Many people assume that tenants are the only ones that can have a hard time paying the mortgage. Not every landlord is a super rich real estate mogul. As a real estate investor or landlord, there are times when it is difficult to pay the mortgage on your end as well. Here are some things that may help you so you can avoid having a hard time paying your mortgage each month in the future.
I know it seems obvious but keep your properties full. Without tenants, it’s very hard for you to pay your mortgage. As long as you have rental income coming in each month to cover your mortgage payment, it’s a bit easier to stay on track. Long periods of vacancy make it very easy to fall behind on mortgage payments. When you have a vacancy coming up or if a rental property suddenly becomes vacant you shouldn’t slack on your marketing. Get the property marketed as soon as possible so that you can get it rented again as soon as possible. Also, don’t put off screening applicants or getting it rented because you get busy. Filling your vacancies is one of the most important aspects of having a successful REI business. Without tenants, there’s no income and as a result there’s no business.
Find quality tenants! While limiting vacancies is important, having a bad tenant can be even worse than having a vacancy. A bad tenant can destroy property, force a long eviction process on top of not paying rent, and they can create unnecessary headaches. In order to get quality tenants use background and credit checks. Although background and credit checks won’t find everything, they’re a good starting place in understanding your future tenant. Your goal is to have a “good” tenant that pays their rent on time so you can avoid missing mortgage payments in the future.
Find long term quality tenants, if possible. Ideally you want long term tenants because it will keep your turnover costs low. Every time you turn over a unit you have to deep clean and repair items. While many people would think “the security deposit covers this” which in some cases it does, you still end up losing some money to vacancy.
Not all quality tenants will be longterm tenants. Some quality tenants that have an amazing background only need to stay for a few months for temporary work or school. While these may be great tenants to deal with, when accounting for the expenses of turning the unit, you may lose money by renting to them. So you always want to opt for longterm renters when possible. This will make vacancies and turnover expenses less frequent.
Keep the property well maintained. If you want good tenants, longterm tenants and tenants who pay their rent on time, do what you can to keep them. Deal with maintenance issues as soon as possible. Make repairs as necessary. Upgrade appliances as needed and if you have older appliances make sure they work as expected. Respond to your tenants’ calls in a timely manner, if you’re going out of town or will be away from your phone for an extended period, make sure your tenants know who to call.
Being a good landlord will go a long way in developing lasting relationships with your tenants, which will in turn, help you keep them renting your property longer. Often a tenant and landlord relationship can turn an average tenant into a great one simply because they want to keep that relationship intact. If a tenant likes the way you treat them and is happy with the unit, they are more likely to continue renting from you.
In a tough economy, it’s important to do all you can to avoid facing the difficulty of paying the mortgage. That applies just as much to an REI professional as it does to the average renter. I hope these simple tips help you become a better landlord and help create lasting, longterm, rent paying tenants to keep your properties bringing in the income you need every month.