Should you offer a deal to find new tenants?

Written by Holly Welles on . Posted in edited, For Landlords, Income Ideas, Maintenance & Renovations, Move-in/Move-out, paid, Rent & Expenses, Rental Advertising, Step 5 - List, Advertise & Show

incentivesWhen your property can’t seem to keep reliable tenants, you might start to consider ways of sweetening the deal, such as offering incentives.

Your property may be great, but that doesn’t mean you’re immune to bouts of bad luck with tenants, increased competition, and environmental nuisances like neighborhood construction projects. When the cards are stacked against you, a discount can help speed up the tenant search and reduce the negative financial effects of vacancies.

The benefit of filling your space may very well be worth the added expense, but make sure you first do a cost-benefit analysis by making sure adding an incentive won’t make your total expenses greater than your total income.

Here are seven practical tips and techniques.

1. Reduce your fees

Review your contract to see if you can be flexible with some of your listed fees. Tenants who review your agreement are likelier to sign on the dotted line if they don’t have to factor an excessive amount of additional costs into their budget. For instance, if you charge for amenities such as laundry or parking, the cost of waiving those fees may be negligible compared to the benefit of winning over a reliable tenant.

If you can manage without the extra income, waive the application fee for background and credit checks. Note that if you use Cozy, applicants are automatically charged for this, but you might apply this charge toward first month’s rent as a way to waive the application fee.

Remember that you’re trying to attract tenants. Applicants have a greater justification for renting with you if they feel like they’re getting a deal they couldn’t find elsewhere. The loss in fee collection is minimal compared to the vacuum of an unoccupied apartment draining your resources.

Of course, make sure that you trust the potential tenant and your screening process before going down this route.

Related: Should I raise the rent on a good tenant?

2. Offer discounted rates

Discounted rates are clearly attractive to potential tenants, but this solution requires some careful math on your end.

Evaluate your expenses and the rates offered by your competition. Compare the costs of offering a monthly reduction against those of an extended vacancy, making sure that your property is still profitable with the deal you offer. Do you have the room to lower your rates if it means signing a tenant more quickly?

You could also offer discounts in return for more convenience. If a tenant can pay rent each month through automatic electronic payments rather than physical checks, for example, you can offer a rent reduction for making your financial life a little easier.

3. Consider a longer or shorter lease

Another way you may discount rates is to offer an extended lease for a lower monthly rate. The longer renters stay with you, the more your risk of extended vacancies is reduced.

The point of an extended lease is to keep your renters making regular contributions to your business. Keep an eye on your local market and any proposed tax changes to assess the risk of settling into a longer-term agreement. While you’ll receive less money for your unit, it may prove more consistent and reliable down the road.

On the other hand, some tenants may not be sure if they’ll be sticking around for a full year. If you need to fill a vacancy now, offering a shorter lease that allows for tenant flexibility may prove beneficial. This is especially true if you’re trying to find a tenant in an off-season. If the shorter lease ends in the summer, for example, you’ll have an easier time finding a more long-term renter.

4. Create more flexible terms

Renting an apartment is an enormous commitment, and a strict lease can turn otherwise excited applicants away. If you relax the terms of your agreement, applicants might feel more secure in deciding to sign with you. And there are small, inexpensive changes you can make to your contract to improve its appeal.

Offer a deal to find new tenants who may be perfectly great renters but crave flexibility that other landlords lack. Pet-friendly apartments are enticing to animal lovers searching for a place that accepts their furry friend. Permission to decorate the property may win some prospective tenants over. Others will find an early lease termination clause appealing, giving them a degree of freedom unavailable from your competitors.

Related: Pet deposits, pet fees and pet rent – what’s the difference?

5. Offer upgrades

If you can’t swing a rate reduction, property upgrades can be a powerful incentive for new tenants. Replacing an old oven with a newer model, painting the walls a more modern color, or increasing storage might win over tenants looking for a fresher living space. Property upgrades create value for you, too, since they will make your rental more attractive for years to come.

Be careful not to overspend on a project that will eat away at your profits. After all, you’re still responsible for all maintenance costs down the line. You don’t need to offer lavish upgrades to appeal to new tenants when simple improvements can make an impact. Something as simple as installing more shelving can please a renter without extending your regular budget for new projects.

Related: 7 Affordable Upgrades for Your Rental Properties

6. Put together a gift basket

For those new tenants who have recently signed a lease, welcoming them to your building with a gift basket can be a great first step toward building a friendship. Renters who feel a closer connection with their landlord are more likely to renew their contract once it expires.

It doesn’t have to cost a lot to look like a nice gesture. Gift cards to local restaurants or the movie theatre, food, or a bottle of wine are all possible options when stocking your gift basket. An edible arrangement can make a good impression on your tenants.

7. Provide a free first month

At first glance, it seems like a ridiculous ask of any landlord. Who in their right mind would sacrifice an entire month’s rent? But consider the money lost on an already vacant unit that’s accruing nothing but dust, and a month of waived rent is well worth the income that will begin to flow in afterward.

