How can you avoid running into trouble paying your mortgage?
You may think it’s only the tenant who has a hard time paying the mortgage, but as a real estate investor or landlord, there may be times when it’s hard to pay the mortgage on your end as well. Here are some things you can do to avoid facing difficulty in paying your mortgage each month.
Keep your properties full. While it may sound overly simplified, this is the most obvious method for ensuring you’ve got rent money coming in each month to cover your property mortgage payments. Don’t allow yourself to get slack on advertising for new tenants. And don’t put off screening applicants or filling your properties because you get busy or overworked. Recognize filling your vacancies as a major aspect of your REI business success and deal with it quickly and efficiently every time.
In some Detroit markets, there is high turnover in rentals just due to tenants that are at the mercy of an unstable job market. Section 8 tenants offer a guaranteed payment via the government. Some landlords are under the impression that they make bad tenants because they are perceived as being lower-class and therefore will not take care of the property. However, the truth is that they are usually good tenants because they want to retain their Section 8 status. Section 8 status is very hard to get, and there are long wait lists.
Find Quality Tenants
Do your best to find quality tenants. While you want to keep your properties full, finding good quality tenants is key. By “good” it means they pay their rent on time, keep the property maintained and don’t abuse the lease. By using background and credit checks, you can find the best tenants available and thereby do what’s possible to keep your rental fees coming in regularly, which will help you pay the mortgage when it comes due.
Look for longterm tenants. Don’t assume that quality tenants will necessarily be longterm ones. Some good renters may know they can’t stay over a few months at most. They may be students or working a temporary job. They may just be living in an area waiting to move or retire somewhere else. Whatever the situation, opt for longterm renters when the choice is available. Doing so will make filling a vacancy at least a more infrequent possibility.
Provide a Good Experience for Your Tenants
Tenants are your bread and butter. Keep the property well maintained. If you want good tenants, longterm tenants and tenants who pay their rent on time, do your part to keep them! Deal with maintenance issues quickly. Make repairs as necessary. Upgrade appliances or at least ensure the ones you provide are in good working order. Respond to your tenants’ calls quickly, or if you can’t be sure they know you’ll be unavailable for awhile.
Being a good landlord will go a long in way in developing lasting relationships with your tenants, which will in turn, help you keep them in your property longer. Often a tenant and landlord relationship can turn an average tenant into a great one simply because they want to keep that relationship intact.
In a tough economy, it’s important to do all you can to avoid facing the difficulty of paying the mortgage. That applies just as much to an REI professional as it does to the average renter. These simple tips can help as you work to develop lasting, longterm, rent paying tenants to keep your properties bringing in the income you need every month.
Recognize Your Strengths… and Weaknesses
Don’t wait until you are in trouble – asses your strengths and weaknesses now! Do you hate dealing with tenants? Are you not able to find the time to keep up with maintenance? Consider partnering with a property management company to offload the tasks and responsibilities that you can’t – or don’t want to – deal with. Your time is probably better spent finding your next property. If real estate is not your only job, you may be better off putting time into your main income stream and a property management company may actually make you more money by allowing you remove distractions that pull you away from your primary income source.
The Five Ps: Prior Planning Prevents Poor Performance
The long and short of it is that it all comes down to planning: You can prevent problems with your payments by staying in front of your payments, and taking a hard look at the activities that make you the most money.