How to Choose an Investment Property You’ll Love
For some landlords, once they rent their old primary property, they’re bitten by the real estate bug. A steady stream of income from a solid property can make investing seem much more inviting. For the right investor and landlord, adding more properties can be a smart choice. You set yourself up for future financial freedom while growing your income and building a business.
Since this is the month of love, let’s focus on finding an investment property you’ll love. Getting this part right is the first step to the kind of future you want for yourself and your family.
Know the Market
Talk to a property manager or a real estate professional and learn all about the market you want to invest in. This is important for any investor, even if you’ve had a successful rental property over the past several years. You need to know what’s going on in the local economy. Are jobs coming to the area or leaving? How are rental and property values doing? Is the rental market strong?
If you’ve had the same solid tenant for the past several years and haven’t had to think about marketing a property in a while, do not buy anything until you have this information. It’ll help you figure out if now is the time to make a purchase and where your money is best spent.
Figure Out Your Budget — and Stick With It
How much money can you afford to invest and how will you pay for it? The amount you spend to buy isn’t the only consideration. You also need to think about how much you’ll need to spend to get a property ready to rent and maintain it once you find a tenant.
Not having a budget or blowing your budget out of the water will lead only to stress and wishing you’d never bought the property in the first place. It’s hard to love something that’s draining you dry and commanding all your attention, time, and money. Buy within your means and make sure you can afford the work that’s needed.
Picture Your Ideal Renter
Knowing who you want to rent to, and how much they can afford to spend, will help you in your property search. You don’t want to buy in a neighborhood that your ideal renter would never live in. At the same time, picking the right location is only half the battle. You also need a property that ideal renter wants to rent.
A neighborhood filled with retirees isn’t a good fit for a young couple. Condos on the beach aren’t a good fit for a small family. There’s no right answer on who your ideal renter will be but there is a right property for them. Choose carefully.
Get Real About Your Expenses
This is no different than sticking to a budget when you buy. Stay realistic about the expenses you’re incurring when you take on the investment property and factor it into your budget and the rent you want. If you’re not prepared for how much the property costs, you’ll spend all your time chasing the right amount of rent and the renter who can afford to pay it.
Some expenses to keep in mind include:
- Mortgage, if applicable
- Maintenance costs
- Big repairs – roof, HVAC, etc.
- HOA/COA, if applicable
- Property management fees, if applicable
The rent you charge should cover these and still bring in at least some extra cash. It might not be much at first but the potential for an increased cash flow ought to be there from the beginning.
Consider Other Areas to Invest
Maybe you’ve always owned single family properties in Niceville or Fort Walton Beach. Have you ever considered condos in Destin or South Walton? Branching out of your home territory allows you to diversify. If you’re really feeling brave, you can even branch out into another state or a part of Florida with a different economy.
Whether you stick close to home or not, investing in different properties has its advantages.
- Different properties command different rent.
- Marketing to another market (retirees or vacationers vs. young families) provides extra opportunity for growth.
- You’re more protected if a segment of the real estate or rental market falter for any amount of time.
Think About Resale
If you know there’s a possibility you’ll sell your rentals in the future, buy with that in mind. It’s impossible to know what the real estate market will do in five or ten years, obviously. But buying an overpriced property now with a too-big mortgage never ends well. Likewise, having to put more money into a property than you’ll ever get out of it on resale might not be the best idea, either – depending on how long and at what rate you rent it out.
Ultimately, you don’t want to look up one day and realize you resent your own investment property. Of course being a landlord takes time and money but no one wants to feel like the life is being sucked out of them. A rental that’s not a good fit can become The Money Pit in no time. Take your time choosing your investment properties so you have a better chance of success and your love can grow over time instead of fade.
If you’re in the market for new rental properties or you need help managing your existing rentals, ERA American Real Estate is here to help. We know the market better than anyone, and we can help you navigate the life of a landlord to get the best tenants and maximize your cash flow. Contact us today.
Why You Shouldn’t Use a Generic Lease Agreement
Being a landlord involves a lot of moving parts: marketing your rental, finding a tenant, taking care of the property, and receiving the rent on time. It can seem pragmatic to pick up a generic lease from an office supply store or download one from the internet. They couldn’t sell it if the agreement wasn’t legal, right?
