The Educated Landlord

Making Landlording Easier

You are here: Home / Archives for Landlord Business

Ask The Landlord – Marketing Your Rental Garage(s)

By

Questions to ask a landlord

Ask The Landlord Feature

Welcome to the first Ask The Landlord Post! After an informal survey the majority of readers of the Educated Landlord overwhelmingly preferred email/article format so this is where we’ll start.

It may evolve to the occasional video or audio file, but I’ll also include the answer in text to try and satisfy the majority. So let’s get started with our first question.

The Background

Our first question comes from Prit who’s located in the North Eastern part of the US. He is focusing on one specific area of  rentals right now, garages and his plan is rather brilliant.

Ask The Landlord - Garage rentalsThe more I’ve thought about it the better it seems and it’s a low cost way to get into Real Estate.

Prit negotiates with property owners to rent their garages and then sublets them to other individuals and in only his first month has six deals for garages in process. The beautiful part of this is the low point of entry.

If he can negotiate the garage for say $200 a month he may need to put $200 plus an equivalent deposit down so it’s $400 to acquire, then he needs to rent it out for $300 per month with a matching deposit and he is now $100 up per month.

I’ll ignore the deposits as they are basically cancelling each other out and aren’t profit, but on his $200 investment he is making $100 profit. That’s a 50% return on his investment which isn’t bad at all. If someone doesn’t have $10,000, $25,000 or more to put down to purchase a rental property this allows you to get your feet wet and learn some basics of Real Estate, contracts and rentals.

Now if you can get that garage for $100 a month and still rent it out for $300 that return gets even better. But there’s still challenges.

To make this really work you need to scale it up, you need solid contracts to protect yourself and you will also need insurance to cover your liabilities. These last two will eat into your profits, but as you scale the costs go down.

I can see Prit expanding this as he gains confidence and moving to potentially renting full properties and subletting and from there who knows. There’s lease options or rent to own situations which are similar, but on a bigger scale and even commercial opportunities. The sky could be the limit, but the important question for Prit is the focus of this article. So here it is.

What Are Ways I Can Market My Garage(s)?

To be successful in this venture one of Prit’s keys will be to have people ready to take his rental garages as quickly as he lines them up. If he secures a garage for June 1st, but doesn’t have a tenant until July 1st, it can take him two additional months to just break even.

If this is a once in a while occurrence it’s not bad, but if this happens on every unit or it takes even longer to fill, suddenly it’s not very profitable and becomes a huge headache. So you need to create a system to funnel interested parties to call you. you want to be come the GoTo Garage Guy!

So how do you do this? (and this is where everyone needs to pay attention as this doesn’t just apply to garages!)

First, Who Would Want To Rent A Garage?

You need to start thinking like your typical tenants. You need to find out who they are, where they hang out and make sure you’re there.

People who rent garages usually fall into a few categories. Many of them are handymen who need a place to work on their projects or they can be small business owners like plumbers,  renovators or even landscapers to name a few that need storage space and lets not forget those weekend mechanics who want a place to tinker on their vehicles or their friends vehicles.

I suggested initially he start by doing online searches for garage rentals to see where people are already advertising garages. This also gives you a way to track current rental rates and availability.

With supply and demand prices can go up and down. With garages, especially in Northern areas, there is increased demand in the fall usually right after the first freeze or snowfall, then in the spring when outdoor conditions improve it slows down.

The rational is that it’s ok to work on your vehicle or store stuff outside in the warmer months, but once it starts getting colder it’s nice to have it indoors, especially if it’s a heated space!

Next targeted area would be the weekend mechanics or the guy who wants to store his precious vehicle during the off season (again back to the winter months).

Garage rentals - ask the landlord questionsFor this you could contact local car clubs or even some of the car dealerships. I know one garage owner who rented out half of a garage to a vehicle owner who kept his collectible Porsche stored indoors in a heated space all winter and then took it out every weekend during the summer months just to drive.

You could also contact auto parts stores and see if they have bulletin boards where you could post you have garages available. Many weekend mechanics get a lot of flack from spouses for taking up the garage with their old vehicle, auto parts stores would be a great source of potential clients.

