As we continue our conversation around “Mindfulness , Money and conscious Landlording” my intention is to continue to shed light on how we, as landlords, can run a sustainable, triple bottom line (People, Planet, Profit) real estate operation while remaining sensitive to the needs of our tenants. There is a stigma attached to the role of landlord – that stereotypical ‘slum lord’ who skimps on improvements and lets his properties deteriorate while he increases the rent with every turnover. But I’m not talking about that. I’m guessing you are pretty good at what you do with your rental properties. But could you do better?
Landlords should always be self-reflective – adapting to the changing needs of tenants and thinking about ways to enhance the rental experience; both in terms of the tenant and the income potential of your rental.
I’d like you to answer the following questions:
Do you calendar at least one visit to your properties every year?
Sure, the checks role in and sometimes you need to hire a contractor for a routine service call – but what is really going on with your investments and your tenants?
It’s easy for landlords to fall into a false sense of security. But that would be a grave mistake.
Your standards are, after all, very different to your tenants. Maybe the tenant doesn’t care that there is a water leak in the bathroom, or is afraid to mention the rodent issue for fear of retribution. Lots of renters in a tight market want to be invisible for fear of a rent increase or an eviction. And likely, they don’t care about the long-term impact a leak or pests have on a property they will be leaving in a matter of months. But you do!
Visiting your tenant – if done right – also improves your relationship. If you periodically schedule a visit, or better yet, state in the lease that you anticipate semi-annual property visits to ensure the property stays up to the standard it was upon the lease signing, the tenant is likely to consider you to be both reliable and somebody who cares about the safety and comfort of your tenants. This could equal longer term rentals and less wear on the property. An actual inspection, and not just a phone call, affords you the opportunity to thoroughly review the current state of the property: paintwork, broken or damaged tiles or lighting – small issues that inform your judgment of what to do next.
Are you maximizing your income potential?
One of the fundamental pillars of effective property management is understanding whether your property is earning as much as it should. Are you staying in touch with the market with the latest services from Apartment List?
Given that local property markets can radically change over short periods of time, it might be worth taking the time to learn whether your rental rate is consistent with other properties in your area.
Are you aware of improvements to your local area? For instance, a new employer may have moved into the area which now attracts high-income jobs. This, in turn, can have a profound impact on rental value. Make a point to check out the market at least once per year, or engage the services of a property management consultant to assess your property’s current value.
Are there one or two improvements you could make at the next turnover to dramatically increase your rental income?
It feels as though every rental I’ve seen recently has an open floorplan, more windows than walls, a granite kitchen island with a gas range – and a much higher rent to match. These costly improvements will pay for themselves with higher rent, paid by tenants who cherish the improvements and are happy with their more luxurious environments. This will result in less turnover, less wear, and a better relationship for you.
Are you capitalizing on optimal mortgage rates?
Assuming your property has a mortgage, it would be smart to consider your buy-to-lease mortgage rate. You may, for instance, be able to secure a more optimum rate elsewhere with a different provider. Consider opting for a better rate – either through negotiating with the same provider or by switching to an alternative mortgage provider.
Are you SMART?
Are you using the latest apps and devices to keep your home safe and secure by installing keyless locks, temperature controls, noise monitoring and even the monitoring of carbon dioxide levels, which can tip you off to instances of over-occupancy.
Are you looking at innovative rental options?
In 2018, we saw a number of developments involving traditional property managers joining forces with real estate developers and agents to provide new solutions. For example, Airbnb launched Backyard, an initiative moving the platform into building physical homes that accommodate flexible and shared living arrangements, in addition to providing its tradition of short-term stays. And the pop-up WhyHotel straddles the line of residence and Airbnb by working with real estate developers to turn un-leased units into furnished hotel units. Consider innovative ways to serve your market!
Are you saving for a rainy day?
Even in today’s boom rental market, we must anticipate a bust will come. Don’t be caught off guard by not saving enough to repair property damages or going without a tenant for months at a time in your luxury apartment. If you are part of the short-term rental market, prepare for tax changes and a growing glut in the market as the long-term rental owners continue to turn to the short-term rental market for fast and furious profits. A continued overload in this market will force landlords to be ever more creative and may result in the lowering of rental rates. Don’t let this catch you off guard.
Conclusion
The bottom line is stay aware and vigilant! Nothing is permanent! Everything, including including rent, real estate values, interest rates, people’s moods, and every opportunity in the market place will ebb and flow. If you hang on too tight it will feel like arope burn, if you are too lax and out of touch, the rug may be pulled out from underneath your feet and you can loose your nest egg.
My advice is to find the balance! Where is the middle way for you?