- Keeping the price higher helps weed out some of the bad tenants that are looking for desperate owners that will take anyone.
- Obviously keeping your rents higher give you a little extra money every month, but the bigger picture is that if you start the rent higher and do small rent increases every year, it makes the value of your property worth much more. An extra $10 per month on your property is only $120 per year, but it adds about $1200 of property value (this will be more or less depending on area). I almost never get a decrease in my tax or water bill for a property. Your bills to own the property increase and so should the rents.
- This is really important when you get a large number of units. If you raise your rents by just $10 a month every year and you have 100 units, that is $1000 extra income every month, which works out to be $12,000 per year and it would add around $120,000 of value to your properties if you were to re-finance them or sell them.
- The other problem is that when you don't have regular rent increases, many times you start to feel like you can't raise the rent otherwise they may move on you. I know someone who has lived in the same property for 25 years with no rent increase. Their rent is $250 for a 2 bedroom, today's market rent for that area should be $600 per month. That is $350 they are missing a month or $4,200 a year. The property does need a lot of repairs, but with an extra $4,200 a year, the owners could have made a lot of repairs and it would not have cost them anything extra.
- The other thing to remember is that if you really want to get top rents out of your property, you should make them nice and keep them updated.
I have always wondered about how people price a property for rent. It has been my experience that what you price a property can help with screening your tenants. Sometime I will ask people that have their properties well below market value why they have the rent so low and they almost always tell me the same answer "I keep the rents low to keep it rented". Although sometimes I can see their point, for the most part this is just untrue and it hurts them much more than helps. When I price a property in a new area, I will look to see what everyone has there properties listed at for comparable properties and I will try to stay in the high range of what is listed. To find these other rental properties I look a lot at Craigslist, Trulia, and Zillow. Below are the reasons for keeping prices in the mid to high range:
Finding good tenants is one of the most important parts of owning rental properties. The tenants you put in can make or break your rental property. So lets get to the point, how do you find these tenants? In my business, I use the following:
Yard Signs tend to be a waste of time for me because the bad calls received far outweigh the good calls. Instead of yard signs, put a for rent sign in the window with the amount of bedrooms and price.
You can advertise your apartment or house in your local city office that handles section 8 housing, they usually have a binder you can put your flyer in. If you have a specific property that requires you to rent to low income tenants, I would suggest this option, but this is something that I don't do often.
Newspaper? Yes, there are still people in this world that use the newspaper. Many times the newspaper works well in smaller communities and for properties that may be a good fit for elderly or handicap tenants. Some lower income tenants don't always have access to the internet so the newspaper can help you reach them as well.
Many times you can find local groups on Facebook where you can market your properties. This can be a great way to find tenants, but you may find disgruntled past tenants here. If the group has a good moderator it will help to eliminate most problems.
The most popular form of advertising is Craigslist. What's not to love about free and easy marketing? I love to use craigslist, a couple of quick tips are:
Trulia, Zillow, Hot Pads, and any other sites that market rentals are a good source, especially for people new to the area. I find that most of these online leads are out of town people just moving to the area. The biggest thing with the online sites is to return calls and emails ASAP.
The other bit of advice I would give anyone about marketing is to return phone calls and emails as quickly as possible. It's pretty easy to make the phone ring, where I see most people fail is neglecting to respond to people in a timely fashion.
The first thing I tell anyone about property management is to document everything and take pictures. Communicating with tenants via email or text is a great way to have everything in writing. If it comes to the point that you need to evict a tenant, you will need to follow the law and time frames. A good place to get more information and forms is http://wcca.wicourts.gov or http://www.tenantresourcecenter.org.
I am not, and can not give legal advice, and every county and State is a little different, but in WI the process typically goes like this: