When you want to maximize the income potential on your rental property, the first and most important thing you can do is minimize vacancy. It’s well known that the longer your property is vacant, the more money you are going to lose. When you work towards keeping those vacancy periods to a minimum, there are a couple of things to consider.
First, a lot of owners like to do their own repairs. This is certainly understandable – why pay a vendor to do what you can do yourself? Doing your own repairs can save you money as long as you do them right away. If you don’t have the time to make those repairs quickly, your home is going to stay vacant longer. Maybe you only have weekends to do the work or one day per week. If that’s the case, it will actually save you money in the long run to have a vendor do the necessary work. It’s a deterrent during showings when there are repairs that need to be made. Every day your property is vacant, you’re losing that rental income.
You also have to set the correct rental price. Sometimes, just a difference of $50 will leave your property vacant longer. We tell owners that it’s okay to set your rental price at $50 or $100 above the market for one week. However, if you don’t get any hits from qualified tenants, you want to bring it back down to what the rent should be according to the market, and it will rent much quicker.
When you get your applications in from interested tenants, it’s imperative to screen them properly. This will save you time and money in the long run and it will also save you from damage to your property. Stick to your guns on your qualification requirements and you’ll have great, high quality tenants.
Owners often ask if they’ll get more rent by changing the counters in the kitchen to granite or by remodeling the entire home. Typically, the answer is no. If the property looks clean and it really shines, it won’t matter if you have tile from the 1980s. As long as it’s clean and it looks good, you’ll get a good tenant. You won’t get that money back that you spend on an expensive remodel and granite countertops aren’t going to bring you $10,000 in extra rent.
If you have any questions on maximizing your rental income, or you’d like to discuss these tips in greater detail, please contact us at Sacramento Delta.
Screening and processing applications requires a lot of time and attention, especially if you want to get good residents into your property who are going to take care of the home and pay rent on time. As property managers, we know that a lot of evictions can be prevented with extra precautions during the screening process. Here’s what we do at Sacramento Delta Property Management to ensure we are putting the best possible renters into our properties.
- Run a credit check
It’s important to read through the entire credit report. This will tell you whether an applicant’s credit history is acceptable for our standards. You want to be careful about renting to people who have a hard time managing money and credit or who demonstrate a history of not paying their bills.
- Verify income
You want to find out how much money an applicant makes, and then you want to see documentation that proves what the applicant says is earned. You can do this by talking to the employer or reviewing pay stubs and tax forms. We require a renter to make at least three times the amount of monthly rent. Make sure the applicant earns enough money to pay rent every month.
- Verify rental history
Whether the applicant was a renter or a homeowner previously, you need an idea of how that person treated the properties he or she has lived in. For renters, we always contact the applicant’s current landlord as well as one previous landlord. It’s important to get a rental history that is actual and factual. If the applicant was a homeowner, we check county records to ensure they did own the home listed on the application.
- Look for red flags
Always pay attention to any red flags that come up during the screening process. These will tell you if the person wanting to rent your home is truthful. You want them to be honest, and you also want them to be reliable. Take red flags seriously.
If you have any questions on tenant screening, or you’d like information on how to handle the application process, please contact us at Sacramento Delta.
Vacancies are extremely expensive for landlords, and if you’re working with a great property management company, you can count on some strategies to keep your vacancy rate low.
Today, we’re discussing how we prevent and reduce vacancies in the properties we manage at Sacramento Delta Property Management.
Tenant Relations and Retention
Keeping tenants in place is an excellent way to reduce vacancy. This is why we are quick to build a strong relationship with our residents. Property owners and tenants have a partnership, and as property managers, we negotiate and facilitate that partnership. We are here to make sure things go smoothly and to take care of things inside the home. If we can accommodate your needs as an owner as well as the needs of your residents, we’ll reduce your vacancy. People undervalue their tenants sometimes, and that’s a huge mistake. These residents are paying part of your mortgage and helping you keep expenses down on your investment.
Provide a Rent-Ready and Well-Maintained Home
We always conduct an inspection before placing the property on the market so we’re sure it’s ready for great tenants.
