Property rentals have always been the easiest, practical, and at some point profitable real estate investment types. These are among the reasons why a handful of people are buying properties and converting them to property rental (i.e a multi-door apartment units), earning passive income thru tenants paying rentals. The cycle continues until the tenant/s finished the contract or the landlord abruptly end the contract for various reasons. It is every landlord’s dream to earn profits from property rentals, but it is not always the case.
The main reason for this is very obvious, landlords whos property rentals are still vacant are basically not doing it right. Erin Eberlin of The Balance Small Business enumerated the reasons why landlord’s property rental is still vacant and not earning money.
7 Reasons Your Rental Is Still Vacant
It can be discouraging when you are having difficulty finding a tenant for your rental. You may be attracting the wrong type of tenants or you may not be attracting any tenants at all. Here are seven reasons your rental property is still vacant and what you can do about it.
Rent Is Too High
If your unit is priced correctly, it will rent. An overpriced unit may be discouraging prospective tenants from coming to view the property at all or the prospective tenants that have seen it may feel there are cheaper, comparable apartments on the market.
- Do Nothing: You can leave the price where it is, but think of the big picture. If you are asking $1,000 for the unit, you will be losing $1,000 each month the unit sits vacant without a paying tenant. Despite the vacancy, you will still have to pay the property taxes, insurance and the mortgage, if you have one.
- Lower the Price: Your next option will be to lower the price. If you lower the price by $100, and it gets you a tenant immediately, yes, it is potentially $1,200 less per year, but you will lose $1,000 every month the apartment sits vacant, so you may break even or even make more money in the long run by lowering the price.
- Add an Amenity: You could decide to do nothing to the price, but fix up something in the apartment. For example, you could replace all the black appliances with newer stainless steel appliances. This may make your apartment more desirable in the long run, making it easier for you to rent out the unit and leaving you with fewer vacancies.
Security Deposit Is Too High
Prospective tenants may have no problem with the monthly rent you are charging, but they may be turned off by a security deposit that is too high. Many states will put a limit on the amount you can charge a tenant, but other states do not.
Consider the amount of deposit you are requiring from tenants. Three months’ rent is probably too much, especially if all the other landlords in the are only collecting one month’s rent as security.
Landlords must figure out these things in order to attract potential tenants to the property. If the rental price is a bit higher than the competition, lower it to match the average rental prices. Lower down the security deposit as well for tenants get turned off by a much higher security deposit. Study the property rental market to understand how the profitable landlords have done it.
Perhaps the property itself is the reason why tenants are reluctant to your property. Location, house designs are among the major factors as well. Money Crashers published an article on the issues with buying property rental as well as becoming a landlord. Read the article below to learn more.
8 Issues with Buying Rental Property and Becoming a Landlord
Do you dream of owning property? Perhaps multiple investment properties from which to earn a monthly stream of income? Ah, the life…
But before you contact your real estate agent or browse websites like Roofstock, consider what’s really involved. If you want to create an income immediately, you’ll need to rent your property. Though the proposition may sound simple, it is anything but. The information that follows details the downsides to property management.
Issues with Becoming a Landlord
1. Start Up Capital
All potential landlords consider the cost of purchasing an investment property, but many overlook the costs to remodel. In other words, don’t expect start-up costs to end at the closing.
If you buy a damaged or out-of-date home, you could spend a significant amount to make it “rentable.” Any damage to the foundation, plumbing, or wiring can cost thousands of dollars to repair. But even if you buy a property in good condition, you may still have to make changes to get it up to code. This is because many states have strict requirements for rental properties that will need to be met before you start renting.
2. Making Repairs
When it comes to being a landlord, two things in life are inevitable: death and repairs. Don’t even consider a property management business unless you’re sure that you can pay for repairs. Landlord and tenant laws require that you make serious repairs quickly. If you don’t, you could be held liable for additional damages.