Related: 3 reasons you might not want to collect a security deposit

When does offering a deal become a gimmick?

Some potential renters are wary of deals, seeing them as “gimmicks” that a landlord uses to attract the naive and gullible. After all, if the landlord has to offer a deal to find new tenants who will stick around, they might think the property suffers from an issue not explicitly advertised.

This is particularly relevant to No. 5 above. Densely crowded urban areas with high rent prices often have apartments that advertise a free month’s rent in exchange for signing a lease. While this isn’t misleading, these concessions can lead tenants to enter an agreement they’re unable to manage.

As a landlord, you need to fill your rentals. The fortunate news is that there are many ways to accomplish this task. As long as you do it with respect and fairness to everyone involved, you’re well on your way toward managing a happy, busy property.

Top 3 tricks landlords should steal from Airbnb hosts (but aren’t!)

Written by Sarah Block on . Posted in edited, For Landlords, Income Ideas, Move-in/Move-out, paid, Rental Advertising

Tricks to learn from AirbnbWhen you go on vacation, you expect an experience. Airbnb hosts and other vacation rental owners spend a lot of time on that point.

To stay in demand, vacation rental owners need to understand how to create a great experience for their customers. This keeps their occupancy high, their rental in demand, and their nightly rate at a premium. By thinking like a vacation rental host, landlords can reduce tenant turnover, keep their units in demand, and charge more for rent.

To level-up their business, landlords should provide great customer service and offer tenant “bonuses” to reduce turnover and increase rent. Below are the top three tricks that long-term landlords should steal from Airbnb hosts.

1. Amazing Communication

The top Airbnb hosts have high communication rates. Furthermore, Super Hosts have a minimum of a 90% response rate. How can you replicate this?

  • Use Cozy’s maintenance ticket system to quickly respond to repair issues.
  • Respond quickly when you have requests for a unit showing.
  • Show future tenants how responsive you are by having current and former tenants review your rental property on Google Maps or your property website.

In fact, 82% of Americans at least sometimes seek out reviews before making any kind of purchase. Your prospective tenant will feel more at ease about entering a year-long commitment with you if they can view reviews beforehand. In addition, from the beginning, you are showing them that their time matters.

2. Welcome Package

A welcome package is an essential part of the experience of staying in a vacation rental. It tells guests about the property, local restaurants, and anything else they might need to know to make the vacation as simple and relaxing as possible. Long-term rentals are no exception.

Landlords should have a welcome package that includes:

  • Unit rules and regulations
  • A small welcome gift like flowers, chocolates, or a gift card
  • Location details like public transportation, local restaurants, local events, local attractions, and anything else that might make their move more seamless.

Related: The perfect move-in package

3. Concierge Services

Lastly, landlords can create a wonderful living experience for their tenants by offering premium services included in the rent. This provides an added selling point and makes life just a little easier for your tenant.

Let’s say your usual tenant is in corporate America and pays a premium to outsource tasks. An added bonus to your rental property could be as simple as including maid service, an Amazon Fresh subscription for quick grocery delivery, and laundry service with the rent. By cutting those chores out of your tenant’s life, you’re providing the best gift you can: time.

Related: 4 basic amenities that attract quality tenants

Conclusion

To summarize, it doesn’t need to cost a lot to provide a great experience for tenants. Above all, simply caring about their time matters most. By communicating quickly, providing an informative move-in package, and including time-saving services with rent reduces turnover, allows for a premium rental price, and attracts good quality prospective tenants. So think like a Super Host and start thinking outside the box when it comes to being a top landlord.

How to increase your income without raising rent

Written by Sarah Block on . Posted in edited, For Landlords, Income Ideas, paid

Being a landlord has always given me a sense of pride, hope, and entrepreneurship.

There are so many possibilities in how to make money as a landlord, even without raising the rent, and even without having long-term tenants. The money-making possibilities are endless and exciting.

Related:  How to increase passive income in 2017

Top 10 ways to increase income without raising the rent

1. Add a vending machine

Adding a vending machine to the laundry area, storage, or common area of your property could add significant income. For example, adding an automated vending machine to one apartment building generated $2,500 a week in revenue. People pay for convenience. A vending machine with food, detergent, Chapstick, and toiletries saves people time, and if they run out of something they need right away, the vending machine is a convenient choice.

New vending machines can be expensive, but smaller properties can buy one used for a few hundred dollars and start generating a new income stream immediately.

2. Charge pet rent

In the United States, 68% of households own a pet. While it is understandable to not allow pets in your rentals, a large portion of renters are cut out. By allowing pets and catering to them, you open a floodgate of opportunities. You can charge a monthly pet rent or a pet fee. Tenants will happily pay a little extra to allow for their pet. As a bonus, you can offer dog walking for tenants. Work with a local dog walker. In exchange for a referral, you can get a percentage of the profits.

Related: Pet Deposits, Pet Fees and Pet Rent — What’s the Difference?

