Top 3 Challenges with Tenancy
An investment property can be an excellent financial move, but it is not all portfolio building and cash flow. Managing tenancies comes with a range of challenges to deal with. Here are the top 3 challenges faced by landlords and how to deal with them.
1. Rental Collection
Constantly dealing with tenants who do not pay on time can be incredibly frustrating, especially if they are repeat offenders. Also, waiting on tenants to pay could be financially draining for landlords. If that situation sounds all too familiar, consider trying these ideas to improve your chances of consistently collecting rent on time:
Strictly enforce your rent collection rules
Follow up with tenants as many times as necessary to collect rent
Screen tenants, thoroughly so you can choose those who are likely to pay on time every month.
2. Competition
New properties are being added on a daily basis and they are all competing for the same thing as you are: the ideal tenant in the shortest possible time frame. Imagine you are doing some online shopping: What would make you stop and click? It’s a similar story when it comes to your property.
Finding a balance between maximizing profit and accommodating tenants are problems landlords face. Keeping your rental prices comparable to the competition is key to success as a real estate investor. One easy solution to avoid over-valuing your rental property is to compare your rental prices to those that your competitors are offering. Seeking out comparable properties and averaging out their rental prices can give you a sense of just how much you should be charging, given the overall real estate market and your particular location.
Smart interiors are key to winning in the highly competitive property market. As there are hundreds of identical units available in a building, the aesthetic of a unit has become the biggest weapon to trigger the emotion of your tenant, other than a competitive rental price. If the tenant loves it, they will be able to justify to themselves why they need to rent this particular property of yours. The value of your rental property lies in the enjoyment and lifestyle of your tenant, which is irreplaceable by other properties at a lower rent
3. Tenant loyalty
High tenant turnover can kill your cash flow fast. Losing a tenant requires you to spend time and money advertising, showing, running background checks, and doing the necessary administrative work to get one tenant out and another one in. On top of that, your property does not generate any money for you while it’s vacant. So, if you spend a lot of time trying to find a new tenant, you could find yourself in severe financial trouble.
A couple of quick tips to reduce turnover include communicating with tenants regularly, and making sure repairs or maintenance issues are settled in a timely fashion, if there is any. The longer tenants have to deal with property maintenance issues, the more likely they will want to move when their lease is up.
Some renter turnover is inevitable, unfortunately. However, it is possible to prepare ahead of time for renter vacancies by getting leads on potential new renters to replace the ones who are leaving. The issue then becomes how to get these leads.
Property management is a critical part of being a landlord, but it certainly is not easy. You must screen tenants, collect rent, deal with complaints, keep your tenants happy, and more. All these tasks can take a toll on any landlord, especially those who would rather not deal with stressful property management tasks. If that sounds like you, let us help you so that you can just sit back and relax. Get your free consultation here.