Rental properties are an excellent way to beat inflation and build wealth over time. But many obstacles can prevent you from achieving your goals. One major challenge is obtaining good tenants who can help you maintain a positive cash flow year after year.
You might hear stories about landlords or property managers who needed to evict their renters after just one year because of non-payment or other violations. Records show that over 3 million eviction notices were filed in 2009 because a tenant could not pay his/her rent on time or in full. On the other hand, more than 1 million renters faced eviction for violating their lease agreement by having unauthorized pets or guests living with them without their landlord knowing.
The following are simple but effective tips to help you find good tenants and double your income in the coming years:
1. Research Your Area’s Average Credit Scores
Before showing any homes for rent, you must know the average current credit score for homes in your location by purchasing a report from one or more national credit bureaus, including Equifax, TransUnion, and Experian. This allows you to have a picture of the kind of tenants you can expect to qualify for your property based on your property’s monthly rent.
For instance, if you own a house in California that rents for $2,000/month with a credit score minimum requirement of 650+, it will most likely attract individuals with higher incomes, such as doctors and lawyers. However, if you own a duplex in Texas that rents for $900/mo and requires at least a 620 credit score, chances are it will be rented to blue-collar workers who earn an average income (at best) and may not be able to afford the additional monthly expense.
Moreover, you may want to consider renting multiple properties in one location. This way, you can save time and money while increasing your chances of finding good renters. It is best to own numerous properties in one area rather than renting out houses or apartments scattered all around town, which can cost you money in car repairs from always driving from one place to another.
For instance, if you live in Davidson, stick to renting properties in the area. This can also be helpful if you plan to hire a property management in Davidson.
2. Ensure Your Prospective Tenant Can Afford Your Rental Property
No matter how great your property may look to people who are considering living there, you are both wasting your time if they don’t meet your credit score requirements. Also, even if there is a chance they may qualify for a lower credit score, avoid showing anything until after pre-approval. This allows you to eliminate potential renters who only have an income stream to afford less than what your rental home requires in monthly rent payment.
3. Always Check Their Credit Score, Not Only Their Credit Report
Credit reports could cause many people to be denied access to a new apartment or rented house, even though there might be nothing that could prevent them from being approved for tenancy. In some cases, tenant applications are returned due to simple misspellings of names or incorrect ages listed on the credit report. But their actual applicant’s credit score is more than enough to ignore such mistakes.
Be sure that you always check a prospective tenant’s credit score and not just their credit report. Doing so will give you an acceptable limit for who may qualify to rent your property and who should be avoided entirely.
4. Use a Property Management Company
Most people don’t know that they can benefit from property management companies like these local property managers in Charlotte NC. There are many reasons why working with these companies is your best decision. The most important reason is a liability. If your renter gets hurt on the property and sues you, there’s no way you could ever come close to affording what they’d win in court.
Here are some benefits of hiring a property management company for your rental investments:
- They have insurance
- They manage your tenants
- They inspect your units
- They manage repairs
- They manage rent collection
- They handle evictions
- They handle accounting
- They make leases easier
- They deal with legal matters
- They look for tenants
- They do everything else you’d rather not do
Choosing the Right Property Manager
Many owners hire a company specializing in tenant placement or real estate asset management rather than an individual. Finding out the firm’s experience and connections with local lenders and insurance agents can be extremely helpful if this is your case. Some of the most experienced companies specialize in certain market segments, such as high-end rentals or student housing.
Start looking at their website for information. Most companies list the services they offer and any certifications or specialties. A client portal can sometimes be helpful as well, depending on what you’re looking for. If you’re looking for a reputable agency in Charlotte, visit Alarca property management to know more about Charlotte property management application requirements.