A unique real estate investment opportunity is available to those that are interested. A surplus of qualified tenants and a growing number of available properties for lease have created a boom in the rental market. The majority of our clients have homes that they want to sell, but cannot get a sale price that is satisfactory. They turn to us to find a qualified tenant and manage them during their lease term. It is important to follow some basic guidelines for renting your property.
A question we often get is “Which property makes a good rental unit?” In my opinion, the best properties to purchase for rental purposes are 3+ bedroom, 2+ full baths, 1200+ square feet, and in a desirable location. An investigation should be done prior to the purchase to determine what similar homes in the area have recently been leased for. You may not get a “steal” on the purchase price and your return may not be as high after all your expenses, however, you are setting yourself up for less headache and financial strain down the road by purchasing a quality home in the right area. Our focus has always been on stability rather than huge profits, and the people we work with tend to value the same principle.
The phrase “do it right the first time” could not be more appropriate for property rental. It is critical to obtain thorough background checks that include information on credit, debt, collection history, rental history, criminal history, and income verifications on potential applicants. If you put the right person in your rental property at the beginning, it saves time and money. If you rent to anyone who applies and “see what happens” you are in danger of renting to the wrong person, which could end up costly. Another example of doing things correctly from the beginning involves ensuring the condition of the home is move-in ready prior to showing it to prospective tenants. It is difficult for most people to look past holes or scuff marks on walls, un-swept floors, dirty appliances, etc. To maximize showings and to efficiently locate a quality tenant, the home needs to be in the best shape possible.
Once a solid tenant is located, a strong lease clearly outlining responsibilities is also crucial to your success. While there are many variations of leases on the internet that can be acquired for little or no cost, these documents offer little protection for the homeowner and may not take certain local or state laws into account. It is wise to use a licensed brokerage to administer official lease documents to best protect yourself and your investment.
This is a great time to purchase investment property, provided you take the necessary steps to put yourself on the path to profitability. Research the area and type of homes available, put the time and money into the home to make it great, screen your applicants well,and start collecting checks.
Tom Potter has 3 years experience as a Leasing Agent and Property Manager. Tom currently manages approximately 50 residential single family homes, condos, or lofts throughout the St. Louis area with average rental price of $1350/mo. Contact Tom for all your property management needs.
Tom Potter
Property Manager and licensed Realtor
Hermann London Property Management
7350 Manchester Rd., Maplewood, MO 63143
314-920-0781
www.hermannlondon.com/property-management
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