One of the major reasons why people invest in land and property is for the returns from rentals. Today, the real estate market in the USA is growing, and along with it is the business for renting properties. However, property owners often find themselves struggling with rent management.
Why Invest in Rental Properties?
The potential for growth in rental property business is profoundly influenced by the sub-categories. Mainly, the properties on rent are either domestic/personal or they are meant for commercial purposes. That being said, the commercial properties are the ones that are more valuable than the domestic ones. But at the same time, the taxes levied on commercial properties are also higher as compared to the ones for personal use. All in all, the returns are quite promising for both, which is why many people are investing in rental properties more than ever before.
However, there’s still one challenge that almost all property owners face regardless of the type of property; finding the right client. The struggle does not end there. Additionally, the property owners also have to decide the terms of renting the property. So basically it boils down to communicating and finding the right client for the property.
How to Find Tenants?
Finding the right tenants for renting a property is not as easy as it may sound at first. There are a lot of things involved in the process. The property owners need to market the property, walk around the prospects to the property, and also conduct a background check on the potential customer. Doing all of these things can be a daunting task. Nevertheless, there are a few easy ways out.
Seek Legal Advisory
The foremost trick is to consult a legal attorney who specializes in property laws. The legal obligations surrounding commercial and personal property are different. Usually, they are complex and any wrongful conduct may end you in trouble unnecessarily. However, a legal advisor is most likely to have relevant knowledge. And therefore can help you get through the legal procedures of renting a tenant on your property smoothly.
Look for Online Listings
In most likelihood, marketing your property to find the tenants is not an easy task. Seeking referral leads from friends and relatives might be an easy option but is definitely not a responsive one. Whereas, online forums and directories are far more effective. You can expect more prospective tenants to reach you through online promotions. And it is needless to say that more prospects mean you stand a better chance at finding a more suitable tenant for your property.
Consult a Real Estate Agent
Another possible way you can ease your hunt for tenants is by consulting a real estate agent. Possibly, the professionals will find you the prospective tenants and also help you with legal tasks associated with renting. In exchange, a real estate agent would expect a commission in the rental. But, this would be a one time fee.
Hire a Property Management Service
In all of the above-mentioned options, the property owner is responsible for collecting the rent, getting the repairs done, and also taking the pain for eviction or new tenancy, if needed. Yes, that’s a lot of pain on your nerves as a property owner. There’s one more option that you may explore. Experts at Nomadicrealestate.com explain that hiring a property management service is by far the most relieving option for property owners. They also add, from finding the prospects to collecting the rent, and even handling disputes, a property manager is responsible for all the tasks in between. Surely, this is by far the most exclusive service that can ease the stress for you as a property owner.
By now, you must have got an idea of what assistance you should seek when putting up a property for rent. All of the aforementioned services are to aid in the renting process for both commercial and residential properties. The key here is to identify the right service that befits your needs. For instance, simply hiring a real estate agent might be sufficient for you in case you own a single apartment or a house. However, a property manager would be perfect if you own several properties and it’s getting on your nerves to manage all of them altogether.
Here’s how you can find the right service provider for your needs.
- Inquire that the service provider is licensed or authorized for the desired task.
- Explore available resources online, as well as, refer to your friends and family members.
- Ask for an estimate of expenses that your service provider shall levy.
- Make sure to dig a little deeper into their reputation with their existing or previous clients.
- In the end, inquire about any exclusive offers or discounts that they may have for you.
At this note, it is necessary to explore what types of rental services, or rather agreements are there.
Possible Options For Renting:
Usually, the most common ideology behind rental properties is that the owner offers his/her property to a tenant. And in exchange, he/she would collect a monthly rental that is pre-decided. But, there’s a lot more to rental properties than this simple idea.
Usually, commercial properties are sought by a tenant for longer. Consider you need to rent an office space. You’ve found a perfect warehouse or an empty office space in a building. Notably, the property would likely be incomplete, or unfurnished. It means, when you rent it you can modify the space as per your needs. This is when the agreement between the owner and the tenant is known as a lease.
Notably, the owner is now referred to as the lessor, and the tenant is called a lessee. The agreement allows the lessee to use the asset and modify it as per their own needs. In addition to this, the responsibility for any damage and subsequent repairs is with the lessee. Moreover, the rent is usually determined annually. In other words, the lessee pays a lump sum amount for taking the property on lease from lessor annually. But this does not mean that lessee cannot opt for monthly rental schemes. It is entirely a mutual agreement for both the lessor and the lessee as what rental model they prefer and are comfortable with.
Now, there’s a common form of renting procedure that is popular with all property types. However, the scenario is not the same for all tenants. For instance, a tenant and owner may enter an agreement that decides the minimum period for renting, a security deposit, and the responsibility for getting the repairs for any damage to the property.
As far as the repairs are concerned, unlike leasing, it is usually covered by the owner of the property when on rent. However, the repairs must not be confused with breakages or intentional damage caused by the tenant. The owner is usually responsible for maintenance related tasks. And in case there are damages such as a broken window or any other fixture on the property, they are likely to be covered by the tenant.
Which is Better?
Knowing all the necessary and supporting tasks associated with rental properties, fulfilling them might be overwhelming. Especially, if you are planning to invest in a rental property and scale your rental business.
The most imminent question of all is the decision to choose what’s better. Well, to be honest, there’s no direct answer to it. The better one depends on a lot of factors. For instance, the expected returns, the tax laws, and the market capital for the type of property can be deciding factors for choosing the right services and agreement options.
Often people who intend to invest for monetary benefits, or let’s say for side-gig purposes, prefer property managers. Besides, they also prefer leasing if not renting. The combination offers much ease while promising healthy returns on the investment. On the other hand, people who intend to offer their secondary dwellings for rentals usually prefer monthly rentals. And, mostly hire a real estate agent to help them find tenants easily.
That being said, the better option is always the one that can offer you peace of mind, along with economic benefits.
Summing it up…
The potential for economic growth in the real estate sector is widespread. Whether it is for commercial gains or to maintain the property, rentals are surely a good source of income for property owners. It is necessary for the property owners to ensure a healthy return from their rental property. It is the returns that will help the owner cover depreciation costs, pay the mortgage (if any), and also pay the supporting services for their assistance. Paying up all the necessary expenses, the owners also need to evaluate and save their own profits from the received rental. Therefore, deciding the rent be levied from the tenant can only be done after evaluating all of these expenses.
Accordingly, you must decide whether choosing individual support services for your rental property is more beneficial or is it hiring a complete solution such as a property manager. Besides, do not forget the amount of stress that such services can curb for you. Only after estimating all of these aspects, should you decide the options and type of agreements.