Considerations Before investing in Rental Property
Common Mistakes First-Time Landlords Make
Are you a first-time landlord who has recently invested in a property to rent out to tenants? If so, a great thing that you can do as a first-time landlord is gain an understanding of some of the most common mistakes first-time landlords make so that you do not go down the same path. They say that understanding the mistakes of those who have gone before us can help us to prevent making the same mistakes in the future. As property managers in Redding who have over twenty years of experience working with landlords, we would like to give you an understanding of some of the most common mistakes that we see first-time landlords make.
- Selecting poor tenants – Having a thorough selection process when it comes to selecting tenants to live in your rental property is important because you will want to make sure that rent payments will be made on time and that the property will stay in good condition. Selecting tenants without first checking to see if they have long-term employment or a stable income setup can result in late rent payments or missed rent payments, which will ultimately fall back on you as a landlord. Selecting tenants who do not care to take care of your rental property can result in damage and repair costs, which can also fall back on you as a landlord. If you really want to make a profit off of renting out your property, it is vital that you take the time to check employment, call references, and run background checks before selecting tenants to live in your rental house or apartment.
- Failing to get the lease in writing – Laying out all of your requirements in a written lease agreement and then having all of your tenants sign it legally binds your tenants to that agreement. This lease includes your tenants’ guarantee that they will pay rent on time and it also includes late fee amounts if they do not pay their rent on time. In the case that a tenant does not make a rent payment and refuses to communicate about making that rent payment, you as a landlord legally have the right to take your tenant to court because you have their commitment to make their rent payments in writing.
- Charging overly high rent rates – A lot of first-time landlords immediately think that the best way to make money off of a rental property is to set high rent rates. The problem with this, however, is that it doesn’t cater to the potential tenants or give them any kind of incentive to want to live in your rental property. It is important that you put yourself in your potential tenants’ shoes. At the most, how much would you be willing to pay? Many landlords end up not being able to fill their rental properties with great tenants simply because their rates are set so high.
- Getting advice from family and friends – People always have opinions, especially the ones who are the closest to you. And when it comes to running a business, which is essentially what you are doing, it is better to get advice and practical wisdom from someone you are not emotionally connected to rather than a family member or a friend. While there are many horrible tenant cases, there are also many success stories. Make sure you connect with landlords who have had success in this business and glean from them. Plus, the people who don’t have success stories most likely made a lot of the mistakes being laid out in this blog post. The fact that you are reading this is a step towards success!
- Underestimating or failing to calculate maintenance expenses – While every landlord wants to give his or her tenants the benefit of the doubt, there is a high chance that your tenants will not take care of the property as well as you think they will. Intentionally or unintentionally, damages do occur. It is important that you calculate and set aside some money as a safety net for potential damages or maintenance repairs. Landlords who fail to do this or underestimate the cost of potential damages and repairs end up in the hole and their rental properties are left worse off than when they started.
- Failing to keep a business-professional relationship with tenants – Many landlords end up in the hole because they allow their relationships with their tenants to become personal and they continue to extend grace when they should be abiding by the lease agreement and sticking to the requirements. Your tenant is essentially your customer. This means that in the same way a customer gives a payment for a product or service, your tenant essentially gives you a payment for a “housing” service. Imagine a customer walking into a business and taking a product without paying or receiving services and then walking out without paying. Not only would that be disrespectful, it is actually illegal and there would be no grace offered for those kinds of actions. It is the same way when it comes to your tenants failing to make rent payments. The requirements must be directly and sternly communicated and if your tenants fail to meet them, legal actions must be taken. The landlords who fail to do this because they don’t keep their relationships with their tenants business-professional are the ones who end up in the hole in the end.
If you have any questions or would like more information on how you can succeed as a first-time landlord, feel free to call us at 530-410-6085! We do property management in Redding and Shasta County and would love to help you in any way we can!
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Property Managers An Incredible Investment
Becoming a landlord seems like an incredible investment opportunity. Buy a home, rent it out to tenants for more than you bought it for, and generate a steady income from it. Seems like a pretty great deal up front, am I right? In fact, this is the main reason why most people decide to become landlords. However, most people who decide to become landlords often overlook many things that end up giving them a headache later on down the road. Before these landlords know it, they are dealing with tenants who don’t pay their rent on time and then leave the house in a worse condition than they found it in. These landlords, who expected to get an incredible return on their investment, are now dishing out cash to fix the damages that have been done to the very house they put so much effort into making nice. (more…)
Buying Rental Properties what you should know.
What do you want when you want to buy rental properties? A safe and profitable investment. Here are some great things to look for while making that happen.
Buying rental properties in Redding CA. can be a fantastic way to build your wealth and retirement. However, as in most real estate investing, it is sometimes difficult to know if you’ve found a reasonably good deal – especially the first time you buy. Here are some things to look for to be sure that rental property is a good investment. (more…)
Millennials tenants, how to reach them and work with them.