I personally rented a garage to a weekend mechanic who needed to get his vehicle off the street so he could really tear it apart, he found me on an online ad and was with me for four years until I recently sold the property. Once they get used to having it, it’s hard to give up.

Side Note – Prit already contacted a car club and they want him to come attend an event on the weekend. What if he not only got a new tenant, but also had a list of additional people who want a garage and would put a deposit down in advance so he can go find them a garage! He could have his funnel filled for the next half dozen garages

Let’s talk about small business owners now or trades people. Where do they congregate? This can depend on the type of business, but why not check union halls for plumbers, electricians and carpenters?

Also, how about plumbing and electrical distribution companies? If any of these have bulletin boards that allow you to post on them why not create a nice simple brochure to attract potential clients.

Small landscaping companies can use space as well. During the winter months they may want to store summer equipment and then in reverse during the summer. Most year round landscaping companies have snow removal services in the winter to keep busy so they need to store plows, shovels and items for extended periods.

I can’t think of where they may congregate but I know every spring I get all kinds of door hangers, flyers and brochures that appear at my house so why not start calling a few of them? The big guys can typically pony up the money for nice buildings and storage yards, but the smaller outfits need ot keep costs down and a garage may be just the ticket.

You Need To Think Further Outside The Box

By knowing who potential tenants are you can start approaching them before they even know they need you. With the car folks if you provide a good product and a good service word of mouth may be your big ticket.

If you believe you can get referrals, reward people!

Whether it’s $50 off the upcoming month for a referral that rents for a minimum six months or something more creative, if you get tied in with the right people you may have a constant stream of referrals. Maybe if you’re just focusing on car people you reward them with gift cards from select auto parts places.

Now you’re helping the auto parts place and they may be even more helpful going forward. Or perhaps just hearing why you are buying the gift cards is enough to start the conversation about what you’re doing. That conversation could open new doors and referrals!

Rules and regulations vary incredibly from city to city, district to district and state to state, so know your local rules before you go too far down this path.
There may be restrictions on what can be stored in a garage, what work can be done in a garage or even whether renting a garage itself is legal in your area. Knowing this in advance you save you considerable headaches.

Updated Ideas For Garage Rentals

So I recently stumbled across another way to advertise not just your garages, but storage space you may have.

It’s a peer to peer storage search site set up with a similar concept to AirBnB called StoreAtMyhouse.com. As landlords you’re able to list your space and get it in front of way more potential tenants.

Being able to list your space is free so there is no cost to you although you can pay a small fee to “feature” your property which I’m assuming means getting pinned to the top of the listings for s certain duration. Also they have other referral services they get commissions from, so bottom line why not give it a try!

Another site for our Australian visitors is https://www.spacer.com.au/. Similar to StoreAtMy House, Spacer provides a place for both people with space and people looking for space for storage to connect.

They collect a small fee as part of the process which would obviously be worth every penny if you can get your spaces filled quickly!

Wrapping It Up

This concludes my first Ask The Landlord post. Hopefully you found it interesting and you can see ways to apply some of this to your landlord business.

Maybe you don’t have a garage you rent, but instead a house or suite, knowing who is renting in the area or who your tenants could be makes it easier to market.

If you have any comments or feedback, I’d love to hear it! Leave me a comment at the very bottom of the page or you can use the handy form just below and I’ll receive the question via email!

But before you ask, I have a couple rules.

1. The question can’t be about specific rules or laws in your area, this is meant to help landlords around the world!

2. Specify whether I can use your name and/or where you are from in your question.

Why Listening To The Media Will Mess With Your Mind

By

Housing Market Set For Biggest Downturn Since 2007

Houses OverPriced By 20-40%

Real Estate headlines shock landlordsHave you seen any Real Estate headlines like this lately? Depressing isn’t it, well don’t worry if you either check the next days paper or find another one you’ll find headlines like this.

Housing Market Booming

New Home Construction Set For Record Growth

I’ve even run into similar headlines to this on the same page, one calling for a downturn, the other calling for a boom and that’s the problem with much of the media these days. They have an agenda.