3. Use Airbnb during vacancies

Do you have a vacant unit? Don’t stress. Rent it out by the night instead. You will make more per night than with a long-term renter, and you have flexibility with showings. No, you won’t be able to show when you have guests, but you can schedule around the guest calendar. A unit with rent at $1,300 per month might bring in $150/night as a vacation rental. It would only take about nine nights to make up the lost rent.

4. Charge for shed storage

Storage is coveted by most renters. So don’t let your shed go to waste. Even small storage sheds can bring in an extra $35-$50 a month, while larger sheds can bring in as much as $200 a month. Move that lawnmower somewhere else, and take advantage of the extra income.

5. Rent out the garage

When I bought my three-flat, the previous owner was renting out the garage for $200 extra a month! In areas where parking is limited, this is something you need to take advantage of. The amount you can charge per month depends largely on the area. In metropolitan areas, it isn’t unheard of to charge $100-$200 a month. Uncovered parking spots can be rented out for an extra $50-$100 a month.

6. Lease a billboard

If you have a larger building, leasing a billboard can be quite lucrative. One BiggerPockets blogger told the story of a $25,000 fire-damaged apartment building that was getting $2,000 per month per side for a billboard. Imagine $4,000 extra income a month for no extra work.

7. Offer upgrades

Make life a little easier for your tenants by offering upgrades. Think hotel services like dry cleaning, laundry, maid service, or lawn care. People pay extra for their lives to be easier. If they were going to be outsourcing those services anyway, it’s a big bonus to have those available through their landlord or property management company.

8. Lease a cell phone tower

Would you have an interest in earning a passive six figures? That’s well within reason when leasing out space to a cell phone tower. Leasing out space to a cell phone tower averages $1,300 in rent a month. In San Francisco, you can earn as much as $2,500 a month!

9. Provide furnished rentals

Furnished rentals can fetch a higher rental price per month than unfurnished. Corporate, short-term, and cross-country tenants are more likely to rent a furnished apartment and will pay more for it. An extra bonus is that during tenant vacancies the unit can be rented on Airbnb or VRBO. The rent will increase, on average, 25-30% for a furnished unit.

Related: Can I get more money from a furnished rental?

10. Add solar panels

By adding solar panels to your rental property, you can become the utility company. Adding solar panels can generate income in three different ways: 1) increase rent to include energy, 2) sell excess energy to utility company, or 3) charge an electricity bill to tenants for using the solar energy.

In conclusion

Rental income is not the only way to generate money with your rental property. There are many options for adding passive (or not so passive) income to your monthly income. Why not take your rental business to the next level by adding a few new streams of income?

What sparks joy in your rental business?

Written by Sarah Block on . Posted in edited, For Landlords, Income Ideas, Landlord Tips, paid

Marie Joy RentalsMarie Kondo’s new Netflix show “Tidying Up” is inspiring people to find what “Sparks Joy” in their homes. But what about the landlord tasks in your rental business that spark joy in your life (or don’t)?

Landlords have a multitude of tasks involved with their business. Some we love, and some we hate. Life is short. So why aren’t we spending our time doing what we enjoy and outsourcing the rest?

The key is deciding what tasks to keep and what to outsource to someone else. But outsourcing can be difficult for most landlords. Whenever I speak with landlords about this topic, the most common response I hear is, “That reduces my profit.”

It does if you choose to think of it that way. However, if you think of your time in terms of dollars per hour, you factor in how much your time is worth. If you outsource a task you don’t enjoy and it costs less than your value, it frees your time up to make money doing something you enjoy.

Related: How to automate landlord responsibilities

Find what sparks joy in your rental business

One of the bests aspects of being a landlord or property manager is there are so many different things to do to make the business work.

  • Researching and finding the best rental
  • Preparing the unit to be rented
  • Advertising
  • Finding tenants
  • Screening tenants
  • Onboarding tenants
  • Managing maintenance and communication
  • Handling the finances

The hard part about being a landlord is that you are bound to hate some of those tasks.

How to decide what to outsource

Make a list of everything you do for your rental properties—from cleaning to showings—and number them from 1 (what you love) to 10 (what you hate).

Figure out how much money your time is worth. Consider commute costs, how much you get paid doing other jobs, and any other factors that affect the value of your time to determine how much your hour is worth.

Consider whether special tools or equipment are needed for any of the tasks. What is the cost for those tools?

Look at the tasks you marked in your bottom 5.

  • How many hours would those tasks take you to complete? Keep in mind, it will take you longer than an expert.
  • What is the cost of special tools, equipment, or materials for those tasks?
  • What is the going rate for someone to complete those tasks?

Add up the hours it would take for you to complete the task and multiply it by your value per hour. Add in the cost of materials and equipment needed for the task. What is the cost of that task if you complete it?

Now, how much would it cost someone else to complete it? If this number is less than your number, outsource it.

Related: How to find a contractor you can trust

How to increase profits by “Sparking Joy?”

You might be thinking that this method of outsourcing and doing only what sparks joy for you is all well and good. But not actually getting paid during the time you’re outsourcing a task to someone else isn’t ideal.

But what if you can be paid while you outsource?

