1.-Establish the correct rental fee
- In rental properties, your main income is the rental fee, so be sure to estimate and establish a fair and attractive market price so that you can rent the property immediately.
- Take into consideration recent market comparables, which will give you the real rental value of your property.
- Give more weight to the properties that were rented and not to those that are still available. If you do not have access to this information in your market, it is advisable to seek the advice of an expert broker.
- Wanting to rent $100 above market can cause the unit to go months without being rented, which in the long run generates greater financial losses.
2.-The rental market does not have a direct relationship to the purchase market
- It is very common to hear from clients that we must raise the rent because the condominium (expenses/administration) has gone up or because repairs have been made or simply because the value of the properties for sale/purchase has increased. However, the prices that tenants pay do not have a direct relationship with the owner’s expenses; these prices correspond to a very specific rental market in a city, community, sub-community or building.
3.-Consider renewing contracts
Although it is true that there are several elements to take into account when renewing the contract with a tenant, from a financial point of view, renewing is usually the best decision; with renewal you would be avoiding costs such as:
- Improvements to the property to put back on the market (painting, carpet cleaning, etc.).
- Time to find a tenant, pre-qualify them, negotiate a contract and the association application phase usually translates into weeks or months without generating income.
- Commissions may be higher on a first contract than on renewals.
4.-If the tenant is good, try to keep him
- One of the most delicate elements of rental properties is the relationship with the tenant. If the person pays on time, maintains the property well, is not constantly pestering you for minor repairs, and is not constantly receiving complaints from neighbors or the association, he is an excellent candidate to renovate and keep happy.
- It is very common as a landlord to insist on increasing the rent and be willing to leave “good tenants” for not reaching an agreement on the increase, however, before leaving a good tenant, always think that it is a lottery who will be your next tenant.
5.-Evaluate the tenant
Some aspects to consider:
- Proof of income: request support showing that you will be able to cover the property payments, such as:
- latest payroll receipts or income (w2 or 1099).
- latest tax returns.
- bank account statement.
- Credit report:
- request a credit report to see the history of how you have paid your bills, in the United States you can use as a reference:
- less than 579 (bad) in the lowest 20% of the nation.
- 580 to 669 (just) below the nation’s average.
- 670 to 739 (good) nation average.
- 740 to 799 (very good) in the top 40% of the nation.
- 800 or more (exceptional) in the top 20% of the nation.
- It should be noted that if the person is a foreigner and does not have a social security number, they will not have a credit report.
- It is important to determine in the report if you have had any type of eviction.
- request a credit report to see the history of how you have paid your bills, in the United States you can use as a reference:
- Police Report: it provides peace of mind to know that this person does not have any police record. It is a very easy and quick procedure to achieve.
- References from former owners where the person has lived: it can be a letter, or place the information on the application form where you indicate the telephone number so that we can call and ask for the references. Although they are telephone references, they give us important feedback.
- Also remember that if your property is in a condominium which needs approval before your tenant moves in, the person will also go through this filter which will give you double protection. However, this does not mean we should stop requesting all of the above for our security and also for that of our investment.