While they may have different underlying agendas, their main one is to sell papers and headlines that scare people or pump them up sell papers, magazines and TV news which is why you have to take them with a grain of salt.

How many economists, politicians, billionaires and people in general nailed the financial crisis back in 2007? Just a handful.

How many of those had accurate forecasts before that? Just a handful again.

And how many have been 100% right all the time,  if you guessed zero you’re right.

Many of them have just picked a stance and stood fast on it until they were right. In the early 2000’s there were many vocal critics of the housing booms forecasting an imminent crash and for five years plus they held to that and sure enough they were completely correct. Eventually.

Meanwhile the landlords and homeowners who bought at the beginning of the growth were still far ahead. Yet, if they followed some of the headlines and listened to these media experts, they would have missed out.

surprisedsmallNow I’m not saying you can’t listen to what’s out there, but you can’t take the headlines verbatim. You need to get more of the facts and look further into the details. There are so many variables that affect housing, the world economy and even the cost of groceries that it’s almost impossible to predict with complete accuracy anything these days.

An unexpected frost can cause orange juice prices to skyrocket, a dock strike can leave fruit hanging in the orchards causing shortages two months down the line, a country dealing with debt can change the confidence of a whole continent and these affects trickle down throughout our very interconnected world.

So you need to stay informed, but try not to let the media headlines cause a panic in your life. The panic of the up and down swings will give you an ulcer or worse a heart attack and it’s just not worth it.

As I told another Real Estate investor a day ago, you have to look long term. The panic headlines today are laughable ten years down the road when you look back at all the cash flow you’ve generated, the amount of your mortgage that was paid down by your tenants and the current value of your investment.

As we’ve talked about before, Real Estate is a long term plan and a long term solution. If you have planned for the long term the day to day and year to year hiccups all even out over time. Having said that though, if you’re getting to a point in time where you  are selling everything off to simply enjoy retirement it may be more important to pay attention to the current market.

Just remember not to get caught up in the headlines and look at the actual details usually buried in the article!

I’m Just Your Typical Landlord Hypocrite

By

This is probably where I need to say, do what the landlord says, not what he does!

I have to confess, I’m breaking my own rules. Now I guess in the big picture that’s not a huge issue, but when it comes to a tenant owing me a ton of money and me suddenly finding myself sucked into the Eviction Spiral, it gets a bit serious.

After all, I’m supposed to be the expert, yet I’m making the same mistake I tell you not too and I guess I better tell the entire tale. So let me take you down the garden path….

Landlord story, down the garden path with a tenant

 

This actually dates all the way back to December with one of my weekly rental tenants. He’s a very clean neat individual, but a) he doesn’t speak very much english and b) he owes me money.

As we zip back a few months to the beginning of December as typically happens to many of my rooming house tenants they vacate around mid month and head back to where their families are located. It’s typical as many of the construction projects close down early before Christmas and many of the workers get to enjoy a two or three week break and trades folks are who I cater too.

So this is something I tend to see every year, then in January they start coming back, rooms fill up and it’s business as usual. Now my nice clean non-english speaking fellow named Michel had no one to go home to. No family around, nothing, so he intended to stay at my property over the break. the only issue being, he had no income coming in to pay for the room. (This is where the hypocrite part comes into play!)

As I weigh my options I have a few things to consider a) he’s a good guy, b) he’s been good about paying in his past history and c) I have a bunch of vacancies anyway and if I kick him out or he leaves I still won’t be collecting rent for that room and I don’t know what the next guy will be like and how many weeks before there could be a next guy.

So I did the easy thing, I let him stay.

Fast Forward to January

calendarI just happen to live in an oil based economy region so as January rolls around many of the projects have moved to a hold status due to the uncertainty of oil prices and the viability of some of these projects going forward if oil stays low.

Instead of starting work at the beginning of January, it turns into mid January, then late January and finally the beginning of February before he finally lands a job. the good news is, he gets paid a lot per hour, so it own’t take too long to get caught up. (Now I don’t want you to read anything into this, but I’m talking about getting caught up in February and here it is March when I’m writing this…)

Anyway, according to my rules, I should have cut bait and recast already. instead I go with my gut and give him more time. This is the part where YOU need to do what I say and not what I’m currently doing with this guy.

