Top 10 Things To Do When You Have Rental Properties
Top 10 Things To Do For Rental Properties
Earlier this week I was talking to one of our investors and realized they missed an important ingredient to our Rent to Own formula (no fault to them by any means). Being so involved in Real Estate investing we’ve acquired a ton of information over the last few years by following the footprints of other successful investors.
Things we’ve learned and now do with our eyes closed is not always clear to the beginning investor plunging in for the first or even second time. I know this first hand as we’ve made our share of mistakes.
So this week we decided to revisit some of the basics but very important steps to remember when investing in Real Estate. Below are our top 10 tips, especially if you’re investing in Rent to Own properties. Think of these as necessary ingredients needed when your mom made you soup when you were sick…. important stuff right??!!
1. Deposit all your Rent Cheques
If you’re just starting out in Real Estate investing and you already have a busy lifestyle, the last thing you want to be doing is to remember to deposit your cheques at the beginning of every month. One of the strategies we use to help free up our time is to have our tenant’s give us post dated cheques for the year and hand them into the Banks. For a small fee they will automatically deposit these cheques into your account without you having to remember each and every month. This is beneficial to not only you but to the tenant as well, saving you both valuable time.
2. Visit Your Property
When you’re investing in a Rent to Own property, the maintenance and up keep are usually kept to a minimal. Your tenants move in to your property knowing they’re going to own the home in a few years and are eager to maintain your property. With that being said, it’s still important as an investor to visit your property from time to time. Since you still own the home, you want to ensure it’s being maintained.
3. Set Expectations Up Front
This is never a fun subject, but it’s something that needs to be discussed before your tenants move in. It’s important that they know when rent needs to be paid and if it’s not, you will officially notify them by proceeding with the eviction process. By not following this process things can spiral out of control very fast and before you know it, your three months deep paying for an additional mortgage. Set the ground rules up early and be very clear with your delivery.
4. Send Yearly Statements
At the end of the year, for all of our Rent to Own properties we send year statements of all the credits they earned for paying on time. If you have tenants that have had a few late payments and they see what they lost out on, it helps to re-enforce the importance of paying on time. This is such an important step to remember.
There are many insurance plans for your property. Make sure that you get the right plan and enough insurance to cover your home by talking to your Insurance agent to get the right package for you. A well designed insurance package can protect your home from losses caused by everything from fire and storms to vandalism, and personal injury and discrimination lawsuit. For a small monthly fee you can protect yourself from losing a large amount.
6. Give Them a Gift
I’m big on this one! For each of our tenants, we give them anywhere from $50 to $100 at Christmas. Now I know this may sound like a lot but, how much of your mortgage did they down this year for you? How much cash-flow are you making on a month to month basis? After you take this into consideration, you’ll see it’s not much at all. Now if you’re not big on Christmas, give them a call on their birthday or drop off a small gift. Remember you’re in a long term relationship with them, why not build a good one.
7. Keep Your Receipts
This is so important. So many people get into the habit of not keeping their receipts… trust me, you need them. Especially if you’re investing in Real Estate. There are so many things you can write off when investing into Real Estate.
8. Have a Good Accountant
#7 rolls so well into this point. If you’re investing into Real Estate, make sure you have a good accountant. I could go on and on this topic alone, so I’ll save it for another newsletter. Don’t do this on your own, you worry about investing and let your accountant worry about accounting.
9. Keep an Eye on Your Accounts
No matter how good your cash-flow may be, keep an eye on our accounts. Make sure the appropriate bank fees are coming out, the taxes are right, your home insurance is correct and your cheques aren’t bouncing.
10. Take Action
For any of you that have been following me for awhile, you know I’m big on this topic. Now I’m not saying for you to go in blindly…. do your homework and have a good understanding of what you’re getting yourself into. Once you’ve done that… just do it!! You will make mistakes along the way….. that’s normal. It’s a part of the learning process. I’ve made a ton of mistakes and I’ll make more along the way but I’ve grown so much from it.