The current condition has to be excellent. We look at cleaning, paint, flooring, etc. You don’t want to offer a home that isn’t move-in ready because a potential tenant is looking for their home. They want to be able to picture their family there or their friends there. They want to imagine their possessions inside that home immediately.
Make sure the home is rent-ready. Some people do not think having fresh paint on the walls is a big deal because new tenants will just hang things over the wall anyway. But, tenants notice the paint. Everyone has their own level of cleanliness, but you want to be able to eat off the floor when preparing for new tenants. You should walk into a bathroom and see the toilet sparkle and shine. Let prospective tenants envision themselves in that space. This will reduce your vacancy period.
Always have the place repaired and prepared. A tenant will not want to be told that the fence will be fixed before they move in or the walls will be painted. They might have heard that before from other landlords, and they won’t trust it. A property will sit on the market longer if the fence isn’t fixed and the walls aren’t painted.
The expectations are set from the beginning when getting a home rent-ready. You are setting a standard for the tenants when you provide a well-maintained home. If you provide a home that has clean carpets, fresh paint, etc., you are really going to have a tenant that values the time and energy you put into getting it ready for them. Cleaning is a one-time charge for the owner. After a tenant moves out, if they have not cleaned the home, they will be charged because cleaning is not a wear and tear item. So, having high cleanliness standards really pays off and the tenants will appreciate it.
We screen for the most highly qualified tenants. So, we want to provide a property that those tenants will want to live in. This keeps vacancy rates low.
Pay Attention to Property Pricing
Make sure the property is not overpriced. This can definitely cause long vacancy periods.
If the property has been on the market a few days and you haven’t heard anything or gotten any potential leads, get with your property manager about your price. We have had several properties in the same neighborhood just lingering out there for a while. They may all have different prices but sometimes there’s just no interest. So, we’ll adjust the price as necessary to try and get good tenants interested. Lowering the price will actually save you money because you’ll have a shorter vacancy period. A vacant home earns you no money.
If you’d like some help avoiding vacancy, please contact us at Sacramento Delta Property Management.
Achieving a great return on investment, or ROI, is the goal of every rental property investor. We’ve invited Bob, a real estate agent with Keller Williams, to talk to us about ROI on today’s blog. We will often have people buying rental property ask us about whether a particular property will provide a good return. We’ve asked Bob to shed some light on what that means and how to increase your own ROI.
Understanding What Factors Impact ROI
Whether you’re buying an investment property or selling one you currently own, you’ll want to know what kind of value it holds on the market. Rental projections are important numbers, and so are numbers like what the property could rent for and how long it may remain vacant before you earn any money on it. Those are two key factors.
Other areas to look at when figuring out the ROI would be the costs to remodel or clean up the home before it’s ready for the rental market. You would have all of that answered after the property inspection or the home inspection was performed. Other items on the list that may impact your ROI include property tax including assessment taxes, management and maintenance fees, and insurance expenses. Once all that is put together on a spreadsheet, you should review it and maybe take it to an accountant or a CPA. The amount of ROI you can expect often depends on your financial situation at the time.
Working Together with Real Estate and Management Partners
At Sacramento Delta Property Management, we do not sell real estate. At Keller Williams, Bob helps people buy and sell homes. When you’re planning to buy a rental property and you need to know what you’ll have to spend and what you can expect in terms of rent and ROI, it’s important to talk to both of us. We each do different things every day, and you’ll need a lot of expertise in order to make the right decision and have a successful investment experience.
Keeping the buying and selling part of your transaction separate from the property management portion of your investment will help you gain as much expertise and as many resources as possible during this process. I love referring clients to Realtors when they want to buy something, because they really are experts at what they do. Bob knows how to buy and sell solid real estate property and he knows how to deal with non-owner occupied properties. He definitely gives us a lot of support on the investment side, which is great.
Property management that’s professional and experienced allows you to earn more on your rental property. We keep your tenants happy and paying rent. The last thing we want are hostile tenants. We want to get a good understanding of how they feel. Tenants are just as much a part of earning more ROI as your rental value and your vacancy rate.
We’d love to tell you more about how to earn a better return on your Sacramento investment property. Please contact us at Sacramento Delta Property Management.
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