Times are evolving, and the old way of doing business is not attracting the next generation. Who is this next generation? They are called the Millennials; they are the tech-savvy generation. They have grown up with technology, they adapt quickly to new devices and perform computer-based tasks more quickly than older generations. Millennials are comfortable with the internet and social media. This comfort with social media means they are good at self-promotion and fostering connections through online media. Millennials are less likely than previous generations to put up with unpleasantness and much more likely to use social networking to broadcast their concerns. On the other hand, satisfied Millennials are often advocates for the business they interact with, providing honest, free — and convincing — public relations.
So what does this mean for Property Managers and Landlords looking to reach the Millennials? It means you need an internet presence. Millennials are more likely to connect with you through your online avenues. No internet presence means major missed opportunities. Millennials are not driving around looking for properties to rent. They are looking at their phones. Millennials do their research online. So for Property Managers, this means your site needs to be user-friendly, more importantly, your site needs to be mobile friendly. Property Management Company’s that provide more useful content in their advertising of properties, for instance, pictures and/or walkthrough videos promote a more enjoyable online experience. They check out what they are going to buy or who they are going to do business with. Millennials care about other people’s opinions and a good customer experience. Nowadays so many people have the ability to write reviews regarding their experiences online for all to read and having it readily available for anyone and everyone to find, demands that you pay attention to your online presence. Thank people for taking the time to write a review, positive or negative it all helps to improve your customer service. It shows you pay attention and you care about the type of business you do. Millennials support businesses that are dedicated to improving their customers’ lives and have informative content. More than 7 out of 10 Millennials consult, react or post about products, brands, and companies on social media.
When advertising your rental properties, use the environment around your residential homes and apartments, for example, townhouse close to shopping, Apartments close to local transportation. Millennials like to walk or ride their bikes. They look for apartments or housing near their work or school to facilitate more economical modes of transportation. Millennials like to be as green as possible. Providing your customers with the ability to apply online and pay their application fees online speeds up the application process. Once an individual is a tenant offering tenant portals for paying their rent and placing work orders online allows tenants to address issues on their timeline. If online is not your expertise, you may want to invest in some lessons. Millennials look for the positive experience, the ease of doing business and the ability to have an input. They will share positive experiences, and they will most assuredly share their negative experiences. Authority Property Management of Redding CA. offers many technologies to help millennials fell comfortable before becoming a tenant and after.
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Is it time to sell a rental property in Redding CA?
As a Real Estate broker specializing in Property Management in Redding CA. We are getting asked often if now is the right time to stop renting and sell your rental properties in Redding or surrounding areas. We wanted to take a few minutes to provide an opinion from a professional Property Manager.
Rental home market.
Let’s first understand where the Property Management Redding CA. market stands. Our rental market here in Shasta County and Northern Tehama county is improving. Many of the accidental landlords have parted with their properties. These properties are not often returned to the market as a rental property or investment property because first time home buyers are the first with
cash. With them occupying the home, they also have an easier time getting financing. This has lessened the available inventory for available rental properties. As you know when demand is high and supply is low prices move up. Over the past 12 months, we have seen rents climb between 5% & 8% over previous years, which is huge. The best part is that rents are now moving up as for years they worked their way down due to the heavy competition in the marketplace. Imagine for a moment that rents in Redding CA. move up another 5% or 8% next year. Then things will look fantastic.
The Sales market.
Yes, we can validate that the sales market is showing improvement. Often times property owners who have rental properties under financial water are getting closer to the surface and break-even point. With the small improvements in the sales market, many of our power investors have begun to pick up more rental homes and apartments as they know the market will grow further. Now is still a great time to buy investment properties. With the way the stock market is bouncing all over, I find myself staying away from buying stocks and moving my monies into the rental properties
So yes the Sales Market is showing improvement but that leads us to a few questions. We are confused as to why an investment property owner in Redding Ca. would sell a property at break-even pricing. After having hung in a long time and possibly taking a loss every month, why sell at break even? If you could hang in a while longer and make between $20,000 and $100,000 why would you sell? The timing seems all wrong. The old adage still applies “Buy low and sell high”. The market is nowhere near a high at the moment. Believe it or not now is still a great time to buy rental homes or apartment buildings. Why because the market is nowhere near a high. So the thoughts from a professional property management company operating in Redding CA. No, No, No only sell when the market is at a high and that’s just not where we are at.
One last thought. If you want to begin buying rental properties, you should involve a property manager before ever making an offer. We can help you understand the cost and benefits a property manager can provide. We can also help you understand what a property might rent for and what things may need to be done to make it a great rental property. So often someone will come to us after buying a new rental and they find that they have misunderstood the cost of owning a rental and they don’t make as much profit. Best to involve us before making an offer on a property. Then you will have good numbers and facts to the basis you offer on so you can maximize profits.
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