Not necessarily – depending on where you got it – but just because it’s technically legal doesn’t mean a generic lease agreement is right for you. If you’re wondering if it’s worth it to get a customized lease agreement, here’s what you won’t get with a generic lease.
It’s Not Unique to You
Generic lease agreements have to be a one-size-fits-all document. Not only will the language not be specific to your property or type of properties, but it may include provisions that don’t apply. Even worse, it make discuss things that you don’t want to apply to your rentals. But once it’s in black and white, a savvy tenant will realize they can negotiate.
Example: A generic lease agreement may list all the possible amenities and utilities that could be available in a rental property, whether or not it’s an option for your specific property. One of which might be lawn maintenance or free cable, but you have no plans to offer that to a tenant. But it’s listed as an option on your lease agreement – and a tenant may want it.
It Doesn’t Address Local Ordinances
Not only are landlord/tenant laws state specific, there are also ordinances and provisions that are county and city specific. Unless you’re an attorney yourself, you won’t know what these are and they won’t be included in your generic lease agreement.
Example: In Destin and other areas, there are rules regarding short-term rentals including AirBnB rentals. Your generic lease agreement won’t mention this at all.
You Might Not Understand It
Having a lease agreement drawn up by a professional means you have someone to explain what each clause means. When your tenant has questions, you’ll be able to answer them. Generic lease agreements use appropriate language (usually) but unless you’re a lawyer, you won’t know exactly what it says and may give your tenants bad information.
Example: The tenant contacts you because they’re unsure what the contract means by “In the event Landlord cannot deliver possession of the Premises to Tenant upon the commencement of the Lease term” and they call you. But you’re not quite sure what it means either.
Your Specific Needs Aren’t Addressed
You decided that you’re willing to allow tenants to have or do certain things in your property — have a pet, paint the walls, plant flowers. You’ve spent time thinking about the whys and hows of how it will work. But in a generic lease, it’s all or nothing. There’s no room to specify exactly what a tenant can or can’t do.
Example: A tenant wants a pet, and you’re willing to allow it. Your requirements include a pet deposit, the types and sizes allowed , and a ban on specific breeds of dogs. But the generic lease says either pets are okay or they’re not with no room for easy alterations.
It Might Not Hold Up in Court
Your lease agreement is supposed to protect both you and the tenant. It’s purpose is to lay out what the rules and responsibilities are for both parties. When a tenant violates the lease, it’s is supposed to be enforceable by the court during eviction. But if your generic lease doesn’t have the right provisions or language, you might not be able to evict.
Example: A generic lease only mentions evictions for non-payment or specific types of illegal activity. But your tenant doesn’t take care of the property and has actually caused extensive damage, and you want them gone. Since your generic lease doesn’t include that as a provision, you have to keep fixing problems as long as they pay the rent.
A custom lease agreement is an investment in your future as a landlord. Once you have it written once, you can use it over and over again. When you need to draw up a new agreement, you can change small provisions or update them as laws and your own preferences change. Best of all, you’ll know exactly what’s in your lease and be able to explain it to a tenant to avoid confusion later on.
Not sure you can afford to hire a real estate attorney to draw up your lease agreement? Work with property management professionals who can help you create a lease that’s fair to both you and your tenants and includes everything that matters most. You’ll also have a lease that can stand up in court if you ever need to evict a tenant.
At ERA American Real Estate, we can help you craft a lease agreement that fits your specific property and needs. The attorneys we work with make sure it can stand up in court, and we make sure you can understand what it means for you and your tenants. Call us today and let’s make sure your lease agreement is done right.
Why It’s Important to Know Your Vendors
As a landlord, you can’t do it all. It’s not feasible, possible, or even recommended. You’re going to need expert help from time to time to keep your rental property ready to rent, safe for tenants, and making money for you. If you’ve been calling whoever shows up first on a Google search or haven’t developed a working relationship with your vendors, you could be setting yourself up for problems in the future.
Here’s why it’s important to know your vendors and establish relationships with them.