Look at the top five tasks on your list, the tasks you love doing. Can you offer any as a service to other landlords?

You have experience doing those tasks. You enjoy doing them. Other landlords might have them on the bottom of their list. Why not build a service business doing what you love?

Conclusion

Life is too short to do tasks you hate. Outsource the landlord responsibilities you don’t enjoy doing, and focus on what you do love.

The end result will be better quality work. And you will find more joy in your life.

What to do if you’re underwater on your investment property mortgage

Written by Sarah Block on . Posted in edited, For Landlords, Income Ideas, Mortgages & Loans, paid, Rent & Expenses

Underwater mortgageWhat do you do if you’re underwater on your investment property mortgage?

I have been there. Most likely, many who bought during the infamous real estate bubble have been there, too. In 2009, I thought the bubble had burst and prices dropped as much as they would. How wrong was I? I bought an investment property and quickly became underwater on it. I was drowning on that mortgage, and I didn’t know what to do. However, I had options, and so do you.

Let’s take a look at some baseline numbers to determine your best move.

Are you making a monthly profit?

The first thing you will want to do is look at the month-to-month profitability of the property. While a rental unit might not have equity, it might have profitability each month. To determine the profit you make each month, add up your mortgage, monthly taxes, monthly insurance premium, and anything else you pay. Then, subtract this number from the rental income you make on that property.

(monthly PITI, maintenance, 10% to reserves) – Rental income = Profit

Related:  How to set the perfect rent price for your rental properties

Questions to ask yourself

1. Are you in the positive?

If so, hold out on selling. If you are making a profit, it makes sense to hold the mortgage and wait for the value to increase to build equity.

2. Are you breaking even?

If you are breaking even, it might be a good idea to hold the mortgage. Each year, you pay down the principal a bit more. Your rent check each month brings you closer and closer to the surface. Unless you truly don’t enjoy being a landlord, or it is more work than you can handle at this time in your life, keep it in your portfolio.

3. Are you in the negative?

Did your calculations show that you were in the negative? That doesn’t necessarily warrant selling. Can you foresee an eventual turnaround? Real estate historically increases in value as time goes by.

What if I have a negative cash flow/loss?

For my property that was underwater, I was making negative cash flow the entire time I owned it, but I could afford to cover that cost. I covered the negative cash flow for nine years, knowing that the market would turn around, and it did. Earlier this year, I sold it at a profit. While it didn’t make sense for me to hold it as a rental because my mortgage was too high to ever have a positive cash flow from rent, it did make sense to hold until I could sell for a profit. My renters helped me pay down my mortgage and I made a little money in the end.

Look at your scenario and ask yourself these questions:

  1. Can you afford a negative cash flow?
  2. Will your property ever regain its value?
  3. Do you have consistent renters that help pay down your mortgage balance?

If you answered “Yes” to these questions, it makes sense to hold the property. However, if you answered “No,” it might be time to look at your options.

Related:  When to sell a rental property?

What are your options to sell an underwater property?

When you have an underwater property that you have decided to unload, you have three options:

1. Short sale

To sell a property with a short sale, the owner needs to negotiate with their lender to accept a lower payoff than the balance. An owner or their Realtor can call the lender and speak with the real estate short sale or work out department to begin the negotiation process. Once you have found a purchaser, the lender needs to approve the purchase price and might decline to pay certain added items such as inspections. After the lender approves the purchase price, you can request they do not report this to credit reporting agencies, and they may or may not comply with your wishes.

2. Foreclosure

While no one wants to go through a foreclosure, sometimes choices are limited. When starting a foreclosure, the first step is defaulting on the loan. After 30 days, a lender sends a notice of default. This likely comes after they have reached out trying to change the loan payments to work with your financial situation. After 90 days of being in default, the owner gets a notice of sale. The last step is selling the property at auction.

3. Sell + pay loan balance

You can avoid short sales and foreclosures if you have cash on hand. The last option for homeowners is to sell the property for what it is worth and bring a certified cashier’s check to the closing for the shortfall. While it is not ideal to pay to get out of the mortgage, it keeps your credit intact.

Conclusion

Investment properties with underwater mortgages can make an owner feel helpless and stuck. However, there are options. In my situation, my property was underwater for about five years. I was losing money each month, but it was a manageable amount. I chose to wait it out, and eventually I sold for a profit. But each person’s financial situation is different. Look at yours to determine what the best move is for your lifestyle.

How to convert your home to a rental property

Written by Laura Agadoni on . Posted in edited, For Landlords, Income Ideas, Laws & Regulations, Maintenance & Renovations, Mortgages & Loans, paid

Turning your house into a rentalYou’ve made the decision to convert the home in which you live, in other words, your primary residence, to a rental house.

Maybe you’re moving, or maybe you figure you can make some good money, collecting that all-important cash flow, by making your home your rental property. Whatever the reason for the change, congratulations on your decision!

But you can’t just move out and declare your home a rental. There are some things you need to do first. Find out what they are.

You need to take care of some business before you can turn your primary home into a rental property.

