Rental and Cashflow Property - Management, Strategies and More

One of the most important parts of being a successful long-term real estate investor is knowing what your properties will rent for. I am a real estate agent and I am an expert at knowing market prices in my area for homes that are for sale. However, rent rates are much harder to determine because there is much less information available. There are still many ways to predict what a home will rent for so that you know you will be able to cash flow on a rental property. Be sure to check out our free cash flow calculator here.

For more information on my investing strategy, check out my complete guide to investing in long-term rental properties.

Why is it difficult to determine what a home will rent for?

This week was an exciting week for me as I was able to pay off the first rental property I purchased!

I purchased the home in December of 2010 and paying it off three years later was right in line with my long-term plans. I have been looking forward to this milestone for a while and it feels good to have reached it!

How I Was Able to Pay Off This Home So Quickly

I bought this property for about $96,000 and put 25% down (my mortgage broker convinced me to put more down for a lower rate).

As a landlord, life is usually good when your units are rented and your customer’s are paying.

Now, granted, you may be dealing with other issues, but at least your assets are bringing you in money every month.

Life is not so good when you have a vacant unit, or worse, when you have a occupied unit that is not being paid for.

Some landlords use a “Cash for Keys” program, where they pay their non-paying tenants to leave. I personally would never pay a tenant who had potentially lied and not paid rent, but this post is not about that.

In this post, I would like to introduce you to my program, “Cash for Tenants”, which is a program where I LOVE to pay my tenants!

Cash for Tenants

Your home is your face, it represents your success. But often, property maintenance can turn into a nightmare if it is not your standard routine.

Well, it doesn't take too long for small troubles to become large when managing properties without appropriate treatment. Landlords know that the failure to monitor the condition of their properties in time can lead to larger and more expensive problems. You need to be sure that everything is working right and resolve any problems before they become a headache for the tenants.

Taking care of your property on the regular basis keeps your property in perfect shape and also makes tenants happy and proud of the house they are renting and desire to help upkeep it.

With our company we typically charge a 9% fee off the monthly rent when there is a tenant in the property, if the home is vacant we do not charge our monthly fee. As for charging the 1st month of rent, we only do this is there is a need to place a tenant in the vacant property. Our management company advertises vacant properties on the MLS (advertisies to other realtors). The reason for the charge is to disburse commissions to a Realtor that brings a client, as well as cover the marketing costs. If we begin managing a property that has a existing tenant, we do not charge the first month of rent. Only the typical management fee.

#1: Have an Emergency Contact Number.

Give your tenants a phone number at which they can reach you 24 hours a day in case of actual emergencies.

I know what you’re thinking: Uh-Oh.

If you give them a number at which they can reach you 24 hours a day, they’ll be calling you at 10 p.m. to complain that they don’t like the color of tile that you chose for the bathtub surround.

“This isn’t warm beige, it’s 1970’s brown!”

You’ll have to speak with your tenants very clearly about what constitutes an emergency. A minor drip is not an emergency, but a flood in the basement is.

If you don’t want to give your tenants your own phone number, here are a few alternatives:

• Use a 24-hour answering service company like WeTakeCalls.com or MapCommunications.com

1. Invest in Good Quality Material for Building the Rental Property
A good quality house will make tenants stay much longer than a flimsily built makeshift accommodation. Think strategically and work at making your property something that people would love to call their home.

2. Cultivate Trust for Yourself in the Tenants
Be the landlord that tenants can rely on. Affability, responsiveness, and empathy will establish a great working relationship between you and your tenants. And if your renters trust you, they will be less likely to leave your premises and move to stay in someone else’s property.

3. Think Long-Term While Choosing Tenants

It’s often necessary to draft a list of rules and regulations for tenants to be used in conjunction with the lease agreement, especially in multi-unit rentals.
Otherwise, landlords and tenants are left to sort out the day-to-day management issues without any written standards. That can lead to conflicts, and claims of harassment or discrimination.

While the rules sheet is usually incorporated into the lease agreement, landlords who use a separate set of tenant rules often will reserve the right to change those rules from time to time. This is usually done by making a revised list, and then demanding tenants sign the new one.

But can a landlord change the rules mid-lease? Not surprisingly, the answer depends on the rule that is being changed.

Many have jumped on to the bandwagon and have invested heavily in to property that is rented out for an income. Some have made a big success of their investment, while others are wallowing in the pro verbal quicksand. Unfortunately, not all property investment stories are fairy tales, some have proven to be horror stories, where the property owner had to deal with various uncomfortable issues that were also quite costly. Some invested in properties that have developed serious maintenance needs within a few years after the property was purchased. Some of these maintenance needs was so costly that it created many problems for the property owner financially.

Pitfalls that should be avoided at all cost

I recently read an article on MSNBC Today Online about Stephen Metelica, a 24-year-old renter in Chicago.
The article is about the rising apartment rents across the country and how distraught Stephen is about his rent going from $1,525 to $1,600.“I was pretty upset about it,” Stephen says in the article.“I thought a 5 percent increase was ridiculous.”

What’s happening with apartment rents these days is both good and bad for owners like you. Good because high demand and low inventory means more emboldened cash flows for your building, bad because the tenants you like may choose to move out which means some unexpected vacancy.

There’s no reason why you can’t boost your rents AND keep your good tenants. Here’s how:
Give your tenants a re-lease gift.