The thing about repairs is they creep up on you suddenly and often cost a lot. For example, if your tenant calls at 11:30 pm at night to tell you the water heater has busted and is flooding the house, you have to immediately send an emergency repairman to shut off the water and dry out the carpet.
3. Collecting Rent
You’ll have great tenants who pay the rent on time every month. You’ll have good tenants who slip up from time to time but always let you know ahead of time when to expect the rent. And then you’ll have the tenants that don’t pay and don’t call. As a landlord, you’re going to have to play bill collector from time to time.
Ask yourself if you’re comfortable confronting your tenants before you start renting. Keep in mind that you’ll have to make judgment calls as a landlord. For example, imagine you’ve had a tenant for six months and one month he doesn’t pay the rent. You don’t hear from him for a week. Finally, you decide to call and the tenant tells you he won’t be able to pay for another 7 days. See full post here…
Landlords expect to make profit out of their property rentals. They are expecting tenants flock the property and start renting it for the next couple of months (depending on the contract). However, if not a single tenant come to your problem, there might be issue or issues landlord must address first. Repairs could incur additional costs for landlord. How can they collect money for repairs if they’re not making money out of the property.
Knowing the issues right off the bat and fixing them ahead of time or even before starting the rental are among the criteria of becoming an incredible landlord, which needless to say will bring money into their pockets. Brandon Turner of Forbes listed the principles for being an incredible landlord. Check out his article below to know more.
13 Principles For Being An Incredible Landlord
Being a landlord doesn’t have to be a drag. In fact, when you manager your rental properties effectively and efficiently, landlording can actually be a great source of income while your wealth grows inside your rental units. Follow these thirteen tips to make your landlording headaches disappear!
1. Commit to taking your landlording seriously.
Landlording is the business of protecting and growing a real estate investment through the careful placement and oversight of tenants. All the work to acquire rental properties means nothing if you don’t manage correctly—because great landlording is how you protect that investment from failure and how you help it grow to become more valuable each passing year.
Landlording is not for everyone; it’s for the special few who are willing to take up the mantle of responsibility in an effort to make a brighter financial future for themselves and their family. It’s for those willing to work hard, think creatively, and accomplish dozens of different, changing tasks. Does that describe you? Are you willing to do the work needed to preserve and grow your investments? Have you fully committed to the success of your landlording business?
2. Run your business like a business.
Landlording success is not a mystery. Those who succeed at landlording do so because they treat their business like a business, not a hobby. But it’s not enough to simply run a business; after all, most businesses fail. Successful business owners set themselves apart with their commitment to eight specific principles:
- Business owners create systems and repeatable processes that help them build a “machine” that runs smoothly.
- They continuously improve their business, looking for small and large ways to tweak their operation to make more profit while simplifying the tasks that need to be accomplished.
- They are firm but fair when dealing with their customers and clients.
- Business owners outsource and delegate tasks in their business that others can do with better results, focusing on the tasks that only they can do to grow their business.
3. Prepare your business before signing your first lease.
Before you sign your first lease, you must build a solid foundation for your landlording business. By using asset protection, buying proper insurance, and setting up a bank account, you are able to keep your investment secure no matter what life (or a tenant) throws at you. By preparing documents and creating a policy binder, you’ll “get your house in order” before accepting rent and dealing with questions from tenants, leading to a more simplified landlording business.
Becoming a landlord is not easy, but becoming an incredible landlord is extremely difficult. It takes a lot of work, discipline, and understanding in depth how rental property works, how investors made money out of it and so on. Another mindset is to develop is to treat and run it like a business, not just a past time or a hobby. Stay committed and stick to the ultimate goal of earning passive income.
If you’re ready to become a landlord and is looking for great home deals, making it a rental property in the future but don’t have the slightest idea where to find them, Dependable Homebuyers is here to help you find good home deals as you realize the goal of becoming an incredible landlord. Visit https://www.dependablehomebuyers.com and we look forward to hearing from you.