Things To Consider When Renting Your Property Out
Here are six steps you need to take before renting out your property.
Today we’re continuing our series on the B.R.R.R.R. method. We’ve already covered the first two steps, buying and renovating, so now we need to talk about the third R: rent. At this point, you should have already purchased a property and renovated it. Now it’s time to start extracting value. Let’s go over the steps to get the most out of your rental property:
1. Price the rent at market value. You should consider the improvements you made to the property so that you don’t underprice your property. At the same time, you don't want to overprice the rent or people won't want to move in. It’s probably a good idea to speak with an agent about what price point works for your property.
2. Complete the necessary registrations. Based on where your rental is located, you’ll need to consider local, city, and county registrations. If it was built before 1978, you'll need a lead-based paint registration as well. An inspection might also be a good idea. The important thing to remember is that all of these take time and money. Make sure everything fits within your timeline.
3. Decide whether to self-manage or hire a property management company. Both options have pros and cons. If you self-manage, you can save a little money, but you’re on the hook for repairs, collecting rent, evictions, and more. While you pay a fee for a property management company, all you have to worry about is collecting checks.
4. Screen your tenants. We believe that credit isn’t everything, especially for rental tenants. Instead, talk to your potential tenants’ past landlords. Find out how long they stay in properties, how many issues they have, etc.
"Property management companies make things easy, but your cash flow will be smaller. "
5. Do you want to rent long term or short term? The advantage of renting short term is that you can probably charge more for rent. However, you’ll have to worry about more tenant turnover. Meanwhile, long-term rentals will have to be closer to market price, but you will likely have more stability.
6. Have systems in place for rent collection and repairs. If you have a property manager, you don’t have to worry about this. If you don’t, make sure you have a system for when something goes wrong. There are some great online resources about creating a repair system, so reach out to us if you want to learn more.
If you have questions about today’s topic, please call or email us. We are always willing to help!