MAZIMISE YOUR IN­VEST­MENT PROF­ITS

A re­spon­si­ble ten­ant, with ver­i­fi­able rule-abid­ing be­hav­ior and bill pay­ing his­tory, will give you the best odds for a pos­i­tive land­lord-ten­ant re­la­tion­ship and max­i­mize the cash in your pocket.

Sunday Observer - - OBSERVER HOME -

You got into real es­tate in­vest­ing for one rea­son: profit! And if your in­vest­ment isn’t gen­er­at­ing a six to eight per cent re­turn, you need to reeval­u­ate your man­age­ment style.

The big­gest ar­eas for im­prove­ment that will pos­i­tively im­pact your prof­its are oc­cu­pancy, on time pay­ments and main­te­nance. This ap­plies to all rental prop­er­ties in your portfolio, whether you self-man­age or use a prop­erty man­age­ment com­pany.

If you use a prop­erty man­age­ment com­pany or es­tate agent and they are not as­sist­ing in help­ing you reach the eight per cent profit point, take the time to re­view how they are ac­com­plish­ing the fol­low­ing goals.

SCREEN­ING

Lack of ten­ant screen­ing can be a huge drain on your prof­its, so this needs to be a pri­or­ity. Your in­vest­ment is only go­ing to be prof­itable if you have ten­ants who pay rent on time and don’t cause prop­erty dam­age. Even if you col­lect a se­cu­rity de­posit to cover the cost of prop­erty dam­age, the time and over­head re­quired to man­age prop­erty re­pairs will eat into your in­come.

You have op­tions to check out your fu­ture ten­ant’s bill pay­ing habits in their credit re­port, see how much money they make by ver­i­fy­ing in­come and re­view­ing bank state­ments and as­sess their rule-fol­low­ing be­hav­ior by look­ing into their crim­i­nal background and call­ing past land­lord ref­er­ences.

The num­ber of land­lords and in­vestors who do not fol­low these ba­sic ten­ant screen­ing prac­tice is much higher than it should be, be­cause it’s as simple spend­ing a nom­i­nal in­vest­ment to do background checks. This is well worth it in the end, to avoid the po­ten­tial lost rent from a non-pay­ing ten­ant or po­ten­tially danger­ous ac­tiv­ity you could face.

A re­spon­si­ble ten­ant, with ver­i­fi­able rule-abid­ing be­hav­ior and bill pay­ing his­tory, will give you the best odds for a pos­i­tive land­lord-ten­ant re­la­tion­ship and max­i­mize the cash in your pocket.

ON­LINE PAY­MENTS

Renters who pay rent on­line are less likely to pay rent late. Most peo­ple have bank ac­counts these days, and it is usu­ally a very simple process to set up a stop or­der or on­line bank­ing. Have your ten­ants pay rent on­line and stop wast­ing time de­posit­ing cash or worse, cheques. Lim­it­ing the amount of ad­min it takes for your money to get to you will save you in the long run.

A smart in­vestor val­ues their time as much as their other as­sets. You can stream­line your rental man­age­ment by tak­ing ad­van­tage of soft­ware so­lu­tions de­signed for renters. One of the new­est and greatest tech­nolo­gies hit­ting the rental mar­ket is the abil­ity to make on­line rent pay­ments.

On­line rent pay­ments make rent col­lec­tion eas­ier for you and are ben­e­fi­cial for your renters too. Of­ten, your ten­ants’ rent is the big­gest bill they pay each month and phys­i­cally go­ing to the bank or es­tate agent’s of­fice to de­posit such a large amount of money can be an emo­tional ex­pe­ri­ence. Pay­ing bills on­line, es­pe­cially via au­to­matic pay­ment sys­tems, can sig­nif­i­cantly lower the emo­tional stress as­so­ci­ated with pay­ing big bills. Plus, any­one who pays a bill with auto pay is less likely to pay late, in­cur late fees or miss a pay­ment.

Re­gard­ing auto pay­ments, make sure all your bills are set up for auto pay as well. Some­times you can ne­go­ti­ate a dis­count for pay­ing your bills via on­line ser­vices, which will cut down on your op­er­at­ing ex­penses and in­crease your bot­tom line.

MAIN­TE­NANCE

One of the ben­e­fits of rent­ing for your ten­ants is the de­ferred home main­te­nance. Your renters might not know what it takes to keep a home dam­age-free with rou­tine and sea­sonal main­te­nance.

You will have no con­trol over how your ten­ants use a prop­erty fix­ture or fea­ture in your prop­erty; this is es­pe­cially the case when it comes to ap­pli­ances. Even if you feel like you covered your bases by re­quir­ing that ten­ants fol­low up on cer­tain main­te­nance tasks as part of the lease, it is very likely that they will for­get if it isn’t in their face ev­ery day.

By in­vest­ing some time and money into rou­tine main­te­nance and ser­vice checkup on the ma­jor ap­pli­ances at your prop­erty, you will ex­tend the life of ex­pen­sive items like stoves, air con­di­tion­ing units, wash­ers and dry­ers.

The same goes for sea­sonal main­te­nance. While you can state in your lease that your ten­ants are re­quired to keep the prop­erty prop­erly land­scaped in sum­mer and rake up leaves in win­ter, if they fail to do so, you’re look­ing at much more ex­pen­sive bill than send­ing over a sea­sonal land­scaper once a year when your gut­ters break or a tree branch crashes through the roof.

Make your ex­pec­ta­tions clear about what main­te­nance you ex­pect your renters to take care of, and help them re­mem­ber to com­plete them.

Ad­di­tion­ally, if you want to keep dam­age min­i­mal at your prop­erty, give your ten­ants an easy way to sub­mit main­te­nance re­quests. The eas­ier you make it for your ten­ants to no­tify you of a po­ten­tial main­te­nance is­sue, the more likely they will be to re­port it.

Your in­vest­ment has po­ten­tial to gen­er­ate great prof­its thanks to the low va­cancy rates and high rents trend­ing in the mar­ket. You will only be able to cap­i­tal­ize on this if you fol­low rental man­age­ment best prac­tices of leas­ing well-main­tained prop­er­ties to great ten­ants. Take the time to find renters who pay rent on time and fol­low prop­erty rules with ten­ant screen­ing. Keep your ex­penses low and your re­serve fund con­stantly full by elim­i­nat­ing po­ten­tial prop­erty dam­age. These simple tasks will have a big im­pact on your bot­tom line.

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