LIGHTHOUSE PROPERTY MANAGEMENT
In reality, owning and renting out houses is pretty straightforward. Done right, they can be one of the best and easiest ways to earn a passive income. Done wrong, and they can be the easiest way to give yourself a headache and lose money.
So, how does one go about doing it right?
You start with the house.
What shape is it in? Do as much as you can to ensure the house is in good form before even beginning to rent it out.
Consider things like how many people will be living here - is it a 1 bedroom executive apartment, or will it be a 5 bedroom student house?
One area of concern is plumbing and bathrooms.
With 5 people occupying a home, it means there will be 5 of everything (5 showers daily, 5 loads of laundry every few days, 5 meals cooked in the kitchen every day etc.). Tenants may also have significant others that stay over for periods of time - now your house is taking on 6, 7, 8 of everything!
You need to prepare your house for the added wear and tear that more people can bring. Install higher quality toilets, update plumbing, use durable flooring, install bathroom exhaust fans rated for around 100CFM or more. The more showers mean more humidity which means a higher potential for mould growth.
In essence, everyday use items should be durable and good quality.
A side note here - this is a great time to talk about spending money wisely. A lot of landlords just want to get the cheapest materials installed because it helps their profit margin (at least in the short term).
A great example is the bathroom exhaust fan - you can get cheap ones that pull around 50CFM, but is saving $50 now worth the cost of mould abatement a year or two down the road? Obviously in our opinion, no it’s not.
Another area of concern in a lot of rentals is flooring.
No doubt, the best floor all around is vinyl plank - it looks great, is cost effective, very durable, and water proof.
Carpet is our second choice if you’re looking to save money, but it comes with a few caveats. Since carpet can degrade quickly, especially in high traffic areas or if tenants have pets, we recommend getting a cheap grade, and replacing it at every tenant turnover. Carpet looks great when it’s new, but looks terrible when it is old, dirty, and worn down.
Our last area of concern is fire safety and health.
Please ensure that all smoke alarms and carbon monoxide detectors are up to date and functional before allowing tenants to move in. They also need to know where they are, and not to tamper with them. I can’t tell you how many times I have gone into a rental to check smoke alarms only to find the batteries missing and see that they have been put in tv remote or video game controller.
Fire extinguishers also need to be readily accessible and in the correct areas - check with your local rental housing rules as they sometimes vary.
We highly recommend hiring a fire security company if you’re not 100% sure of what you’re doing - it’s a fairly inexpensive cost that can give you and your tenants piece of mind when it comes to fire safety.
Moving on to tenants
Finding the right tenant is what this business is all about. Almost all great tenants can tell when a landlord has taken care of the property and taken their comfort and well-being into consideration.
Always ask for proof of employment and a credit check. Again, this is something that great tenants are familiar with and happy to provide. It shows them that you really care about your house and don’t want to rent to just anyone.
When renting to students, ask to have parental guarantor forms signed. This is an added level of protection against rent not being paid.
Spending a bit of money up front can save a lot of money later on.
As a property manager our job is sometimes difficult because it can seem like all we want to do is spend owner’s money. When really we are doing our best to have your property earn as much as it can for you.
Houses are a bit like cars, you can choose to do nothing, but if you want your car to last you more than a few years, then you need to do regular maintenance. You need to replace things before they totally break or degrade.
You need to be proactive.
If you do all of this, you’re bound to have an exceptional rental business experience.
Though there are a lot of other things to consider when owning a rental, we’ve found that these are among the most important. If you have any questions, please feel free to leave a comment or contact us directly.
Phone: (519) 829-5047