You may think it’s only the tenant who has a hard time with mortgage paying trouble, but as a real estate investor or landlord, there may be times when it’s hard to pay the mortgage on your end as well. Here are some things you can do to avoid facing difficulty in paying your mortgage each month.
Avoid Mortgage Paying Trouble
Keep your properties full. While it may sound overly simplified, this is the most obvious method for ensuring you’ve got rent money coming in each month to cover your property mortgage payments. Don’t allow yourself to get slack on advertising for new tenants in the Nashville area. And don’t put off screening applicants or filling your properties because you get busy or overworked. Recognize filling your vacancies as a major aspect of your REI business success and deal with it quickly and efficiently every time.
Do your best to find quality tenants. While you want to keep your properties full, finding good quality tenants is key. By “good” it means they pay their rent on time, keep the property maintained and don’t abuse the lease. By using background and credit checks, you can find the best tenants available and thereby do what’s possible to keep your rental fees coming in regularly, which will help you pay the mortgage when it comes due. Ask for previous rental history and then call former landlords to see what kind of tenant were they. Did they keep the place clean, pay on time, give proper notice before leaving and are there any complaints from the tenants. By following these steps you are more informed and can make a better decision.
Good Accounting Practices
Keeping good records and accounting is paramount to running any successful business. Setting a budget and reviewing it monthly will help you from overspending while maximizing your profit. Set aside additional monies for repairs particularly big-ticket items like new floors or roofs. By setting money set aside, you will build an emergency fund for later times. This will go a long way to avoid mortgage paying trouble.
When you decide to sell, the buyers will want a complete financial picture of your landlord company. They will want to know your vacancy rate, rent rolls, maintenance and repair expenses, lease documents, and a profit loss statement.
Finding Good Tenants
Look for longterm tenants. Don’t assume that quality tenants will necessarily be longterm ones. Some good renters may know they can’t stay over a few months at most. They may be students or working a temporary job. They may just be living in an area waiting to move or retire somewhere else. Whatever the situation, opt for longterm renters when the choice is available. Doing so will make filling a vacancy at least a more infrequent possibility. With the current growth of Nashville, Franklin, Murfreesboro, and Mount Juliet, finding good tenants among all the newcomers has greatly improved.
Keep the property well maintained. If you want good tenants, longterm tenants, and tenants who pay their rent on time, do your part to keep them. Deal with maintenance issues quickly. Make repairs as necessary. Upgrade appliances or at least ensure the ones you provide are in good working order. Respond to your tenants’ calls quickly, or if you can’t, be sure they know you’ll be unavailable for a while.
Rental Properties Near Colleges
One of the better investments is rental properties near colleges and universities. Having multiple bedrooms and bathrooms, the house or apartment is rented out to several students together, not unlike a dormitory. The key is to have the parent co-sign and by doing so they are responsible for damages! The rents on dormitory-style rentals are usually higher. An example would be a 3 bedroom 2 bath house that might rent for $1,800 or $2,000 a month. With students, it might be $750/student or more, grossing $2,250 or more per month.
Being A Good Landlord
Being a good landlord will go a long way in developing lasting relationships with your tenants, which will, in turn, help you keep them in 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. A tactic that works to maintain tenants is to offer them an incentive by staying like adding a ceiling fan this year and next year paint an accent wall for them or have the carpet professionally cleaned as a gift.
Maintenance and prepping a unit for renting is always a big expense for all landlords. I have found that buying new appliances or scratch and dent appliances lasts so much longer and saves money over time than repairing when a repairman is required. Garbage disposals are always a pain for landlords because they clog easily particularly with tenants who aren’t as responsible. Many landlords just remove them altogether when the tenant moves out.
Another big saver these days is laminate flooring. What a great solution to carpet that always needs professional cleaning or replacing. Keeping the paint colors the same between units really saves money and questioning “what color was that” when trying to touch up paint. The new designer colors really help units rent faster and for more money instead of the old developer white!
In a tough economy, it’s important to do all you can to avoid facing the difficulty of mortgage paying trouble. That applies just as much to an REI professional as it does to the average renter. These simple tips can help as you work to develop lasting, longterm, rent-paying tenants to keep your properties bringing in the income you need every month and minimize mortgage paying trouble.
Many landlords over time become tired of owning rental property and dealing with all the problems of landlording. If you find yourself in this boat, give us a call at 615-235-0612 at Southern Homes Investments Nashville TN. We would like to talk to you about your property and see if we might buy it. You may also benefit from our article “6 Tips for Selling Your Unwanted Multi-Family Property in Nashville“.
Disclaimer: David Wright is a licensed real estate agent in Tennessee and this article is not a solicitation to list your property.