Owning rental properties that produce income is without question a very profitable and worthwhile achievement. Most folks, who buy properties and stick with it, end up a whole lot richer than those who don’t. I’m a good example of this, but I must tell you; there is definitely a catch to owning rental properties. The catch is – if you do not quickly learn how to operate your rentals and handle the tenants who live inside them, you’ll think a lot more about suicide than counting your money! Getting rich is a very strong motivation and will certainly carry you through some rough times. But, tenants who don’t play by your rules can have a devastating effect on your bank account, as well as your quality of life as an investor.
Most new investors seriously underestimate how important it is to learn landlording skills. Many so-called “Professional Property Managers” suffer from the same affliction. However, I can forgive them because they’re simply working for fees with little prospect of ever becoming wealthy. We investors, on the other hand, have high hopes of becoming wealthy or at least as well off as our neighbor down the street who drives the Mercedes. I have long supported the proposition that “Mom and Pop” investors must learn good landlording skills in order to earn any serious real estate profits.
Operating Properties Like a Business
The first rule of good landlording is to treat it exactly like you would any other well-run business. Managing your property is a business and the tenants are your customers. It’s your job, as a landlord, to provide the best product (houses) and the best possible service you can. If you do this better than your competition, obviously you’ll enjoy much greater success. Customers (tenants) will naturally beat a pathway to your doorstep when they feel you offer the most value for their housing dollar.
To make sure you are ready for the kind of business you want and expect, you must try hard to offer your customer the best value in the rental business. That means a clean house or apartment, priced ideally at ten to twenty dollars below the competition. Ten or twenty dollars may not seem like much, but for renters who compare houses and watch their expenses closely, it’s enough to swing many deals your way. It will also keep your houses full of tenants, while the other guys carry the vacancies.
How can you tell if you’re $10 to $20 below the competition? The best way I know is to study your local classified ads, “Houses Or Apartment For Rent”, then drive out and see what your competition is offering at comparable rents. Adjust yours up or down, according to what you observe.
Upgrades Pay Off
When I first started to study my rental market, I quickly discovered that freshly painted houses (inside) with attractive window coverings were not all that commonplace for houses in the moderate to lower rent range. I immediately made it my operating rule to keep my houses freshly painted and dress the windows with inexpensive curtains, drapes or mini-blinds. That rule has always made money for me and it’s a perfect example of a good business decision. Another decision I made years ago was to build three foot high white picket fences in front of my houses where possible. I discovered that renters are turned on by these “homey-looking” fences and are willing to pay more rent to have them. By providing picket fences, I not only attract more customers than my competition, but I get higher rents for the same size house. My fences pay me back ten dollars for every dollar I spend to build them.
Jay P. DeCima, “Fixer Jay”, lives in Northern California where he operates multiple rental properties. With nearly 50 years experience, he’s a street-wise landlord and best-selling real estate author. Jay’s recession-proof, adding value techniques are ideally suited for small-time, Mom & Pop investors seeking faster paydays and financial security. Jay’s self-help books have been voted #1 by both the Los Angeles Times and Chicago Sun during the past 12 years. FixerJay.com. Readers are invited to download Fixer Jay’s latest free how-to eBook, LIVING THE DREAM at: www.bit.ly/aoa-2.