E-Renter News

Jackie has been a landlord for almost fifteen years. She’s had her share of challenging tenants, but overall, she’s thoroughly enjoyed running her rental property business and watching her investment property portfolio grow.

Laurie and her family had been living in one of Jackie’s single family rental homes for the past three years, and her lease was coming up for renewal. Jackie was surprised when Laurie approached her to say they had to move at the end of the lease.

Why? They needed a break on the rent.

Like many families, Laurie and her husband suffered a job loss along with unexpected medical expenses. Luckily, Laurie’s husband found another job, and the couple feels like they will soon be in good financial shape again. But to cover their medical expenses, they needed to pay less for rent.

Because she runs a tight ship, Jackie approached this from a purely business standpoint. Laurie was a fantastic tenant, who always paid rent on time and never caused a problem. They had a respectful working relationship. Jackie didn’t want to lose Laurie as a tenant. She asked what rent they could afford, and was surprised when Laurie replied that they just needed to reduce their rent by $150 per month, from $1550 to $1400.

Jackie knows the comparable market rents in her area. She knows that this home was above the average market rent. She also knew she had “wiggle room” because she has no mortgage payment to cover.

Jackie did the math, comparing the loss in rent income to the expenses she would incur if Laurie and her family moved out:

• Reduced rent 150 x 12 $1800
• Cleaning fee $ 150
• Carpet Cleaning $ 150
• For Rent Ads $ 60
• Loss of Rent Income $1550

The total for loss of one month’s rent, cleaning fees and advertising is $1910. That’s more than it would cost to reduce the rent for one year by $150 per month! And it doesn’t include any additional repair expenses or additional rent loss if it took longer than one month to find a qualified new tenant .

Jackie made the decision to reduce Laurie’s rent by $150 per month for one year. She gained even more loyalty from a grateful tenant, while knowing she’s not out any extra cash.

The real estate market is still precarious, at best. Some areas of the country, like Durham, NC and Knoxville, TN, have been identified as good possibilities for rental property investment, while others,including Reno, Las Vegas and Orlando, are described as “dangerous.”

If you’re thinking of entering the world of real estate investing, here are some tips we’ve gathered to get you started on making a good decision:

Read, read, read. There are thousands of books out there on real estate investing, from Real Estate Investing for Dummies to The Beginner’s Guide to Real Estate Investing. Both are available on Amazon.com.

Ask, ask, ask. Real estate investors are full of advice. Find investment property owners in your town, and invite them to coffee. They will likely be happy to offer you some words of wisdom.

Keep it local. When starting out, it’s a good idea to avoid long-distance ownership. Some would say avoid it forever, but there are plenty of long-distance landlord success stories out there, too. Before you consider a property, learn everything you can about your local real estate and rental market.

Enlist an expert. When you start getting serious, find a real estate agent who knows the rental market. There could be some screaming deals on single-family homes or multi-family buildings in your area.

Decide if you’ll manage your property yourself or hire a property management company. There are plenty of pros and cons about both choices. Educate yourself through online research or consult the books you purchased in step #1.

Don’t spend all your cash on the purchase. You’ll need some in reserves for repairs, maintenance and emergencies. Or even to buy your next investment property!

Talk to a lawyer and an accountant. Learn the landlord/tenant laws in your state and city, as well as the basics of taxes for rental property owners. Consulting with professionals up front can help you make the final decision on whether or not to invest in real estate.

Today could be the very best time to invest in real estate, if you do so mindfully.

• Create a business plan and strategy.
• Do your homework first.
• Stick to your plan.
• Consult with your attorney and accountant for sound advice.

Good luck!