It’s not just tenants who have trouble making payments on their homes each month. Landlords and real estate investors also often struggle with making the monthly mortgage payments on the properties that they own. If you’re in this group, here are four proactive steps you can take to avoid falling behind on your mortgage payments each month:
Do everything you can to limit the number of vacancies at your properties.
We know that this may be easier said than done, but it really is the best way to guarantee that you have enough money coming in every month to pay the mortgage on your rental properties. This means that you must keep advertising for new tenants before you think you may need them. You also need to avoid putting off the task of qualifying tenants and filling up your rental units, due to a lack of time or being focused on other things. Keeping your properties full is a key factor in the success of any REI business, so make sure you have a good routine in place to quickly handle vacancies in an efficient manner.
Work hard to find high quality tenants for your rental properties.
While keeping your properties full is critical to the success of your rental property business, finding the right tenants is as equally important. After all, what good is it to fill up your property with tenants who never pay their rent or always pay it late? Either scenario means that you won’t have the money that you need to keep your property’s mortgage up to date. Likewise, to get this action step right, you must check out your potential tenants to ensure they have good rental payment histories and a track record of limited damages with prior landlords. Taking the time to run background checks and credit checks for every rental application will help you avoid problem tenants and help keep the funds rolling in each month from your rental properties.
Look for long-term tenants during the screening process.
Even if a rental applicant has a good payment history, it doesn’t always mean that they’re the best tenant for your property. That’s because while paying the rent on time is important, how long a tenant plans to rent from you is also another key factor, when it comes to ensuring the proper cash flow to keep current with the monthly payments on your rental property.
Short-term rental agreements should be avoided whenever possible, because they cost you extra time and extra money, since you must advertise, clean, and redecorate your rentals more frequently, when you have short-term renters. Therefore, you must ask the right questions up front, when talking to potential tenants, to find out if they plan to rent your property on a long-term basis.
Always handle property maintenance issues quickly.
One of the fastest ways to run-off high-quality tenants is by being slack when it comes to maintaining your properties. Because at the end of the day, good tenants who pay their rent on-time every month naturally expect to get a quick response to any maintenance issues that come up. To keep your long-term tenants happy and willing to renew their leases at your properties when the time is due, be sure to have the proper maintenance staff in place before a small repair turns into a major emergency at one of your properties. With this, it’s important to keep in mind that the Tenant-Landlord laws in some states allow tenants to break their leases within a matter of days for outstanding repairs that make a rental uninhabitable, when the proper “Right to Cure” notice is served to the landlord and they fail to fix the problem in the required timeframe. To avoid this type of drama and potential loss of a good long-term tenant, you must be prepared to make all needed repairs in a timely manner.
Finding high quality tenants is much like searching for the right long-term romantic partner. The landlord must do most of the legwork to get the benefits of the relationship, since every real estate investor wants to maintain the value of their property and keep the mortgage paid on time. When it comes to the landlord-tenant relationship, it’s also always the small things that make a difference, in terms of attracting and keeping the best tenants in competitive rental markets. That’s why it makes good sense to always go above and beyond, to build strong relationships with your tenants from the start. Little extras, like dropping off a move-in welcome basket, offering a new tenant referral bonus program or giving tenants incentives like discounted rents for longer term leases, go a long way towards building stronger relationships with tenants, creating a win-win for both parties.
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