Recently we posted Part 1 of a 3-part series on home marketing for DIY landlords. Whether you are new to the rental property scene or you own an extensive portfolio of properties, you will eventually be faced with challenging situations when looking for the just the right renter.
Part 2 of the series covers additional marketing tips to help you ensure that you protect yourself and your investment.
Pre-screen applicants. This is likely the most important step once you have prospective tenants. You need a signed application that gives you permission to check their credit, income, rental/housing history, and job verification/history. This may sound intrusive into the life of someone looking to rent your property. However, you need to know whether or not a tenant meets your standards. With their written permission to check credit you can use websites such as youcheckcredit.com, amerusa.com, or tenantbackgroundsearch.com. Call their employment and credit references. Be prepared to present your signed application giving you authorization to ask these questions.
Set Income guidelines: Many real estate agents and property management companies use a basic rule of thumb that yearly income should be 40 to 45 times the monthly rent. So for $2,000/ month that would mean $80,000 to $90,000/yr for total household income.
Note: Pay attention to Equal Opportunity laws. Have your requirements in writing (minimum credit scores and income requirements, etc.). If you decline an applicant, it must be on the basis of these objective measures and not based on race, religion, disability, etc.
The lease – Everything needs to be in writing. If you are uncertain about the lease, either pay an attorney to draft and/or review a lease for you or befriend a Realtor® that is kind enough to give you honest guidance. Remember, it’s about more than monthly rent. The terms matter.
Not getting traffic? Think about a 12 month window instead of one month. It’s better to take $1,800 over 12 months ($21,600/yr), than wait for $2,000 and only rent it for 9 months at that rate ($18,000/yr). You may need to lower your price. Do what you can to avoid vacancies as they will destroy your yearly cash flow.
Becoming a landlord is not for everyone. While this article covers one aspect of the renting property, you should definitely consult your attorney and tax advisor before taking the leap. If you should be brave enough to try, then we will be the first to encourage you to go for it!
See our other articles in this 3-part series:
- Your Investment Property – Tips to Help You Find Your Own Tenant (Part 1)
If you have questions on your DIY rental -OR- area ready to turn it over to us, please contact us at SandersNoVA@gmail.com or 703-298-7037.