Do you find yourself having trouble paying the mortgage at times? As a real estate investor or landlord you learn quickly that it is not just tenants that sometimes have trouble paying the rent. Here we have outlined a few key items that you can focus on to try to minimize the risk of running short on cashflow to pay the mortgage on your investment properties.
Vacancies are the biggest risk to monthly cashflow for investment properties. As an investor or landlord, you must consistently execute upon strategies to keep your properties rented. You should consider advertising even when your properties are full so you can build a backlog of qualified tenants for when you have a vacancy. You will often know of an upcoming vacancy in advance, and you should consider stepping up your marketing as you find out. You should not sit on tenant applications, screen them right away and don’t waste any time on this. You want to make sure that rent is coming in a predictable and consistent manner so that you are running your real estate business like an efficient business.
Just as important as keeping your properties rented, is keeping them rented to quality tenants. A quality tenant is typically a tenant who will pay on time, maintain the property and not try to take advantage of the lease. There are screening softwares available and you can also do background and credit checks yourself. You can also ask for prior landlord references. Having good tenants will help you pay your mortgage each month and give you peace of mind.
Your long term profitably can improve significantly if you find quality long term tenants. A quality tenant might not be a long term one so you want to go for a long term tenant when you have the option. It’s risky to have tenant turnover often and to have short term tenants. There are entire businesses built around that model but what we look for is quality long term tenants so we an keep consistent cash flow coming in to pay the mortgage monthly.
Be a good landlord that maintains the property for your tenants. Be responsive and deal with maintenance issues in an efficient and respectable manner so your tenants know you value them and want to keep them long term. The short term cash outflow for maintaining a property produces vast long term benefits for cash flow- you keep tenants longer, your deferred maintenance is much lower and you build a reputation as a great landlord in your community. You also should make sure the the tenant’s appliances are in working order and that they don’t have any unnecessary headaches. You our your property manager (if you have one) really must respond to tenants right away.
By being good to your tenants you can often make them want to stick around a lot longer. This is good for you and good for them. Being a good landlord pays!
It is advisable to work as hard as you can so that you don’t ever encounter tough circumstances in paying the mortgage. That applies just as much to an REI professional as it does to the average renter. Following this set of guidelines can bring you vast long term benefits so you can have long term tenants who pay the rent every months so you can have a stable income coming in from your properties.
If you want to be active in your properties as an investor, you can manage them yourselves. If you want to be somewhat passive, find a good local property manager who you have good chemistry with and work with them. You can also try working with a few different property managers and see who you click best with. Sometimes a property manager who is good in one area might not be as strong as another in another area so be aware of how real estate is very local. The real estate professionals you develop relationships with can make a big impact on your success in the real estate business. It goes without saying that the better those relationships the more likely you are to be able to pay the mortgage each month.