Now Fast Forward to Late February

Now we’re in the last week of February and I get a text update from him (he uses French to English conversion to send me texts, sometimes it is very very confusing). This set of texts though is quite clear. He will have $2,000 for me on Saturday the 28th (yes, I let a weekly tenant rack up an outstanding balance of over $2,000, please find me a wall to bang my head on).

As you can imagine I’m pretty upbeat when I go to meet him Saturday, at least at first.

You see, he lost his bank card and couldn’t withdraw the money.

Is it time to panic yet?

Of course he can’t tell me this due to the lack of conversational English between us, but he has notes that someone obviously wrote out for him in English. So now I’m stuck in a tight spot. It’s the Eviction Spiral I referred to originally.

If I kick him out, I take a huge loss, so I have to take a stand.

His notes tell me he will go to the bank after work Monday get the cash and get a new card and will have the money for me Tuesday night. Experience tells me this is the perfect getaway for him.

If he has $2,000 that is enough for him to get into a new rental place, with the 1st being the next day, it’s an optimum time for him to skip out.

But I follow the hypocritical emotional road and lay down the line, Either I get paid Tuesday or he GETS OUT!!

Even in our lack of a mutual language I am quite sure I got my point across, now I play the waiting game.

My question for you, what would you have done?  Let me know your thoughts in the comments below and I’ll add an update Wednesday about what happened!

Update Friday

Just to make this worse, I’ve extended to tomorrow. The tenant paid $200 to buy a few more days, but tomorrow is the cutoff. I meant to update Wednesday, but it’s been one of those weeks that will likely be extending out for the entire month!

Poof, It’s Magic!

Yes, I’ve had another tenant disappear…

I was at the property Monday to get some work and cleaning done there (I rented a steam cleaner for the day, so I was bouncing from property to property to get the most bang for my rental dollar) and my tenant’s room was wide open, all his items were gone, the room was quite clean, his keys were on the dresser and he was gone.

Bottom line, I’m out a bunch of money, my faith in humanity is eaten away a bit more and in the end I can still sleep at night. I tried to help, deep down I knew it probably wasn’t going to work out for me, but as part of my nature I really do want to help people (hence this site!), just along the way I may have to take a little damage.

The hypocritical lesson to pass along is if things are really tight, you can’t take this chance. You need to clamp down immediately. I could probably rationalize some of the loss as I would have had a vacant room for multiple weeks anyway, but it’s still a loss. If you have more losses than wins, you eventually lose and in Real Estate, you lose big when you lose.

 

Confused About How To Properly Determine Rents?

By

Determining Market Rents

Determing Rental Prices For Your PRopertyA challenge many landlords face is what they should be charging for rent. When you need to determine rents, it can be a fine line between charging too much, or charging too little.

If you charge too much you end up with more vacancies, higher turnover and ultimately less profits.

If you charge too little you may end up with tenants staying longer leading to fewer vacancies, but ultimately also getting less profits.

Part of operating a successful landlord business is finding that sweet spot where you’re not too high and you’re not too low.

Many landlords wish there was some sort of tool that could help them with this and fortunately there is!

It’s a website called Rentometer.com and I’ve been using it for years to determine rents for my properties, to see how I compare and even to see trends over time.

Of course you shouldn’t limit yourself to just one source, there are multiple other ways you can get this info as well, or to help provide you with multiple comparisons just in case one is off a tad.

Fortunately for you, the president of Rentometer Mike Lapsley, provided me an article he wrote walking you through some steps to help you confidently set your rents. Here’s the article with some additional info about Mike and Rentometer for you! Be sure to leave him (and/or me) a comment.

5 Ways to Help You Confidently Set Rents

BY MIKE LAPSLEY ON FEBRUARY 23, 2015

The rental housing business is very local and it takes time and effort to understand a local market and all the nuances that go with it. Many variables can impact the rent you can charge for your rental unit including: location, building structure, amenities, age of unit, market conditions, etc. The subjective and local nature of many of these variables make it difficult for anyone to tell you exactly the right rent for your rental unit.