You might need to wait if you have a mortgage

Do you have a mortgage on your home? If so, you generally need to live in the home for at least 12 months before converting it into a rental. Why? Certain perks are associated with buying a primary residence as opposed to investment property.

You often get a lower interest rate and can put down less of a down payment when the mortgage loan is for your primary home versus a vacation home or an investment property.

If you say you’ll live in the house but you really are buying it as investment property, you are committing mortgage fraud. The penalty? Your lender could call in the loan immediately upon finding out. And that will probably lead to foreclosure.

Read your loan paperwork or call your lender to find out the waiting rules that apply to your loan. After you’ve lived in the home for the required time for your mortgage, you’re free to turn your primary residence to rental property.

Find out whether you can get another mortgage

When you move from your primary home, you might want to buy another home to live in. If that’s the case, find out whether you’ll qualify for another mortgage before you rent out your current home.

Your lender might consider the rental income you’ll get, but they might not. Either way, get the ball rolling by talking with a mortgage lender before you make any moves.

Check with your homeowners association

If your home is in a neighborhood governed by an HOA, you need to find out whether there are any restrictions regarding renting out your house. Some HOAs have no restrictions, some allow only a certain percentage or a certain number of homes in the neighborhood to be rentals, and some ban the practice altogether.

Change your homeowners insurance policy

Insurance policies for primary homes differ from insurance policies for rental properties. “In my experience, the insurance classification is really the biggest issue when converting a primary home to a rental property,” says Lucas Hall, Landlordology’s founder and Head of Industry Relations at Cozy.

And Lucas makes a great point. Why? If you need to file an insurance claim after you convert your home to a rental, but your policy has not been changed to a landlord policy, your insurer could deny your claim. “New landlords need to make sure they change the policy from a homeowner occupied policy to a landlord’s policy,” says Lucas.

Related:

Learn about tax changes

It’s best to consult a tax professional both for your rental property and for your primary residence. But you shouldn’t be totally in the dark about taxes. Here’s what you need to know.

The bad news (regarding taxes) is that if you make money, that money is taxable income, so you should figure out how that might change your tax rate.

But here’s some good news. Once you have rental property, you get to take these deductions for rental property expenses:

  • Utilities (if you pay them)
  • Homeowners association fees
  • Landlord insurance policy
  • Repairs you make to the house
  • Property taxes
  • Mortgage interest

Related: Top 15 tax deductions for landlords

Ask your tax advisor or find out from your local municipality about the homestead exemption you probably have on your current home. You are allowed to have that only on your primary residence, so find out what you need to do when you wish to convert your home to a rental.

Ready your property

Look at the competition. Are the rental homes in your area upgraded? If they are and your home isn’t, you should consider putting some money into your home to help ensure you’ll get renters and at market rate.

A new coat of neutral paint throughout the house and nice landscaping in front are good starts. You might want to then make a list of all the improvements you’d like to make and get them done gradually. At the very least, make sure your home is well-maintained and that everything is in working order.

Related: Top 10 Amenities Renters Can’t Resist

Learn how to be a landlord

Once you rent out your home … hello, you’re a landlord. Many of us, myself included, learned the business by jumping in headfirst. But, you are apt to make costly mistakes this way. I know I did.

Related: 5 Unexpected Traits of a Profitable Landlord

But lucky you: If you happened to find this site, browse around. We are here to help you along the way with informative articles, a comprehensive state law section, and a toolbox with tons of resources to help landlords succeed.

Can I get more money from a furnished rental?

Written by Laura Agadoni on . Posted in edited, For Landlords, Income Ideas, Laws & Regulations, paid, Rent & Expenses, Rental Advertising, Security Deposits

Furnished RentalsAn interview with Lucas Hall, Landlordology’s founder and head of industry relations at Cozy.

Not only can you get more money from a furnished rental, demand is growing in the furnished rental market, even with the popularity of Airbnb. Over the past decade, there have been more renters overall, and a percentage of those renters prefer to rent a furnished home for a variety of reasons.

I recently spoke with Lucas to get his opinion on what it takes to get into the furnished rental business and to get his best advice for landlords who are thinking about breaking into this niche segment of “landlording.”

First, lets talk about what exactly a furnished rental is.

There are two types of furnished rentals: long-term, meaning a few months or more, and short-term, such as vacation properties.

Most long-term rental properties typically don’t come furnished. But they can. And there are some benefits for renters. Furnished rentals usually have all the furniture and appliances someone would need, and they may or may not have day-to-day essentials such as plates, silverware, and linens.

Short-term rentals for 30 days or fewer are completely furnished with linens, a vacuum cleaner, grill—everything you can want. The idea is that all you do is bring your suitcase and move in.

What kind of furniture should you put in a furnished rental? Cheap motel furniture? High-end stuff?

The type and quality of furniture to buy should mirror the type of unit you have. So if you have a high-end unit that commands thousands of dollars a month, then you should probably have a leather couch, a nice bed frame, and art on the walls. Whereas if you have housing that attracts contract workers, for example, who make between $20,000 and $40,000 a year, you can have used furniture that’s still in great shape. Or you can get furniture from places like IKEA.

