1. Prioritize rent
Rent is your income. Surprisingly, how many landlords are not active in pursuing rent and late payment fees. Sometimes it's a good idea to work with people who usually need help... if they talk to you.
But if your tenant no longer pays the rent, ignoring your phone call or text message, you will need to start the eviction process. Otherwise, you may default on six months' rent before you know it, which may be the most important of all landlord tips.
2. Work with the right investors
I have a great business partner, he is completely honest and transparent, and these two qualities are crucial when choosing a business partner. For some reason, some new landlords are very willing to work with people they barely know, just because the deal looks good. This is usually a mistake.
3. Appropriate screening of tenants
Screening tenants is a big deal, and I was the first to admit that I had made some serious mistakes in this area. My first multi-family tenant had 480 credits and could not provide a previous rent reference and did not work.
Guess how is this? We say that all of the following 600 are considered bad credits. If you want to be more cautious, here is the breakdown:
- Excellent credits - 750 and above
- Good credit - 700 to 749
- Fair credit - 650 to 699
- Bad credit - 600 to 649
- Bad credit - below 600
4. Do not allow cats
Sorry if this is offensive to any cat lover. I believe your cat is great. However, my experience with cats is very bad, I will never forget it.
I renovated a property and was very excited about the new carpet I installed. Then I rented the place to the manager of a local restaurant.
She paid for it on time for several months, but she disappeared. She was relocated, but did not tell anyone. She also "forgot" to bring her cat. The entire unit is spelled like a cat urine for a few months, even after I installed a new carpet. Learn the lesson.
5. Don't ignore the extra income opportunities
Most investors think 1-1. What do I mean by this? If someone buys a house, they just need to rent out the house. But this approach means you can ignore some extra income ideas that can increase the return on your real estate investment.
Here are some ways to make money out of the box:
Can you install solar panels? Consider selling excess electricity from the power generation back to the grid.
Does the hotel have room to install billboards and/or cell phone towers?
Is there a shed that can be rented out for self-storage?
6. Understanding the Fair Housing Act
For some reason, many investors choose not to educate themselves about fair housing laws, and if you violate these laws, you may have a serious impact.
There is no reason not to educate the laws of the real estate industry. Land science has created several easy-to-understand guides on fair housing.
7. Don't invest in renovations that don't generate higher rents
One of my friends made a lot of money in his current career and now buys the rental property with all the cash. This is fine.
However, he is definitely renovating these houses. For example, he is buying what I call the "B" community.
Then he placed the tiles in the bathroom, the marble countertops in the kitchen, and the crown strips in the study, which were refurbished. The renovated house is better than the house where many owners live.
The problem is that these renovations do not lead to a high enough rent to justify these costs.
8. Online rent collection
You have no reason to use a check to collect the rent in the mail. Not only does it take a lot of time to go to your mailbox or email, keep up with all the checks, and then save the checks, and the risk is even greater.
9. Use the right financing strategy
Every day, I have a word to say to anyone who is willing to listen: it is not good to deal with wrong financing strategies.
Most investors are concerned about interest rates, but there are still many issues to consider when financing a rental property.
Is there a big payment?
How long is the amortization period?
Can I only pay interest when renovating a house?
Can we replace the term loan with a credit line?
10. Effectively marketing leased properties
To my surprise, how many real estate investors still advertise in the newspapers, using the courtyard sign. Based on my experience (now 12 years), the potential tenants who pretend to be interested in your property are just nosy neighbors.
