Are you a property owner sitting on the fence about renting your space? If so, now could be the perfect time to turn a lucrative profit. The US housing market is experiencing some seismic shifts. Fewer and fewer people can find affordable homes to buy. Forbes contributor Ellen Paris has shared her thoughts on the subject. According to her analysis, the most popular American cities (for example, Los Angeles, New York, and Denver) are seeing the worst of the affordability crisis. Skyrocketing monthly mortgage payments are, therefore, partially responsible for the massive influx of prospects to the rental market.
Researchers at the Pew Research Center reported as much almost a year ago. The data they published suggests that more US households are renting than at any time within the last half-century. Survey results also illustrated that the grand majority of renters (72 percent) want to buy property at some point in the future. That doesn’t necessarily mean those renters can and will, though. For instance, Richard Florida at CityLab postulated that the nation has a long-term trend emerging toward greater renting versus greater homeownership. Either way, an abundance of tenants doesn’t automatically translate into greater profits.
Seasoned property managers know that tenant turnover can have a serious impact on your bottom line, regardless of how many possible replacements are in the market. Andrew Schulhof, a veteran real estate guru, explained tenant turnover and how to decrease it in his LinkedIn Pulse article. He says landlords can usually anticipate several costs as a result of turnover, especially when it’s unexpected. Examples include administrative, marketing, showing, cleaning/repairing, and application-processing costs. Multiply those by several instances of turnover, and you realize how quickly the costs can snowball.
Fortunately, Schulhof prescribes a number of tactics and techniques you could use to mitigate tenant turnover. Things such as proper tenant screening and early marketing are more proactive. Revising your legal documents and quarterly checks can sometimes be more reactive but are equally imperative. Streamlining as much as possible is always sound. You might offer a free rental application to prospects rather than charge a fee. Another option could be enabling your current tenants to pay monthly rent using an online portal instead of writing paper checks. Never underestimate the value of convenience. Time is money for most people.
Understanding that nuance can go a long way is important when it comes to business relationships. The less the relationship feels exclusively like business, the more positive the emotional associations. Jered Sturm at BiggerPockets® is one professional who genuinely understands that fact. He suggests offering welcome gifts, quarterly checks, and anniversary presents. Those tips might seem unconventional, but the logic is simple: Infuse warmth and positivity into the traditionally cold process between tenant and landlord.
But tenant turnover is never preventable. Both Schulhof and Sturm admitted that fact. That doesn’t mean preventative measures aren’t worthwhile. The focus should instead be on what else can be done to streamline the replacement process when turnover does happen. Promotion to qualified prospects is often the most difficult. Fortunately, Jimmy Moncrief at Landlordology has written the ultimate guide to market a rental property. Most helpful is his compilation of numerous online and offline promotional channels. Landlords have no shortage of choices, so the real challenge is being judicious about where you advertise.
Renting your property can clearly be a booming endeavor with prudent planning and sound judgment. It’s probably never been easier to find informative resources and relevant guidance thanks to the internet. Consider these things the next time you contemplate whether or not to rent a property.