Three Ways Tenant Communication Can Improve Your Real Estate Investment Profits
You’ve heard it said that real estate is one of the most profitable, wise and smart places to invest your money. The numbers don’t lie. When done correctly, this can be a lucrative pathway toward improved earnings. However, not every real estate investment pays off. If you don’t do your research and due diligence before sinking your hard-earned money into a property, you could wind up over your head in a money pit, ultimately losing more money than you ever see returned.
To that end, it’s important to know just how to optimize your chances for success in this realm. In most cases, this starts with ensuring great tenant communication, though this can be a tricky field to navigate. What practices work, who should you work with and how can you discern a great opportunity from a huge risk? Today, we’re discussing three methods that can help you get the most out of your real estate investment, setting you up for continued success in your next endeavor. Ready to learn more? Let’s get started!
1. Thoroughly Screen Your Tenants
In a perfect world, you’ll invest in a cost-effective fixer-upper, perform some much-needed repairs, then rent the property out to someone who will care for it as much as you do. Or, in the best case scenario, you’ll acquire a turnkey, move-in ready rental property like the kind detailed by High Return Real Estate. Either way, in return, you’ll earn a passive income that will eventually allow the home to pay for itself, and then some. While this scenario sounds ideal and is achievable, the top reason real estate investors fail to see the returns they’re expecting is a lack of willingness to thoroughly screen tenants before allowing them to take temporary ownership of a property.
Remember, as the homeowner, you’ll be the one footing the bill for any maintenance and repair costs that the home incurs. Thus, if you rent it to someone who is hard on the appliances or otherwise destructive to the property, those calls could come in more frequently than you’d expect.
Ultimately, you need tenants who will pay you in a timely manner and keep the house in top condition. Of course, it will be lived in, but there’s a difference in normal, everyday wear and tear on a home and over-the-top carelessness that could lead to long-term damage. So, take the time to review any applicant’s credit history. You can also verify their income, review their bank statements and check their criminal history. If possible, try to call past landlords to get a feel for how their experiences with this renter were.
2. Opt for Online Payments
One way to encourage your renters to miss a payment? Ask them to visit you in person to deliver a handwritten check, or request they send you one through snail mail. This leaves gaping holes of opportunity for the money to get lost in the mail, for the payment to be damaged, or for them to forget altogether.
Thanks to digitization, landlords now have more options than ever before when it comes to payment terms. To this end, why not enable quick, simple online payments? You can even discuss setting up an automatic direct draft transfer of funds on a certain date each month so the renter doesn’t even have to worry about remembering to hop online and submit the payment.
Thanks to the myriad software solutions now available to make the real estate investment journey as seamless as ever, you can set accounts like these up in less time than it would take you to physically deposit a check at the bank. When you do so, you’re not only making life simpler for yourself and your renter, but you’re also helping to remove some of the emotional stress that making such a large payment can inflict upon the other party. For many, the rent check is a significant expense and having to find a checkbook to write the amount each month can take its toll. Online payments are less direct and help take some of the emotion and stress out of the process.
3. Maintain Control of Maintenance
You might think it’s easier to allow your tenants to take over some of the routine maintenance responsibilities, such as calling the HVAC repairman for a twice-yearly systems checkup. While some might be happy to shoulder that burden, keep in mind that the chief reason most people rent is because they’re not in a position or place where they can take on traditional homeowner duties just yet. As such, if these jobs are left in their hands, there’s a good chance those important phone calls won’t get made, those repairs won’t be accomplished and the house can fall into a slow but steady progression of disarray.
This is one area in which it’s wise to go ahead and invest the time and money on your end. Sure, you could include basic homeowner tasks in your renter’s agreement, such as making sure the tenant removes the lint from the dryer trap after each use or covers the outside spigots so they don’t freeze during the wintertime. Yet, it’s wise to go ahead and make routine service calls to your property to check on those things (and others) yourself.
Want to take the guesswork out of the process? Why not create an easy way for your tenants to let you know when something needs repair or when there’s a maintenance issue to check out? You can create an online form that they can just send to you via email on their smartphone. That way, you’re notified of an event or problem as soon as it happens and can respond in real time, mitigating any major damage that could be lurking.
Making the Most of Your Real Estate Investment Today
At the end of the day, real estate investors are optimists. We want to believe that our properties will turn out for the best and that everyone we rent to has the best interest of the home at heart. While this may be true in most instance, it’s still worth taking a second look at your rental policies.
The way you interact with your tenants, how you set up payments, and the portal you choose for reporting maintenance repairs all matter. That’s why it’s helpful to embrace technology in this regard and allow software solutions to help take the grunt work and guesswork out of the issue. Listen to your gut, be as involved as possible, and facilitate seamless renter-owner communication. Then, sit back and effectively manage your rental property while you turn a profit.