Six Ways to Get More from Your Rental Properties

1.  Automation helps alleviate redundant tasks to help you focus on bigger picture problems and better customer service. Whether you have a property management company managing for you or you are managing your own properties, you want as much automation as possible to focus on matters that move the needle and increase your bottom line. You simply won’t be as fast, effective or efficient without automation.

Your property management software and Tenant Access are examples of automation solutions that allow property managers and investors to scale, reduce costs and improve efficiency.  

Good property management software automates online rent collection and accounting.  

Tenant Access allows property managers to control access management, automate maintenance scheduling and automate rental showings-without keys. 

Changing possession between tenants is clicking a few buttons instead of rekeying, driving to place clunky lock boxes that rust or freeze and keeps properties secure without the ability for anyone to copy keys.  Tenant Access also incorporates doorbell cameras for monitored access, vacant property monitoring and smart home upgrades. 

(www.mytenantaccess.com)

2.  Having leases end in spring or summer months is always better, but you’ll want to be careful not to have all of your leases across your portfolio ending at the same time to avoid cash flow challenges. Staggering lease end dates throughout the warmer months is the best method.

More people are moving during the spring and summer months, and most families with children prefer not to move until school is out for the summer, so demand is higher and you will lease for more money in less time on more favorable terms by steering your lease end dates towards the warmer months.

Don’t be afraid to have odd lease terms to achieve ending in the warmer months, but if that means you’ll have less than a year lease, see if you can get a lease that ends the following year in the warmer months, even if that means you’re ending up with an odd 16 month lease.

Most tenants don’t like to move every year or during the winter anyway.

3.  A rush option for security deposits is another way you may generate more income from your properties. Check your state laws to make sure it’s legal in your state, but we’ve done it in at least a few states without issues.

In Colorado, we have thirty days by default, or up to sixty days to itemize and return security deposits if it is specified in the signed lease.

As an example, you could extend the offer to rush the return of the tenant’s security deposit and itemization to occur within two weeks for an additional charge of, let’s say, $50 to $75.

Most tenants appreciate the option to rush the security deposit to help with moving costs.

4.  Better Tenant Screening. Good tenant screening only comes from experience. It becomes intuitive once you’ve seen the same patterns over years in property management.

Rule #1 for us is having a bank account. If they don’t have a bank account, there is no way to automate receiving rent payments, and chasing cash will cost you more money. Most responsible people will have a bank account and people without bank accounts are usually hiding money from creditors, they don’t trust themselves with a bank account or basic accounting, or they’ve ruined relationships with banks and cannot get bank accounts. In any case, not a tenant you want to have a financial commitment with for income you depend on.

Reviewing the last three bank statements will show you actual deposits to actual expenses, you’ll be able to see if they’re paying rent on time now, and bank statements will tell you a lot more about how someone is managing money.

Someone without a bank account is an automatic decline for all of our applications for privately held investments. 

  

Rule #2 Recurring Debt to Monthly Income Ratios. New regulation prevents us from solely denying tenants that are taking home less than 3x the rental amount in take home income, but that doesn’t mean that we can’t pick the best tenant out of ten with the strongest income, or that we can’t deny a tenant based on feasibility considering that their expenses may be more than their take home income.

You have to think like an actuary to prevent introducing adverse risk to your portfolio.

Rule# 3 Reviewing credit. Consider the credit score, but look for the patterns. Are they spending more than they make on lifestyle and getting into debt, and what trajectory is the applicant on?

If the applicant has low balances on credit cards and timely payments, it’s usually a good sign.

If an applicant makes $4,000 per month, but their car payment is $800 a month, this might be a red flag layered with climbing debt balances in recent months.

An 800 credit score doesn’t always mean they’ll be a great tenant or that they won’t default.

Always go by the patterns to form your opinion of their financial habits and in determining whether or not you have a sustainable applicant.

Are they one car repair, one life event or one dispute with a co-applicant away from not being able to pay rent? In the case of multiple applicants, can any of them afford the rent by themselves if they have a falling out?

We’ll be including a free tenant screening guide on our home page to download available at www.mytenantaccess.com
     

5. Tax and Legal

Tax: There may be advantages to obtaining a sales tax license for capital improvements to avoid paying sales tax twice for materials and maintenance repair invoices that are itemized for materials and labor, setting up a proper pass through entity could save you thousands, some income may be accurately described as ordinary income instead of capital gains-savings tens of thousands. It’s worth having a good tax expert on your team that understand real estate.

*Ask other investors you know for recommendations.

Legal: It’s important to properly set up entities to not only help lessen tax burden, but also to shield you from liability. You should also run your entity like a business. If you are paying anyone in cash, as an example, your entity protection may be contested because you are not operating as a business. How you sign documents, how you administer accounting, competent legal review and how you document everything are all important for minimizing business and personal liability.

*Ask for recommendations from other investors about a good legal representative to consult you about effectively utilizing entity protection.


6. Positioning and Marketing

Leasing for the most money and attracting tenants that take pride in the way they live will directly relate to the condition of your property and how you conduct showings. Take a look at the properties in your neighborhood that are leasing for the most money. Are they painted with neutral colors, do they have hardwoods, are the yards nice, do they have affordable improvements you can make to compete?

A qualify finish will help you command the best tenants, the most qualified tenants and will have you in a position of power.

Good qualify photos, video, a carefully crafted property description that highlights your rental’s unique features, pricing and presentation will all play a role in how much your property will lease for and what kind of tenants you’ll get.

It’s common sense, but if you only have five blurry photos, and a boring description will a full market value price, most would-be renters will just move on to the next property that has all of the information and the photos to help them form an opinion quickly about whether or not they would like to consider setting up a showing for your rental. They aren’t going to call and ask for more information and additional photos unless they’re desperate. They want to make a quick decision to get the tall task of finding a new home off of their list of things to do as soon as possible.

If it is difficult to set up a showing, that is another reason why a property will take longer to lease and will ultimately lease for less money.

It’s all interdependent.

Professional photos and media can be used for the next five years, or more, so it is worth the cost of paying a professional photographer and/or videographer.

Tenant Access will make accessing your rental for showings easier, but you’ll want good marketing and positioning to get renters to the door to see it.

Check out our podcast for insider information related to growing your property management company brand and/or your real estate portfolio by subscribing to our podcast: https://www.youtube.com/@tenantaccess