However, having said all that, there are some things you can do to help you more confidently set your rents. Below are a few ideas to help you set rents for your rental property:

1. Stay up to date on local economic and business activity in your market because economic activity is one of the key drivers of housing demand including rental housing.

2. Work with local real estate professionals – property managers, brokers, agents, appraisers, and lenders. Local experts are especially good at identifying the drivers of housing supply and demand unique to your market – jobs, local ordinances, zoning, etc.

3. Check local apartment listings using the local newspaper, apartment guides, Craigs List, and of course Rentometer (shameless plug!).

4. Check your local apartment or rental housing association for research and other information they may provide about local rent levels – past, present, and future.

5. Use “rent per square foot” whenever possible as a benchmark. This allows you to encapsulate into a single number all the subjective variables of rent and provides you a basis for comparison across different units, locations, amenities, etc.

The task of setting rents can be done more confidently with good current and historical data, as well as a thorough understanding of the local market and current market conditions.

Mike Lapsley is the President of Rentometer.com. You can reach Mike at: mike@rentometer.com Learn more about Mike here.

About Rentometer

Used by tens of thousands every month, the Rentometer provides rent comparison data and analysis through a simple, intuitive user interface. Everyone from landlords, property managers, owners, and renters can research and compare rental rates on Rentometer.com. Rentometer offers a basic free version as well as Rentometer Pro for users that need more detailed info, a professionally printed report, as well as additional tools to analyze the data. For more information, please visit www.rentometer.com, find them on Facebook at www.facebook.com/rentometer or on Twitter @Rentometer.

You Can’t Eat a Brick…

By

Unless Your Richard Kiel…

You Can't Eat A Brick - reference to money stuck in a propertyIf you didn’t catch that last reference, perhaps you’re not a James Bond fan? Richard Kiel played the James Bond villain Jaws in a couple of the James bond moves (The Spy Who Loved Me
and Moonraker and yes those are affiliate links for which I make pennies if you buy the movies 8′]) and he could chew a brick and steel and more.

And even if you did catch the reference, you’re probably wondering how the heck this applies to Real Estate?

The answer is part of the problem. When it comes to a Real Estate asset like a rental property you’ll find that your money, or equity, is trapped in your property. You don’t realize that equity until you sell and while it may add to your net worth, it’s not money you can quickly or easily access. Which is the problem.

A sudden downturn in the economy (caused by oil dropping to $50 a barrel around here), unexpected repairs (that roof that suddenly started leaking) or an increase in vacancies (large local employers laying off staff or shutting down) can all have a huge effect on your cash flow as a landlord.

That’s where having access to that equity, or by having cash reserves in place can help.

Borrowing From The Experts

A Reserve Fund Study provides a long term plan for upcoming expensesOne way to prepare for instances like this is to hoard money during the good times, but that may not be the best solution for everyone. Another option is to borrow from what expert property managers do.

In this example condo boards. They are forced to be experts in planning future expenses.

Now personally I’ve had some horrible experiences with condo boards, but there are always some benefits somewhere and the concept of reserve funds is one of those.

If you’re not familiar with a reserve fund it’s a process that condo boards use to build up funds for planned (and sometimes unplanned) expenses. In my are it’s law for a condo building to have a Reserve Fund Study completed that outlines projected expenses for the next 25 years on the building.

This study needs to be completed by a company that professionally reviews everything and includes breakdowns on upcoming expenses such as new windows, roofs, ongoing maintenance along with taking into account other future expenses such as tax increases and more.

Now I’m not suggesting you need a professionally completed reserve fund study done for your rental property, but it wouldn’t hurt to take a longer term look at your property and plan for the future so you’re not caught by surprise.

By taking an approach in advance to deal with this, you hopefully won’t be caught in the position of having all your equity stuck in the property, having no money handy and you stuck figuring out whether bricks go best with ketchup or mustard for dinner.

So What Can You Do To Prepare?

One option you can use is starting with a reserve fund. We often would budget right from the start an additional $5,000 as part of the float for a property.

This was required up front money and made sure we were prepared moving forward for unexpected expenses.

