A rental portfolio has the potential to generate a strong passive income, but what issues can get in the way?
This is an important question to ask yourself as you embark on your rental real estate journey.
Building a lucrative rental portfolio goes beyond purchasing a property. You must have a keen eye for what prospective tenants are looking for in the market. These factors include everything from property amenities to leasing contracts.
In this post, you'll learn valuable lessons on what to do (and what not to do) in rental leasing.
Finalize Your Pricing Strategy First
If you're dealing with a competitive rental market, you don't want to list your investment property with the wrong price. You need to nail down a smart pricing strategy first.
This strategy starts with a rental valuation.
You can get a free one from Income Property Advisors, Inc., for example. Simply provide your property's location, square footage, number of bedrooms and bathrooms, property type, and contact information to receive a value. You can periodically request more valuations to see how quickly the value rises.
Next, look at the property values in your neighborhood. Study metrics like appreciation rates. Research city ordinances to discover how much you can rate rental prices to keep a decent profit.
There is publicly available information online about average rent prices, but a real estate professional can expand on these values even more. The right consulting will ensure you have the right price ready to go on your listing.
Don't Overlook Tenant Screening
This next step can seriously cut into your profits if not executed properly.
One of the biggest mistakes a new real estate investor can make is undertaking their own tenant screening. Don't be fooled by online background check services that claim to provide accurate data. However, you may find yourself paying for aggregated information from unvetted social media sources.
Tenant screening data must come from verified sources of information, like national databases and government ID verification.
A property manager can verify the following data:
- A tenant's current employment
- Financial statements (bank statements, pay stubs, etc.)
- Government ID and social security numbers
- Credit score
- Past rental history
- Previous landlord experiences
Property managers will go as far as to call references to ensure the very best tenants move into your property. There's no substitute for an excellent tenant; they're necessary for high-profit margins.
Professional Marketing Matters For Rental Leasing
Step into the shoes of a prospective tenant. What points do you consider when looking for a rental property?
Price is the first factor. Then you would consider the safety and security of the home and neighborhood. This point also includes safe appliances, electrical systems, and HVAC units; you don't want to live in a space with potential health hazards.
The next data point is amenities like proximity to grocery stores, transportation, and jobs. Available parking is an important point, as well.
A property manager will inspect the rental home for repairs and upgrades so that your real estate listing photos look as appealing as possible. All amenities and benefits will be included in the listing copy, including expectations for tenants.
Start Strong
Don't wait for a major mistake to happen. Mitigate rental leasing issues beforehand by investing in property management, tenant screening, and marketing.
Let the professionals at Income Property Advisors Inc. handle the details for you. Browse our services, book an appointment, or call us today!
