07 Aug How to Rent Out Your Property
How to Rent Out Your Property? This is the story of two investors—one named “Jerry” (to protect the innocent) and one named Sarah (because that’s her real name). Let’s make sure your rental experience is a lot like Sarah’s and not as much like Jerry’s.
Both rented out their homes when they moved on to bigger and better properties. But Jerry ended up hating the entire experience. His tenants didn’t pay rent on time, trashed the home, caused a bunch of damage, and made life miserable for Jerry.
Sarah, on the other hand, had great tenants. They took care of the property, never woke up Sarah in the middle of the night, and when they finally moved out, the home looked even better than when they moved in.
So, was it luck? Not a chance. Sarah followed the five tips I’m about to share with you.
Top 5 Tips for Successful Rentals
1. Screen your tenant. Your tenant will make or break your deal, so you need to do the work up front to ensure a great tenant. You can hire a real estate agent to do this for you, or you can do it yourself. Place ads, run a background check, and make sure they have stable income and no evictions.
I know it can be tempting to rent out to someone who you like and to trust your gut. But this isn’t a hobby! This is the care of your home and your someday retirement and your future wealth.
2. Set clear expectations for your tenant. Have you ever told a kid to go clean their room, then they shove everything under the bed and proudly declare they’re done? Technically, they might be right if you didn’t set clear expectations for what you wanted. Therefore, you didn’t get the result you needed.
The same is true for tenants. You have to lay out clear expectations for what your business relationship is going to look like. For most landlords, this means using a solid lease agreement and onboarding the tenant correctly. Let them know what an emergency is and what it is not. Let them know when and how to contact you, and what the expectations are for rent. They also need to know what happens if they don’t pay.
Trust me, setting expectations up front is going to save you years of trouble down the road.
3. Develop sound systems. I’m not talking about speakers. I mean solid, repeatable processes in your business that make things run. What will you do when a tenant pays rent late? What’s that system look like? How do they pay rent in general?
Systemize your business in order to work much, much less. This applies to every business owner, whether you own a McDonald’s or you’re renting your home.
4. Keep reserves. One of the reasons landlords despair is because they fail to prepare. Is that cheesy? Sure. But you know what’s not cheesy? Having money set aside for a rainy day. Because guess what? Stuff breaks. A lot.
Last week, the water heater went out on one of my rentals. There goes a few hundred bucks—right down the drain. But since I expect stuff like that to happen, I set aside reserves. Those things never kill me. It’s just the cost of doing business.
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5. Outsource what you don’t like. You want to know what one of the stupidest things I ever did in real estate was? It nearly ended my real estate investment career before it ever began, which would’ve been a shame.
Because I wanted to do everything myself, I managed the property, took the phone calls, found the tenants, fixed the stuff, collected the rent—and I hated it! I just wasn’t that good at it, and it didn’t bring energy into my life.
So eventually I got smart, and I hired a property manager. And since that day, my landlording has become 100,000 times easier. Now my manager does all the steps we’ve been talking about today, so I don’t have to. Yes, I pay them something, but the cost is well worth it.
If you’re willing to implement the tips in this video, you’ll probably have a great landlord experience. And that’s what I want for you! But if not and some of the things here sound like something you won’t do, outsource it.
Being a landlord doesn’t have to feel like a drag. You don’t have to be like my friend Jerry; you can be like Sarah and own a great, profitable rental property. It might just end up being a perfect foundation for future investments.