Another option I know several investors use is to not withdraw any funds from the incoming cash flow for the first six months to a year depending on the profitability of the property. As an example, if you have $500 cash flow per month from your fully rented property, leaving that $500 to build up for ten months could give you a $5,000 reserve.

Another way to proceed might be utilizing a bit of both. Maybe you’ve just bought a new property, you only have $2,000 to start the fund, you still have $500 cash flow, but rather than taking all $500, you take $300 for ten months to build up your reserve. Or $200 for 15 months.

Or maybe you have a brand new roof already and your biggest upcoming expense might only be an appliance, so maybe you only look at a $2,000 reserve. It just doesn’t hurt to prepare.

But Don’t Over Prepare

Should you limit cash reserves?

Now this works fine when you have one or two properties, but if you start expanding your portfolio there gets to be a time where you have a lot of money sitting there not working for you.

If you have five properties each with $5,000 set aside you’re looking at $25,000 that you could likely use some of to either expand your portfolio further or find some other use for.

If you had ten properties that becomes $50,000 and after that it gets even crazier. So while it’s good to have that reserve, when you start getting bigger, you may want to consider other options. Or even start that way.

Even if you only have a single property, there are still other options to consider.

Setting up a line of credit on your personal residence can give you quick access to cash in the need of a major repair without incurring any major costs when it’s not needed. This will give you ready access to funds rather than locking up your own cash.

Depending on how long you’ve owned your rental property there may be an option to put a secured line of credit on your rental as well (a secured line of credit is attached or “secured” to the equity in your investment property helping to protect the lender). Secured lines of credit tend to have lower interest rates, but it may be more problematic getting one on a rental property and it may require additional equity.

Credit cards can work to cover unexpected expenses, but this usually means a very high cost of borrowing and is probably one of the least desired options. But it’s an option!

The important thing is to plan ahead for those times of need so you don’t become the needy one!

Do you have reserves set up? Options like Lines of Credit? Share your safety net with the others and we can all benefit! I always love to hear your feedback.

Systems Check – Check

By

Thank You Mr. Pilot

Airplane pilots and checklists

If you’ve ever taken a flight anywhere you’ve probably been more than content to sit back, watch a movie, read a book or even sleep while the pilot dealt with the business of flying the aircraft.

Maybe you’ve had some nervous moments and you’re not entirely sure how or what keeps this incredibly heavy piece of metal up in the air and prevents it crashing down to the ground. Or if you’re like me, you just sit down, buckle up and leave the flying to the professionals.

Wherever you fit, the important thing to remember is those pilots you’re flying with are professionals.

They’ve logged countless hours of flight time, simulator time and classroom time to hone their skills and they have dozens of checklists with myriads of steps that they go through to ensure their flight and your safety are a top priority.

Now I’m not sure how many steps are in a checklist for a big passenger jet, but I did go online to search for a simple checklist for a smaller Cessna and found it had almost 100 steps in the checklist before the pilot was off the ground. It doesn’t have quite as many dials, knobs, levers and controls as you see in the picture above…

If there are any pilots out there reading this (and I believe we have one out there!), how many steps were there for your plane before you took off?

But What About The Flight Plan?

Plan Where You Are GoingAgain, I’m not a pilot, but I know a pilot’s job typically doesn’t end with just a beginning checklist. there’s flight plans to file, constant adjustments to make during the flight and even more checklists to prepare before descending.

Now many of these pilots have completed hundreds if not thousands of flights, but they consistently need to check these checklists, make sure their flight plan is accurate and they constantly make adjustments as they go. All so they can get whee they are going safely.

Are you starting to see a parallel yet with being a landlord?

Are All Systems Go?

All systems goObviously taking the lives of a couple hundred people into a pilots hands by flying them across the country can’t compare to you renting out a single property. But owning an investment property and making mistakes along the way can take the life of your financial future away, and that can have a huge affect on you and your entire family!

The worst part, many of those mistakes are avoidable. Which is where checklists come into play.

There can be so many moving parts when it comes to purchasing and owning a rental property that we tend to forget bits and pieces along the way.

