In Part 2 of our series on optimizing your rental property, we'll take a look at finding the best local agent for your circumstances. Investors are purchasing rental properties to add to their investment portfolios because interest rates are so low, and money is so cheap to borrow. In addition, rent prices are skyrocketing so the probability of making money on a rental investment property per month is high. Also, home values are still increasing at an above average pace. If you are looking for a rental property to purchase, you will need to find the right agent to help you. Your agent should be qualified to help you rent the property and manage it from month to month as well.
Rental Agent Attributes
The first attribute you should look for in a rental and property management agent is that he/she has experience in the real estate rental field. Ask friends and neighbors if they know of anyone who manages rental properties nearby. If the community you are considering has an association, the management company might know agents who will help you find, rent and manage a rental property. You can search online for local rental properties to find agents who have them listed. You can also search the internet for local property management companies.
Finding the Right Rental Property
Your agent should be able to help you find the right property to rent. One that will bring a good return on investment (ROI) is your main goal. In an article written by Sarnen Steinbarth, a Forbes Councils Member, How to Calculate the ROI on a Property Investment, he states, "With long-term appreciation, a monthly cashflow and tax advantages, owning and operating rental properties will increase your wealth so you can save for retirement." This article spells out how to calculate ROI for a rental property. You will want to find a property that has a healthy structure and bones. Be sure the property doesn't need any major, high-cost improvements right away. Be sure the foundation, roof and siding are in good shape. Have a professional inspection performed to be sure the plumbing, electrical and HVAC systems are working properly and are not defective.
Finding a Tenant
Once you purchase a rental property, your agent will help you find a qualified tenant. Your agent will list the property in his/her local multiple listing service (MLS) and on top real estate and rental websites such as zillow.com, trulia.com, hotpads.com, Realtor.com, rent.com and apartments.com. Your agent should have a system in place for when prospective tenants apply for renting your property. To remain in compliance with fair housing laws, this system should be the same for each and every person who applies. Your agent should provide an application to fill out and instructions listing what other documents are required. Proof of income such as year-to-date paycheck stubs and tax documents, copies of IDs and other documents should be required. Your agent should be affiliated with a credit bureau so he can pull a credit check on all applicants. He should also pull a criminal background check on the tenants; some towns or communities actually require it. A sample website to use for a background check is People Scanner. Once your agent collects the applications and supporting documents and pulls the credit and background checks of applicants, he should go over the applicants with you. Together, you will make a decision on who to approve to become your tenant. A lease will be signed, and a security deposit will be collected at this time.
Property Management Responsibilities
Hiring a property manager is in your best interest to protect your investment. After a lease is signed, property management responsibilities don't end. According to an article on apartments.com, How Much Does it Cost to Hire a Property Manager?, property managers typically charge eight to 12% of the rent per month. The month-to-month responsibilities of a property manager include collecting rent and attending to tenants' questions and any problems with the property. Year-to-year responsibilities include preparing an end-of-year report for the landlord to use for taxes. Some property managers are also responsible for keeping up with regular home maintenance such as resurfacing driveways, ensuring furnace filters are changed periodically, having HVAC systems cleaned and checked and an annual walkthrough.
When you hire an agent to help you find a rental property, rent it and manage it, be sure you get their services in writing. You will be signing an agreement with your agent. Finding the right agent will make sure your rental home value increases and your financial goal of owning a rental property is attained.