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When it comes to creating cashflow, many people opt to become landlords. Renting out property can be lucrative as long as you take the necessary steps to reduce the risk.
Rule 1: Run a background and credit check
One of the biggest reasons why new landlords fail is because they don’t want to inconvenience the potential tenants. That, or they are in a hurry to collect that first month’s rent and deposit. The result is not knowing who is entering their rental property, and whether or not they have bad credit or previous evictions on their record.
When you fail you do due dilligence on a rental applicant, you set yourself up for potential disaster in the near future. We’ve dealt with situations where a tired landlord was in a constant state of eviction, which made him even more desperate to rent out the property when it returned to his possession.
Rule 2: Require an application fee
To avoid such issues as mentioned in rule #1, a simple $30 national background check should be done, and can be done online. If you don’t want to absorb the cost, you may be able to pass it on to the applicant as a non-refundable fee. Check your state laws on rental application fees.
In addition to ensuring an understanding of the renter’s background, am application fee charge will often keep those away who know that they will not qualify to rent from you. Having a non-refundable fee is a red flag to them, and they do not want to throw away $30 for a home they know they won’t get.
Rule 3: Check the references
Your rental application should have a personal references section, as well as a past employment area. ALL of these references should be checked by you, or your property manager if you have one. A simple phone call can reveal information about someone’s character, as well as whether or not they are lying about having a job and for how long.
Rule 4: Be accessible
In 2017/2018, everyone is connected to the digital space. People want to pay for things conveniently. There are plenty of services available online. Take for example a rental listing service called Cozy, which not only allows you to list your rental, but also to collect the rents online. In addition, some landlords provide tenants with a business checking name and number so they may make deposits in the nearest branch location. Banks such as Wells Fargo, as well as many others allow this.
Being accessible isn’t just about convenient payment options, but also about how easily you can be reached in an emergency. It may be 2 in the morning and a pipe burst. Can your tenant reach you or your management company to handle it immediately? There are obvious reasons why this is a good idea. For one, you don’t want to deal with extensive water damage. In addition, you want your tenants to know that you are responsive so they have the faith to keep renting from you.
Rule 5: Employ good management
Cashflow wouldn’t be a lifestyle choice if you had to be on call 24/7. While being accessible is a must, wouldn’t you rather it be your property manager that has to be on call?
The tough part can be finding a good property manager. There are plenty of bad ones out there taking advantage of landlords. Especially when they know you are out of the area, or absentee. Make sure you vet your property manager well by checking references of current and past clients, and doing online searches to locate reviews.
Getting stuck with a bad property manager can leave your home vacant.
Are you having property management issues?
If you find yourself stressed about holding an unwanted property and you are a tired landlord looking for a way out, reach out to us for a fast cash offer. You can call us at 888-519-3721 or fill out the form on this website for a no-obligation offer.
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