Licensed, Bonded, and Insured
To reduce your own liability, you’ve got to make sure the contractors and service providers you work with can do the job. You also need to know they’ve got the insurance and certifications to handle problems when they occur. This is the absolute bare minimum requirement for any vendor but it’s one that most often gets overlooked.
Reliability and Dependability
Working with the same high quality vendor over and over again means you know exactly how reliable and dependable they are. If they’re not, you fire them and find another vendor. This gives you peace of mind that any problem in your rental, big or small, will get fixed. You know they’ll get the job done without you having to follow up, call, or worry. Even better, you’ll have happier tenants because problems will fixed well and in a timely manner.
You’ve heard the adage that you get what you pay for. It’s true in every part of life. When you choose whoever’s cheapest, you tend to get a cheap outcome. Working with a vendor you’ve vetted, approved, and built a relationship with means you know the value of the money you’re paying. They’re probably not the cheapest company you could hire but if you’re not calling them in so they can fix the same things over and over again, they’re definitely the most cost-effective.
When you’re a landlord, you’re a small business. You need a team of companies, people, and service providers to help you do the things you can’t do. The vendors you work with: house cleaners, pest control, landscaping, contractors, plumbers, electricians, etc – they all need to help you when you call them, instead of adding to your stress. This means you have confidence they’ll get the job done right, on time, and at a price you can pay.
Imagine it: your tenant calls to let you know a pipe has burst, the bathroom is flooded, and parts of the house are quickly becoming damaged. It’s the middle of the night or on a holiday. Which would you rather do? Frantically do a Google search for the first available plumber and hope they’re good, affordable, and professional or quickly (but calmly) call the plumber you’ve worked with for years who will tell you what to do right now and when they can be at the property to take a look? It’s that second option every time.
With the right team of vendors you can rest easy knowing that when (not if) a problem occurs on your rental property, it’ll get fixed. If you wait until you need help to find someone, you’re more likely to go with the cheapest option which isn’t always the best person for the job. Spend time talking to potential vendors, asking about their practices, and finding out what they can do for you. The good companies will appreciate the effort because they know how important relationships are to building their own business and having steady work.
If the idea of meeting with, selecting, and hiring vendors to help you take care of your rental properties sounds like work, it is. Skip the stress and hassle and partner with a property management company that’s done the work for you. Here at ERA American Real Estate, we’ve established relationships with service providers all over the Emerald Coast. These are companies and people we trust to get the job done right, at a good price, and on schedule. Let us help you manage your properties so you can focus on the rest of your life.
How to Get Good Tenants to Renew Their Lease
Reducing vacancies in your rental properties saves time, money, and a lot of hassles — as long as your tenants are the kind you’d like to keep long-term. A bad tenant can cost you more than a vacancy — late payments, damaged property, legal costs for eviction, the list goes on. Make your landlord life easier and retain your best tenants.
Once you get a good tenant, you want to keep them. Thinking about how to do that shouldn’t begin 30 days before the lease ends. It starts from the very beginning.
Identify Your Best Tenants
The best tenants aren’t always the ones who are willing to pay the highest amount of rent. Think about the tenant that makes your life easy — that’s who you want to keep. How can you tell who your good tenants are? They’ve got a few common traits.
- Good tenants pay their rent on time.
- Great tenants take care of the property as if it were their own.
- They also communicate well — to let you know about problems before they become disasters.
Get Feedback Long Before Lease Renewal
You should do this with every tenant, but with your best tenants, you’ll go a long way in forming a good working relationship if you get feedback. Yes, you want to know when something breaks or gets damaged. Of course you need to know about the problems. But what about the small inconveniences or the things that could be better? Everyone wants to be heard and acknowledged, including your tenants. By asking for feedback on their experience with the property, you’ll send the message that you care.
The next step, of course, is to act on the feedback you receive. You might not always be able to offer every upgrade or change things drastically. But where you can fix a problem for a tenant, do it. They’ll know you take their feedback seriously and be more likely to rent from you long term.
