Treat Your Rental Property Like An Asset
By JD Esajian on September 20, 2013
One of the most widely discussed topics in real estate regards the acquisition of more assets than liabilities. The mistake that investors make, both new and old, is not distinguishing between the two. You may think that the physical rental property itself is the money maker, but in reality, it is the people inside that should be considered. You can spend weeks and months acquiring the perfect house to rent, but if you spend only a few hours finding a tenant, your asset will quickly turn into a liability.
Every rental property is only as good as the tenants residing within it. This is why the screening process is so important. You are trusting your property, and the income it produces, in the hands of strangers. If you ask any landlord who has gone through an eviction, or has had to deal with property damage after tenants move out, they can tell you what a damaging situation it can be. Even if you are approaching a vacancy and time is of the essence, you still need to be diligent with your screening efforts. Going a few weeks, or even a month, without collecting rent can put you in a short term financial strain. However, dealing with a tenant that doesn’t pay after a month two will cause serious long term effects.
Your screening process should be very similar to the application you may have gone through to purchase the property itself. You need to find out employment, income and any prior housing issues. You have every right to call the previous landlord or any other references they supply. Sure, this can be a lot of work if you run into a few bad tenants that are trying to pull one over on you. However, it is better to know sooner rather than later.
Not every tenant is going to be a bad one. If you have a good tenant (and most of them are), you need to take care of them. This does not mean that you have to give them breaks on the rent or soften your stance on house policies, but you should treat them and the property with great care. If something needs repairing or replacing, don’t make them wait to do so. It may be an inconvenience to get someone up to the house the same day, but it is worth your 30 minutes on the phone to do so. Tenants will remember this and go out of their way to take care of the property and pay you on time.
There are many potential issues with your property that can be avoided. Most of them have to do with preventative maintenance. Provide seasonal checkups on your furnace and hot water heater. Clean the oil tank and the chimney once a year. These little things may not seem like much, but over time, they will eventually cause you problems. You need your asset (your property) to keep producing income without additional expenses for as long as possible. Simply hoping you have a good tenant and that your property holds up is not enough. If you take care of your tenant and your property, they will take care of you.