Hi! Today you can find me at Modest Money talking about how to crush your debt by earning more. I was also on Joe’s Stacking Benjamins podcast to discuss retiring abroad, which was a lot of fun although I am far from a radio pro like Joe is!
As you may know, I own a 3 bed flat in the UK. Each of the three rooms is individually rented to a young professional. Generally, people stay for a year or so, and then move on to live on their own, although I have had two tenants who stayed for three years. That is a landlady’s dream. Move the tenant in, cash a cheque for three years, and you will be sad when they leave.
The best part is that in the almost five years that I have owned the property, I have never had more than a week of vacancy between tenants. All of it managing the property from overseas. Even last month when I had to deal with both a tenant moving out, finding his replacement, and a broken washing machine. Here are a few tips to keep your cool while managing your rental.
Set a fair price
We all want to make crazy returns from real estate, but if you price too high, you won’t get tenants, if you price too low, you will get any kind of tenants. You want to be right in the middle, at an attractive price that won’t make people want to move out after three months because it is too expensive. Research your competition and test the price online, adjusting your ad depending on the number of answers you receive.
If you don’t feel the person, just say no. Letting someone in will get you a month deposit and a first month of rent, but if they burn the place down, that won’t be much of a consolation.
What I do with my tenants is have them conduct the viewings for potential roommates. Sure, they do me a favor by doing so, since I am not even in the country, but I also ask that they have a chat with the person to make sure they all get along. I prefer to wait for the right person, and if the tenants have vouched for that person, then they will be responsible should things not work out.
I used to own a property in Paris, that was a nightmare, the tenant died, his widow refused to leave or pay rent and in France it takes 18 months to evict someone. Thankfully, I had insurance and the rent was covered. Companies like CIA Landlords Insurance can help you sleep better at night knowing you would be covered should something happen. If you are getting contents insurance for your things, make sure the tenants know it doesn’t cover their personal belongings.
All my bills are paid automatically, and all tenants make an automatic transfer to my bank account with the rent money on the first of the month. So if I am traveling or just busy, I don’t have to remember paying the TV license. Nor will they be left without electricity. It makes life much, much easier.
Have a go to person
I used to live in that flat so when I moved out and rented what used to be my room, my roommates stayed around, and they were happy to give me a hand, forwarding my mail or letting the plumber in when the heater would act funny. It is important that you can trust your tenants, and having a go to person you know will be responsive with emails or phone calls is key. Now all the roommates I knew moved out but I still have a person I can count on. I know if something breaks they will first try to fix it before they call me to buy a replacement.