Understanding the Life Cycle of a Rental Property
For new and aspiring real estate investors taking on the job of landlord can initially be highly intimidating and daunting. However, it doesn’t have to stay that way forever. Like pretty much any other situation, time, planning, a rational state of mind and excellent communication skills can make all the difference as you make your way through the landlord learning curve.
A rental or investment property’s life cycle can be separated into two primary parts, these are the turnover process and the tenancy period. Let’s take a closer look.
Part 1: The Turnover Process
The turnover process is a fairly common term that is known amongst property managers and real estate investors. It refers to the period of time in which tenants do not occupy an investment property. This most commonly this happens when current tenants decide for whatever reason not to renew the lease. However, it can also refer to the time between owners closing a deal on a new property and when they end up getting tenants to move in.
Proper Maintenance
Before the property is out back on the market it is vital that any damages that make it uninhabitable, or that might negatively impact the rent are taken care of. Sometimes eager landlords jump the gun and advertise their property before it’s ready to generate interest, but this takes the tool of reference pricing out of their hands as an owner. The better a tenant’s first impression is of a property the higher rent rate they will be willing to pay, so it is more profitable in the long term to handle maintenance before allowing tenants to set the price bar in their minds.
Part 2: Life with Tenants
Sadly, it is a common misconception that the work that is involved in being a landlord comes to an end once the tenants are moved in. However, it is just not the case. The truth is that owning a property requires someone, whether they are an individual owner or a property management company, to do more than merely collecting rent checks on the first of the month. Most property owners think of their properties or units as investments, and therefore want to protect their financial investment, and make sure that they continue to drive profit.
Buying in today’s market is no easy task, so when one is finally able to reach the milestone of being able to purchase a rental property they naturally want to squeeze every possible penny out of it regardless of what the money is going towards. Most investors are also well aware of the fact that while they are dealing with a business, and out to make money their investment property is also someone’s home. I need to be taken care of and safe.
Routine Maintenance and Rent Collection
Aside from periodically checking in with tenants about their living experience and any concerns that they might have, there are two other primary concerns for landlords during the tenancy period. These are routine maintenance and rent collection. Generally, maintenance is handled on a case by case basis, However, applying the same respectful people skills above should resolve any incidents without too much difficulty.If the issue does not make the property unsafe or uninhabitable and the landlord chooses not to fix it, then giving the tenant a clear explanation of why the decision was made will help keep the tenant-landlord relationship healthy.
Rent collection can be made easier, again, by laying out clear expectations in advance.