Most property owners and landlords have a deep-seated fear of certain events. A fire that damages or destroys a building might be one of those fears, or a tenant that moves in, doesn’t pay rent and refuses to leave.
While those are very valid causes for terror in landlords, there are other, less dramatic things that you should also be considering when choosing who to entrust your investment property to. Here are a few things to consider:
Your Property Determines Your Tenants
Most tenants know where they fall on the rental scale, and they won’t look for properties that are outside of their budget range. Unfortunately, they also generally won’t rent a property that they consider to be beneath them. Location and appearance go a long way in determining what kind of tenants you can expect to have.
Invest in properties in desirable or up and coming areas, and make sure that the property suits the type of tenant you’re looking to find. Remember, if your property looks like a dump, you won’t get great, responsible tenants in the first place!
Take a long, hard look at the property you are hoping to rent, and take stock of things that might be improved. Consider investing some additional money to upgrade areas that need attention. You’ll add equity and attract higher quality tenants.
Screening Is Key
If your property is in the “right” area, looks the part, and is priced right, then you’re doing everything you can to attract the right caliber of tenant. The next thing you need to do is to ensure that they are the right tenants. Conduct a thorough screening on your prospective tenants, including credit and criminal checks and security vetting. The more you know about the people you’re thinking of renting to, the better positioned you are in terms of return on your investment.
When you own and rent out property, you need to be proactive about the possible risks to your investment. There are many steps you can take to help prevent those nightmares we mentioned from occurring.
- Attracting the right tenants and screening them carefully is one way to protect yourself. Another would be to ensure that you have comprehensive property insurance, and to have your lease reviewed by a lawyer who specializes in leasing law.
- Make sure that you set up a regular inspection schedule for your properties, and include clauses in the lease that set out maintenance responsibilities and how to report accidents or incidents.
- Even if you have done security vetting, there are still other risks to certain properties too, particularly in areas where there may be more crime than others. In those areas, consider having monitored alarm systems installed, so that you have a third party as another line of defense against damage or losses.
All of these steps, combined with professional screening of all prospective tenants and your own instincts can help to prevent losses or damage to your properties, which puts more money in your bank account. Plan ahead, and you’ll save time, money and effort, all while getting a better return on your property investment.