In other words, if your clientele is willing to pay $3,000 a month for a two-bedroom, that’s the clientele who would expect to have a nice sofa.

Another consideration is that if you buy the nicest furnishings, there is a chance things will get stolen. If you buy the best coffeemaker or the most expensive knives, those items might ‘disappear.’ You’re better off buying middle-of-the-road items that serve their function.

What is the market for a furnished rental? Who wants to stay in one?

I have had renters for long-term furnished rentals who are moving from across the country for a job, and it’s a big convenience to just be able to move right in. There’s no need to move furniture or to shop for furniture right away.

Short-term is a whole different game. There you have weekly or monthly vacation rentals. You also have traveling nurses who tend to stay for two to six months, and the hospital pays for it.

Related: How to market your rental to traveling nurses

How do you market a furnished rental? What, if any, are the differences in your advertisement?

It’s important to put in the title that you have a furnished rental. Someone who needs furnished housing will be looking for that first. An unfurnished rental in this case will be a deal breaker. Also describe in the listing what the furnishings are. And make sure you show pictures of all the furnishings.

An important benefit of a furnished rental is that furnished units generally look better in listing photos, particularly when you stage properly. You want your furnishings to look really good in pictures. Your furnishings should be clean, useful, and complement the space and the color scheme.

Whenever you’re advertising a property, whether it’s a long-term unfurnished rental or a short-term furnished rental, you should photograph it with furniture in it.

Related: How to shoot real estate photos like a pro

How much does it typically cost to furnish a rental property?

I have had experience furnishing a two-bedroom condo and a studio. For the studio, I spent between $2,000 and $3,000. With the two-bedroom, I spent about $10,000 to furnish it. I bought a little nicer for the two-bedroom because it was going to be a short-term rental. I needed durable furnishings.

My tip when it comes to buying furnishings, whether it’s for a short- or long-term rental, is to buy stain-resistant materials. Otherwise, you’re stuck with regular cleanings or having to replace the furniture every year.

Now for the question that helps landlords decide whether they will offer a furnished rental or not:

How much more money can you get for a furnished rental?

You can typically get 15 to 20 percent more for a furnished long-term rental. It’s a convenience. People are willing to pay for convenience.

And for a furnished short-term rental, you can get 40 to 50 percent more at a minimum. In some cases, you can even double that, getting 100 percent more, depending on the location of the property.

You can typically get 15 to 20 percent more for a furnished long-term rental. It’s a convenience. People are willing to pay for convenience.

Which locations are best for furnished rentals?

I’ve had the most success with furnished rentals in high-density or highly desirable areas. I’ve had a successful furnished studio, for example, right in the heart of Washington, D.C., right near Capitol Hill and a metro station. People wanted to live there and were willing to pay for the convenience of a furnished rental. Places like that appeal to people whose time is more important than money and who would rather spend more than deal with furnishing a rental property.

Can you charge a larger security deposit for a furnished rental? After all, there are now theft of furnishings and furniture damage to consider.

Absolutely. But you can charge only what your state allows. This is often between one and two months’ rent as a maximum. So most of the time, landlords charge one month’s rent as a security deposit for an unfurnished rental. But for a furnished rental, I think it’s smart to double that, or charge two months’ rent. And just like any security deposit, it’s fully refundable as long as there are no damages.

Do you have any further tips or advice for our readers?

A good opportunity for people who want to do long-term furnished rentals is to get into corporate housing or provide housing for traveling nurses. You figure out if there’s a company or hospital that’s willing to make a corporate agreement with you. They pay the rent and are responsible for finding tenants.

Are you interested in getting into the furnished rental business? Or are you in it now? Let us know in the comments!

How to ensure your property is appealing to renters from every generation

Written by Sean Miller on . Posted in For Landlords, free, Income Ideas, Maintenance & Renovations, Step 1 - Perform Research

Rentals that appeal to every generationIt’s human nature to gravitate toward things we like.

So what you think makes a rental property attractive will probably appeal to other like-minded people. But you could be limiting your market by only doing that.

When you have a rental property, it’s best to make that property appealing to the greatest number of potential renters—people that span all generations—not just millennials or baby boomers, for example.

Landlords need to appeal to renters across multiple generations.

The good news is that appealing to one type of renter doesn’t have to mean alienating other demographics. Renters across every generation will likely be attracted to the same features in a rental.

The best way to start increasing the appeal of your rental units is by finding the commonalities most of your prospective tenants share. The 2017 “Renter Preferences Report” from the National Multifamily Housing Council is generated from survey responses by more than a quarter of a million apartment renters around the country, and based on the findings, here’s how to ensure you’re casting the widest possible net:

1. Focus on the essentials

For the most part, renters want the same basics. Air conditioning and access to high-speed internet made the top of the list, with 94 percent and 93 percent interest, respectively. In fact, 92 percent of respondents said they wouldn’t lease a unit without air conditioning. Many renters are also interested in reliable cell phone reception (92 percent), secure parking (88 percent), and secure access to amenities (84 percent).

