If you have a little bit of extra money, a good amount of people will tell you to buy a rental property. Our area, especially, is a safe bet as we are in such a great accommodating location for various jobs, schools, etc. However, with great real estate comes great responsibility.
You are indeed running a micro business by providing your customer with a product and service.
So:
1. Attract a great tenant with a great home
Yes, it is a rental property. No need to go overboard, but consider that the product you display will attract the equal quality of customer. Mind you, there are certain upgrades that will bring you more rent and certain things that will not. Consider your location as your biggest asset when purchasing a rental property. That will never change. Think Newtown Gate, Summit Trace, Raintree, Country Bend, Heritage Hills, Tanglewood. All neighborhoods with a great location and an awesome community. Your goal is get a tenant with a score in the mid 700's and their goal is to get a great home at a great price.
2. Creating Value
We live in a world where flash sales are dominant, consumers are very price savvy, and price negotiations are commonplace. Nip that in the bud by creating great value. Look at all the other units that have been rented in your neighborhood and see what they offer and for how much. Do better. Your tenant will easily follow through with the tip below. Another idea is to offer to cover a utility or waive a pet deposit (but always collect a pet fee). Or perhaps don't take last month's rent upfront. Good business is always a win win situation.
3. Timing the Lease
As a Realtor, it has been my experience that if a lease ends between September and January; the property will sit on the market for a longer period of time. If this is the case, try to find a tenant who will extend the lease to a 15 month period rather than a 12 month lease. Make sure you are putting your property on the market between Mid Feb to Early August. It's actually better for the tenant as well, since they have a better market to work with if they are buying or moving.
4. Be Kind and Rewind
Whenever you get a rental car, the car is thoroughly vacuumed, cleaned, etc. I think having your carpet cleaned and a professional maid service go through the property is the right thing to do. I also, think the tenant leaving should do the same when finishing his or her term.
5. Communication for Repairs
Yes, you must be available, attentive, and responsive. Your best bet is to go over how to take care of the property before hand to decrease the amount of phone calls, but make sure there is a clear line of communication and a great rapport between you and the tenant. You need each other. You can put in your lease that the first X amount of repair will be covered by the tenant to decrease the phone calls if you'd like, but make sure the tenant understands what that means. A little responsibility on both sides will help keep the property in great shape.
6. Pet's Welcome
Not all pets were created equal and a lot of renters seem to have them. To mitigate the issue, do charge more in rent for the pet. Make sure the renter's insurance policy they take out will cover pet damage. Please make sure to find out what the HOA has to say about pets as well.
7. All Certified Mail
Any communication done with the tenant that is a little slippery, please send it via certified mail. Rent is late? Certified letter. Security Deposit deduction? Certified letter. E-mails don't really hold up in court.
If you are interested in purchasing a rental property, please call/text me or check us out at our beautiful new office (across Shady Brook Farm/the former Waste Management Building now the Coldwell Banker Hearthside Regional Sales Office)
Sid Shah
Coldwell Banker Hearthside, REALTORS
267-799-3229
*New Office*
100 Brandywine Blvd., 3rd Floor
Newtown, PA 18940
