This is a contribution from Jennifer Riner, who currently lives in Seattle and writes about home improvement, rental management and local real estate for Zillow.
Not everyone is cut out for rental property ownership or operation. In general, it takes years of experience to smooth out all the kinks and have a relatively stable business that generates a reliable income. However, the risk is often worth the reward. Investment properties typically accrue 5 percent appreciation each year, and with rental incomes to pay off mortgages, potential resale profits are high.
Capitalize on investment properties with these four tips.
1. Insure and Update the Property
Landlords should safeguard their businesses with insurance policies prior to listing rental properties. Contact an insurance agent to receive an estimate based on property details. Depending on location, natural disaster coverage may be necessary. For instance, property owners in California are wise to invest in earthquake insurance policies since the West Coast is considered a high-risk zone.
Updated properties have a better chance of attracting and retaining a leaseholder. Although costly, facility improvements can be reimbursed through rent increases. People are willing to pay more for quality and design. Aside from aesthetics, buildings should be constructed to national and local building codes. Keep common areas clean and quickly respond to unit maintenance requests to ensure satisfied tenants.
2. Run Thorough Background Checks
Don’t waste time on tenants who can’t afford the rent or have a history of financial irresponsibility. Further, be sure to review and analyze criminal records. While everyone deserves a second chance, someone with a long history of breaking the law may be less likely to follow the rules of an apartment complex.
Property management companies can pull applicants’ histories through credit reporting agencies. However, individual landlords must use online services. Either way, applicants are notified and required to verify the release of their credit reports. Criminal background screenings are completed similarly and sometimes through the same websites and companies that perform credit checks.
3. Administer Online Updates
Utilize social media, email, newsletters and flyers to keep tenants in-the-know about building events, maintenance plans and accommodation updates. Set up Facebook and Twitter accounts so current tenants can find and communicate with each other. Uploading photos on these social media platforms may attract potential lessees searching for apartments. Consider establishing a high-quality blog for other real estate professionals and property managers to follow. Online communication tools ultimately help first-time property owners gather information from tenants and colleagues to run a successful company.
4. Accept Electronic Payments
An easy way to diminish the likelihood of late rent payments is by setting up online payment options. Tenants can then directly connect their online bank accounts for no-hassle, automatic monthly payment transfers. For property managers who collect utility fees, offer online gas and electric payment options. Be sure to link that information to the property website for easy access.
These four tips are good starting points for first-time property investors. Better the odds of successful rental investing through online research and professional networking.