Placing your condo for rent requires more than just you going to an online property listing site and advertising there. Proper management of assets requires you to understand what your responsibilities as a landlord are, what you should to when people inquire, and how you should maintain the property. Renting out a condo is a business, and just like any business, there are methods to follow, practices to maintain, and guidelines to understand. Through this guide, you will be able to have an in-depth look at the actions of professional landlords and know more about what practices they follow and what activities they avoid.
Set Competitive Pricing
Yes, it is tempting to set a high price so that you can maximize the amount of money that you can make from the unit; however, the higher the price you set, the greater the likelihood that people will ignore your apartment. No matter how well maintained a unit is, if the price is too high, people are unlikely to consider it as something they can actually rent. There is also the fact that most people that hunt down apartments to rent tend to know the average price of units in a particular area. If you set prices at a rate that is much higher than current local prices, people won’t even need to see the photos of your apartment to know that they should avoid it. It is also worth considering crypto currencies these days as there’s a whole new market there (BTC to USD).
To set a competitive price, check out the various condos for rent on sites like DDProperty and determine what the average price is for your unit type in the building and area it is in. This is the fastest and most expedient method of immediately setting a competitive price that potential tenants are likely to go for. You can adjust your set price depending on any improvements or lack thereof to your apartment. For example, does your unit come with a water heater and the other does not? Increase the price of yours by three percent since it has an amenity that the other doesn’t have. Is your unit 20 square meters while a similar one is 24 square meters? Lower the price by five percent since your apartment is smaller. You can’t just set a price based on what others are doing, you need to determine what sets each unit apart and adjust your price accordingly.
If you spent a significant amount of money renovating your apartment to make it look awesome, are you going to charge the same rental price as an apartment in the same building that hasn’t been renovated? Of course not! You want to get your money’s worth and the best way of doing this would be to increase the price of your rent accordingly.
Know the Law
All too often, new landlords get so excited about accepting their first rental payment from a client that they neglect to take into account the corresponding taxes that they also need to pay. Yes, even if you are a small-time landlord with a single apartment that you are renting out, it is still taxable based on local laws. Failure to properly remit taxable income to the government can result in significant fines. Landlords must report rental income using Schedule E of their IRS 1040 tax return form. You should research all relevant tax codes in your area, determine what is the right amount to pay, and add this to the rent that you are going to charge your client. After you have done this, that is when you can advertise and communicate with potential tenants.
Place Limited Liability Options in the Contract
A rental agreement should always be in writing; avoid “handshake deals” at all costs since these are hard to prove in a court of law and are not considered wholly legal. In any contract that your client signs, there should always be a limited amount of liability indicated. Limited liability means that you are partially responsible for repairs and maintenance of the condo to only a certain extent. For example, the contract should state that any damage caused to the apartment that was done by the tenant should be paid by them and not you since you are not directly responsible. The same can be said about regular cleaning, the association dues for the apartment, utilities and other miscellaneous fees.
The contract should indicate that you are responsible for the regular upkeep of the unit, but this should only extend to damages that are not the tenant’s fault such as having to repaint the walls, replace worn outdoors, as well as ensuring that the physical structure of the apartment is kept intact. For example, if the ceiling of the apartment starts to leak water, this is likely due to issues in the unit above the tenant and, as such, it is your responsibility as the landlord to investigate the issue and rectify immediately.
Screen Your Potential Tenants Carefully
Always perform proper due diligence when it comes to your tenant and screen them prior to agreeing to any rental contract. There are a lot of online tools available for landlords that enable you to check a person’s current employment records, police clearance, as well as a variety of other details. You need to ensure that the tenants have stable employment, got into the country legally, and are not criminals rent the apartment. Failure to do any of these actions can result in a significant backlash which can lead up to a police inquiry.
Think About Getting Insurance
One thing many landlords seem to neglect is to ensure their apartment against potential damages. Yes, insurance is an additional monthly cost; however, there are several aspects to it that you need to consider. First, it is still a small cost compared to the potentially massive expense that you would incur if your apartment burned down. Yes, this is unlikely to happen, but as seen in the case of the massive fire that engulfed the Address Hotel in Dubai in 2015, even the safest buildings can have accidents occur to them. It is better to be safe rather than sorry and, as such, you should consider insuring your apartment against such potential damage. The second aspect you can consider is that you can include the insurance payments into the monthly amount paid by the tenant. Through this method, you won’t be the one paying for the insurance directly, and this helps you in saving money.
Renting out an apartment is beneficial to both parties involved, you as the landlord get an additional source of income while the tenant gets a place to stay. Such a situation is what all owners should focus on getting since this maximizes their profit and minimizes their risk. However, if it ever reaches a point where the relationship is no longer beneficial, wherein the tenant is taking advantage of you by always being late with the rent. You should assert your rights as the property owner and indicate that if they are unwilling to follow your rules and conditions, then they should move out. Never be afraid or hesitant to exercise your rights, you are the owner and who stays or goes is completely up to you.