By starting with these basic features that you know renters want, you can broaden your appeal and attract as many applicants as possible.

Related: Top 10 Amenities Renters Can’t Resist

2. Adopt useful technologies

Adoption of home automation technology has exploded in recent years; approximately one-third of U.S. broadband households own at least one connected device. Home automation adoption among renters, however, has been below the national average because of the complexity of choosing, installing, and maintaining a home automation system in a rental home. Take this opportunity to install home automation solutions that increase renters’ safety, savings, and convenience.

  • Smart locks prevent the need to rekey after each renter, and they improve safety by allowing renters or landlords to issue unique access codes that show them who was in a rental unit and when.
  • Exterior video cameras, such as doorbell or driveway cameras, let residents keep an eye on their home from the comfort of their couch … or halfway around the world.
  • Smart thermostats can improve savings by lowering energy costs when a unit is unoccupied.
  • Water sensors can alert you to flooding before unwanted water has the chance to wreak havoc.
  • Smart lights increase convenience and lower bills by turning off when rooms are vacant.
  • Voice assistants are appealing to all generations because they make it easy to control other smart home features.

3. Pick a good location

Location is key for any resident when they’re choosing a new home. Suburbs no longer hold the same appeal they once did; renters of all ages want to be closer to the action, where restaurants and nightlife are convenient and walkable.

4. Provide maintenance-free living

People of all ages want to live maintenance-free. In fact, one of the biggest appeals of renting is that landlords take care of upkeep and maintenance—from unclogging toilets to repairing broken appliances. Landlords who can respond to maintenance requests quickly and efficiently will attract great tenants.

The bottom line

The rental market is growing and becoming increasingly multi-generational. Millennials may represent the majority of the rental market, but a winning strategy is one that increases the appeal of your properties for all renters, from Baby Boomers to Gen Z. Checking the essential boxes is the most important step you can take—from there, introduce the right technologies in the right locations, and you’ll have renters lining up to view your property.

How many rental properties are too many?

Written by Sarah Block on . Posted in edited, For Landlords, Income Ideas, paid

How many properties are too many?At my high, I had four rental units and, for me, it felt like too many. My husband and I have two full-time jobs, two kids, and too little leisure time. When much of our spare time was focused on our properties and not our kids, we decided it was time to simplify.

But, that’s my personal story. Everyone is different, and where four units felt like too many for our limited time, 22 units might be perfect for you. Real estate investors need to look at three things when deciding how many rental properties to acquire:

1. Personal finance goals

While some may think of real estate investing as a business, you are still using your personal finances to purchase rental properties, keep them in top shape, and cover tenant turnover costs. So, while rental properties are a business, you are funding it. Here are some things to consider when deciding how many rental properties to have in your portfolio.

Debt

How comfortable are you with debt? There are two types of real estate investors. Which investor are you?

Very comfortable: The first type is building a business. Typically, when someone builds a business, they get a business loan and/or find investors. This type of investor feels comfortable with debt and confident that they will pay it off. They will likely feel comfortable taking on more debt to build a bigger portfolio.

Not at all comfortable: The second type of real estate investor is the debt-free journey investor. They build their portfolio as part of a way to meet their financial goals. This investor is less likely to want to take out mortgages and has a goal of paying down the mortgages as fast as possible. They are more likely to pay cash for a property when possible.

Related:  How to Finance a Rental Property

Hefty retirement savings vs. passive income

When buying rental properties, you likely have one of two financial goals in mind: hefty retirement savings or passive income.

Those whose goal is a great retirement income will likely want a larger portfolio. If you accumulate properties in your 30s and pay the minimum mortgage, they will be paid off by the time you retire. You can accumulate more properties because your goal isn’t paying down the mortgage but rather putting money aside for down payments on more properties. This investor sacrifices a larger cash flow month to month to accumulate more properties and have a larger passive income cash flow in their 60s and beyond.

The investor whose goal is passive income now has a smaller portfolio and focuses on clearing the mortgages off their current rental properties. One way these investors handle their profits is to put them straight to the balance of their mortgages. As soon as the properties are paid off all rental income (other than regular expenses) will be passive income that can be used now.

2. Available Time

When deciding how many rental properties to have in your portfolio, consider the time commitment. Real estate investing is called “passive aggressive income” for a reason. It isn’t completely passive. Time is spent working with tenants, making repairs, and finding tenants. It can be quite time-consuming depending on your property and the tenants you have.

Related: Stress-free Property Management with Paula Pant from Afford Anything

Self-managed properties

If you self-manage your properties, consider the time it takes to manage each unit. While Cozy saves massive amounts of time with rent collection, maintenance tickets, and semi-automating the tenant application process, there are still tasks that need to be done. Cleaning, maintaining the property, responding to maintenance tickets, and tenant showings are done by you. Sit down and determine how many hours each unit takes of your time. Do you have that much extra time to dedicate to another property?

