How to Transform Your Rental from a Money Pit to a Money Machine

    4 Tips for Buying Your First Rental Property

    These days, you have to make a little extra money any way you can. Having a rental property is a great way to do it. Unfortunately, your rental can become a money pit before you know it. There are so many things that can go wrong, it can be overwhelming. A rental property has a life of its own in that you don’t control most of what goes on with that property. You have no control over what Mother Nature throws at you. When it rages, there is little you can do about the fallout.

    Beyond nature is the nature of the humans who rent your property. You can do everything humanly possible to weed out the bad seeds. But you are going to be wrong at some point. And being wrong is going to cost you a lot. You also need to worry about possible legal liability that could cripple a guest and bankrupt you. Sure, you have a good lawyer. But so do they. You really can’t protect yourself against every negative eventuality. But there are some things you can do to increase your chances of making a profit. Here are a few:

    Have a Source for Flexible Financing

    Do you have a contingency plan for when the storm comes crashing through? No, really, storms come crashing through rentals all the time, especially those highly sought-after beachfront properties. You need a contingency plan that involves something other than filing for bankruptcy.

    Look into credit union loan rates and find one that has the rates and features you need. The best time to think about it is right now when the sky is clear. The last thing you want to do when digging out from under storm damage is trying to figure out your finances. Violent acts of nature do not have to destroy your business. The key is knowing how to bounce back quickly. Where can you turn when things take a turn for the worse? Once you know that, you can survive just about anything.

    Before moving on, you should consider the effects of COVID on your tenants. Just as the storm can hit you, it can also hit them. COVID is a disaster that took us all by storm. As a post-New Year landlord, you might not be a post-COVID landlord. There are laws about evictions that could be a stumbling block to the profits you were hoping to make by now. No one is to blame. It is just another reason you have to be very well-financed. The storm has not passed quite yet.

    Give It the Smart Home Makeover

    People are starting to be turned on to the smart home lifestyle. This trend is even trickling down to rental properties. Renters will be less likely to rent from you if you are anachronistic about smart devices. Make it clear that they are welcome to use smart devices. You can even provide a list of smart home devices that are easy to install.

    There is no reason you should include or at least allow smart locks. They can be installed and removed in a nondestructive way. The same goes double for smart lights. Being smart home-friendly is the smart differentiator for landlords.

    Offer Flexible Leases

    Flexible leasing is an obvious but rare feature for rentals. Some people only need a place to live for 6 months before work moves them to another assignment. Some people are in it for the long haul and want to lock in a price for the next 5 years. 12 month leases simply don’t work for everyone. There are incentives you can offer to entice longer stays. But the lack of flexible options means you are leaving a lot of money on the table.

    It is easy to lose money on a rental. Decrease your chances of losing money by being well-financed, and knowing where to turn when you need more. Be smart home friendly. And give more people a chance to choose your property by offering flexible terms.

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