From the very start of a landlord/tenant relationship, you want to keep the relationship cordial and professional. Never assume that because a tenant is nice and friendly that this is a tenant that will be profitable for you. Here are some tips to follow in establishing a profitable landlord/tenant relationship:
Starting with the Interview Process
From the onset, you need to establish authority, let your tenants know what to expect and what type of documentation and financial requirements you require. You are looking for tenants that have good credit ratings, long term stable employment and a decent income so that they can afford your rent. In today's economic times, there is no certainty about anyone, but keeping to your guidelines will help to ensure you choose a good tenant that will stay for awhile and pay their rent on time.
Offer Incentives in Tough Economic Times
You may want to offer some incentives to attract good tenants in tough economic times such as one or two months free rent. Also, to keep existing tenants, you may want to offer paying for building cable or Internet services.
Negotiating a Strong Lease
The following items should be included in your lease negotiations:
1. Rent escalator clauses instead of arbitrarily raising rents. This way tenants are aware of what to expect, can budget for the increase, and there will not be any objections.
2. When doing improvements to the property, make improvements that your tenants will find attractive. Tenants will pay more and stay longer if they feel they are getting more for their money. Cosmetic improvements such as fresh paint, new carpet and new appliances all help to increase rental income and keep tenants happy. Also adding amenities, if possible, will make your property stand out from competitors and help to keep long-term tenants..
3. Don't dismiss renting to Section 8 tenants. The government will subsidize the tenant's rent, and you always get paid on time. The tenants know that they have to pay their rent on time or they will lose their subsidy. Most Section 8 tenants have families so they are interested in finding properties in good school systems, and do not want to keep moving around. Your chances of keeping them longer are higher.
4. Don't be afraid to use Realtors or rental agents to advertise and screen your tenants. This way you will attract the right tenants from the very beginning.
5. Add other income generating features to the property such as coin-operated laundry or card reader laundry machines. If you allow pets, then get pet deposits for each pet. Sometimes tenants need extra storage. If you have the room, then charge a storage locker fee. These days parking is at a premium in many areas, especially if your property is located in the city. If you have extra parking available on your property, then charge a fee for each additional parking space. If your property is large enough, you may want to add a common area business conference room with a computer, fax and copier and charge for those services as well.
Avoid the Vacancy Factor
By following the above tips, it should help you to avoid the vacancy factor which cuts into your profitability. Every time a tenant moves out you have to repair the unit, paint and you may have to put in new carpet. Since there is a lot of competition in today's rental market you need to keep your tenants happy. Also with affordable housing prices, you are competing with the fact that many renters are choosing to buy right now because it's cheaper for them. So offering incentives is a smart way to go, and making improvements that tenants find attractive will help to keep them remaining longer. It takes time to build long term profitable relationships and trust. Good tenants are gold. So make wise choices and treat them right.