An investment property can be a great source of extra income, but it can admittedly be a source of extra stress. To keep things running smoothly, there are several things you should bear in mind.
In Part 1 of this two-part article, our Tampa condominium property management team covered prescreening your tenants and minimizing turnover. In Part 2, we will discuss choosing the right insurance, determining the ideal rent price, and enforcing late fees.
Choose the Proper Insurance
If you read the first half of this article, you already know that a stitch in time saves nine! This cautious mindset applies to selecting your insurance just as much as it applies to selecting your renters.
Remember that one lawsuit could not only negate the profits you’ve gained from your investment property, but even drain your entire bank account. Landlord liability insurance may cost extra, but it can also save you much more potential money and heartache down the road.
In the event that you are moving out of your personal home and renting it out, remember that you can switch to a structure-only policy. There is no need to insure your renter’s personal belongings and the change could save you around $25-$50 per month.
Determine the Ideal Rent Price
One of the best ways to prevent vacancy (especially if your property is not in a high-demand area) is to offer a great deal. If you find yourself struggling to rent out your property, it may be time to examine your price point.
Remember that each month your place stands empty, you are losing 8.3 percent of your annual revenue. This means that it would be better to rent one month faster for 5 percent less than your original rent price than it would be to let the place stand empty.
That said, don’t be afraid to increase the rent when needed. Rent increases can be tricky territory, but if your prices are still competitive, a satisfied tenant will usually stay. After all, moving costs them money too!
If a tenant feels he or she could do better by moving (even with the cost of the move factored in), then the increase might be too much. Make sure to conduct research on rent prices in your area to evaluate whether your price is appealing and fair to both parties.
Enforce Late Fees
An investment property is a business, and it is your tenant’s responsibility to pay rent on time. Their failure to do so costs you extra time and stress, so don’t feel guilty about charging for it. This transaction may not always be pleasant, but you and your renter signed a contract which you are both responsible for following.