When it comes to buying an investment property, many folks only do it once, or once every several years. When it comes to finding tenants again it may only occur once every several years.  This leaves plenty of time for you to forget the steps along the way.

That’s why following the model of airplane pilots and creating your own checklists for various processes in your landlord business can help streamline recurring events and help you avoid costly mistakes.

And it doesn’t end with a checklist, you still also need your flight plan. After all, if you don’t know where you are going, how will you know when you’re off course? Part of your system as an educated landlord is to not just take advantage of checklists to make your systems well, systematic, but to also have a longer term plan of where you are going.

Understanding you have a ten year plan, a twenty five year plan or simply a plan to never end being a landlord makes you stay on course, makes those hiccups or diversions along the way become a little less taxing. I’ve previously referred to making sure you have a plan (You Need Your Own Real Estate Plan and What’s Your Real Estate Plan?), so if you missed those articles, be sure to check them out for reference.

My Flight Plan AKA My Checklists

2015 is going to be a big year for me. It’s the year I am hoping to spend more time focusing on getting some more educational courses and packages put together on this site to help those of you without processes and checklists in place.

Whether you’re new, experienced or somewhere in the middle I’m hoping everyone will find as much value in them as they did in my Tenant Screening Course.

This course is one of my most popular paid courses as it’s full of helpful information, processes and checklists to point a landlord in the rigth direction.

So the lesson to take away from this right now is, if you don’t have a checklist already don’t wait.

While I may have something down the road, the next time you purchase a property, break down the steps. From must have conditions in your offers to specifications of properties you buy a checklist can keep you on track.

The same goes with your next tenant screening. If you’ve taken my course, you should already have some screening steps to follow, turn that into a checklist you can use and keep, rather than try to remember again in another 12-24 months.

Make sure all your systems are GO!!

And hey if you already use checklists, can you take a moment and share with everyone how they’ve worked for you?

Profiting From Renting Out Rooms and Boarding Houses

By

Renting Out Rooms — A Rental Cash Cow

I can’t think of  a better way to explain renting out rooms than as a cash cow. Far and away room rentals have been one of the most profitable ways we’ve found to make money on rental properties.

Properties that may not have been suited to generate enough income to be attractive as rentals otherwise. That might be a bit confusing so let me explain.

With a normal half duplex that isn’t suited and where I operate out of, I may be able to get $1,000, on the low end, maybe $1,400 on the top end in monthly rent if I rented it to a family. With a mortgage payment of around $1,000, taxes of $150 per month insurance around $30, that really doesn’t make much sense as a rental property and I will probably end up losing money.

However as a rooming house with five separate rooms I rent out, everything changes.

Room rental property
They even put up Christmas decorations

I’ve got several long term tenants in this property who I’ve kept the same rent for a couple years for as they take good care of the place and treat it like a home, not a rooming house. I’ll use these numbers to give you an idea.

I have five rooms in the property. Two rent for $170 per week, one for $175 and two for $200 (the newer tenants and the current going rate).  Each week that becomes $910, in four weeks that becomes $3,640 which is significantly more than the $1,400 max I would make from a single occupant.

Now I do supply internet and cable and I do pay for all the utilities, and my maintenance costs are higher, but I still clear over $1,500 a month when it’s full. Note I did say when it’s full!

Normally in properties like this you have much higher turnover, so it’s important to stay on them and fill vacancies ASAP. This particular property though my last vacancy was almost five months ago, for a week, and before that it was probably four months prior again! Did I mention cash cow?

It’s Not All Rainbows And Unicorns Though

It’s not always like this though. I do have problems. I do have to evict tenants, there are more things that break due to more wear and tear, but when they work, they do work extremely well!

Plus, as I pointed out earlier, it takes a property that wouldn’t really work as a profitable rental and turns it into something that works like gangbusters.

So, if you’re stuck with a property that doesn’t quite cover the expenses and that you can’t sell maybe you need to entertain the prospect of running your own rooming house!

If you liked this article, you may also want to check out this one Renting Out Rooms – Rooming Houses As a Rental Option

Or check out my Rooming House Resource page by clicking on the following image,

Boarding House and Rooming House information
Rooming House Resource Page

Rooming House Tips