Communicate Early and Often
Thirty-one days before the lease expires isn’t the time to ask your tenants, especially the ones you want to keep, if they’re staying. People don’t make decisions about moving that quickly, if they can help it. Reaching out early to discuss lease renewal helps people prepare. This is even more important if you’re planning a rent increase.
Talk to your tenants 60 to 90 days before the lease ends, and then follow-up every couple of weeks. Make sure you’re available to answer questions or address concerns. Communicate with your tenants. Lock-in your tenant’s renewal as early as you can so it’s one less thing either of you have to think about.
Make Renewal (and Renting) Easy
Many people will pay a little more for convenience. We’re all busy, and we all want our lives to be as easy as possible. This is true for your tenants, too. Upgrade your systems to make renewing their lease and renting easier.
- Offer online lease renewal — allowing tenants to agree to the terms of the new lease with digital signatures or simply sending their lease by email instead of snail mail.
- Accept online rent payments. You’ll receive payments sooner and make tenants’ lives easier.
- Communicate by text, email, or even social media — let your tenants get in touch with you in a way that’s most convenient for them whenever possible.
When the lease expires on a bad tenant, choosing not to renew is the best option. It frees you up to find a better tenant who will pay on time and take care of the property. But when you’ve already got a great renter, small things can make the difference between a lease renewal and a vacancy.
Need help with tenant retention or finding good ones for vacant rentals? Work with the property management company that has the knowledge, experience, tools, and (most importantly) skill to find the best and keep them for multiple lease renewals. Work with ERA American Real Estate. Contact us today!
4 Steps to Get Your Rental Move-In Ready Faster
A vacant rental property is one that’s not earning income or paying the mortgage. If a vacancy lasts too long, it can become your worst nightmare. Tenants move all the time, and your current renters won’t stay forever. Knowing how to minimize your vacancy time will keep the income flowing and give you less to worry about.
Make a plan now so that when you get that 30 day notice, you can put your plan in motion so you’re ready for the next tenant in less time.
Maintain the Property All the Time
Some projects are easiest when a property is vacant but keeping the property maintained means you have less to do once the tenants move out. Fix and replace what you can as needed. Perform annual maintenance checks so you’re on top of problems or potential problems with the property. Doing this means your to-do list will be much shorter once your tenants move out.
Have a Plan Ready to Go
Certain things have to be done after every tenant moves out. Go ahead and pull that list together so you’re not scrambling when they leave. You may have to add extra things after you inspect the property, but the basics will already be covered.
- Clean the property from top to bottom
- Repaint the walls
- Put down new carpeting or flooring
- Take care of the lawn, including mulching and even adding plants
If you know there are some upgrades that need to be done like new appliances or a new shower, add it to your list for this specific property and plan for it early.
Use Your List of Vendors
You do have a list of go-to vendors you trust, right? If not, put that together first. Once you do, think about what you know needs to be done once your property is vacant. Go back to the list you’ve made. Call and begin scheduling the work that needs to be done. No, they can’t start until the tenants move out. But the earlier you can get on a contractor’s calendar, the more likely it is they can get the work done when you want it done. Wait too long, and anything you can’t DIY will likely have to wait several weeks.
Certain things have to be done over and over again with each vacancy. Those things never change. After the first few vacancies, you know exactly what needs to be done. Create a procedure that you can repeat with each vacancy. Yes, you’ll have to add extra things to the list depending on how a tenant leaves the property, but the basics will be covered. Take the time to create a process and a list that you can use over and over again. It’ll be worth it when you can pull out your list when a tenant puts in their notice and know exactly what needs to be done.
If your property sits vacant, you’re not making money. The faster you can move in and get it ready to rent, the better. Don’t cut corners but don’t wait until the last minute either. Tenants want a home that looks good and fits their needs. By putting together a plan, taking care of the property year-round, and staying organized you can cut down the time it takes to turnaround a rental.
Does it all sound a little overwhelming? Don’t have time to make lists or keep up with all the details? Work with a property management company that has the vendors, the procedures, and the tools to get your rental ready for new tenants faster. At ERA American Real Estate, we know how important it is to keep the renters and rental income flowing. We’ll make sure your rental stays vacant for the least amount of time possible and help you find the best tenants. Contact us today!