Property manager

Do you have a property manager already managing your rental units? Then time isn’t a factor. A property manager can take care of the time commitment needed for your properties. However, the cost of a property manager does need to be considered. Is your property still cash positive when you take into account the cost of the property manager? If yes, it might make sense to add another property to your portfolio.

3. Real Estate Investment Strategy

When deciding whether or not to add more doors to your portfolio, consider your overall investment strategy. The first item to consider is profit. You are in the real estate investing business for one primary reason, and that is to make money. How can you make the most money with the least hassle?

Profit

Your strategy might include more properties that are less expensive or fewer properties that are more expensive with higher rent potential. Neither option is the wrong one. What is wrong is not doing your homework. Calculate the cap rate, do the research, and learn about the communities before investing. Compare what profit you can make with either choice and don’t make assumptions. You might be surprised what heeds the most profits.

Law

Consider any laws that might make life more difficult with more properties. In Illinois for example, if you have 5+ investment properties, you need to hold security deposits in an escrow account, return the deposit within 30 days, or provide detailed receipts within 45 days of move out. Look for landlord-tenant laws in your state, as each state is different.

Conclusion

While four rental units were too many for me, it might be perfect for you. Maybe it is not enough for you. It depends on your financial goals and available time. Look at these factors and decide what makes sense for your situation. There is no such thing as too many rental properties or too little for that matter. There is only what works for you.

Should I raise the rent on a good tenant?

Written by Sarah Block on . Posted in edited, For Landlords, Income Ideas, paid, Rent & Expenses

Every June, my husband and I have the same question: do we raise the rent?

Our leases run August to August, and June is when we begin to consider the pros and cons of raising the rent on our tenants. Sometimes it’s clear. If they paid late or were difficult, we raise the rent. But many of our tenants are amazing, so it’s a difficult decision. Do we risk losing a great tenant by raising the rent?

Here are three questions to ask yourself when deciding whether to raise the rent.

1. What’s the market value of the rental?

I’ve been lucky to have long-term tenants on multiple occasions. All landlords know, finding new tenants is as enjoyable as stepping on a rusty nail. Still, if you haven’t raised the rent in a while, chances are the market value has increased. Is your rental way below comparables? You have a few choices for learning the market value.

  • Property managers—A property manager can compile a comp report to determine the ideal rent price for your rental market. This route isn’t cheap. It’s usually part of hiring an apartment search or property management company and their tenant-finding service. They usually charge a one-month rent fee.
  • Rent Estimate reportSet your rent price with confidence with a Cozy Rent Estimate report. See how your rental stacks up to nearby single-family homes and multifamily properties, with up-to-date info about the actual rents they collect. Each report includes comparable rent prices, local vacancy rates, rental trends, and investor metrics. A report costs $19.99.
  • Do-it-yourself comparables—Before rent estimate platforms existed, I came up with my own by using Apartments.com, Redfin, and Craigslist to look at local apartment listings. I would use their data, rent prices, locations, and time on the market, to determine my market value. It takes time, but not money.

Related: Should I increase rental rates every year?

2. Will the current rent still yield a profit this year?

Rent isn’t the only thing that increases in cost. Taxes go up. Insurance premiums may increase. Upcoming maintenance needs might be expensive. Take all these things into consideration before renewing a lease at the same rent.

Consider these things:

  • What were your costs on the rental the previous year? You should have this information from your taxes.
  • Are any costs expected to go up?
  • Is there any expensive maintenance expected to happen soon?
  • What is your monthly mortgage?

Add up your expenses and subtract from your rent. Will you still make a profit? If so, and the tenant is great, don’t raise the rent. Lucas Hall, the founder of Landlordology, says, “A quality tenant is far greater than a 3% rise in rent.”

Related:  3 ways to stay up-to-date on rental prices

3. Can I raise the rent without losing my tenant?

It is possible to raise the rent on a good tenant without losing them if you do it delicately. If you choose to raise the rent, follow these rules for the best opportunity to keep your great tenants.

  • Raise the rent, but keep it $100 less than comparables, and let your tenant know that while you needed to increase the rent, it is still lower than typical rents for the neighborhood. After receiving the notice that rent will increase, your tenant might begin looking around to see if they are still getting a good deal. However, if you keep the rent below market value, they will find a benefit in staying.
  • Provide plenty of notice. The amount of notice that is required depends on the state. However, the more notice the better. It gives your tenants time to prepare for the cost increase.
  • Be honest and communicate kindly. Remember, your tenants are people. While you are working on determining your finances, they will be doing the same. Be honest and communicate with them. When I raised the rent on a long-term tenant, I provided her with the market report I had and explained to her that the market value was $500 more than I was charging, but I was only planning on raising it $100 because I enjoyed having her as a tenant. Being honest and open about the process I went through in determining the rent went a long way with her, and she stayed for several more years.

In summary

When you’re a landlord, you have to be everything. You’re an accountant. You are a maintenance person. You are marketing. But, most of all, you’re customer service. To keep a great tenant when you need to raise the rent, keep customer service in mind, and make decisions based on data.

Now that I can get my data in Cozy Rent Estimate reports, June will be a lot less agonizing.

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