Making the Mortgage Payment is First and Foremost
You may think it’s only the tenant who has a hard time paying the monthly nut. For a tenant, it’s rent, but as a real estate investor or landlord, there may be times when it’s hard to make the monthly mortgage payment. Here are some things you can do to avoid facing difficulty in paying your mortgage each month. While these things may seem simple, they are often not. Ask yourself what it would take for you to execute on all of these all the time. While some real estate investors will tell you that having rentals is nice “passive income”, there is nothing passive about tenants, repairs and keeping track of finances.
Keep Your Properties Rented
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’s mortgage payment. Keep connected to your current tenants, engaging with them regularly to maintain open communication.
Don’t allow yourself to go slack on advertising for new tenants, either. And certainly, don’t put off screening applicants or filling your vacancies because you get busy or overworked. Recognize that filling your vacancies as a major aspect of your real estate investing business success, your ability to make your mortgage payment and then deal with it quickly and efficiently every time.
Do your best to find quality tenants. While you want to keep your properties occupied, finding good quality tenants is the 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 make the mortgage payment on time. You’d be surprised how many times potential landlords don’t call previous landlords directly to get the real story on why the renters moved out. With a few open-ended questions, you can quickly get an idea of their ability to pay on time and for their ability to properly maintain the rental.
Look for Long-Term Tenants
Don’t assume that quality tenants will necessarily be long-term 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 long-term renters when you have the opportunity to sign a contract for that. Doing so will make filling a vacancy at least a more infrequent possibility, and thus enable you to make the mortgage payment. This is why most leases start with a one-year lease then convert to month-to-month leases automatically. This ensures that the landlord knows there is at least a bit of a long-term commitment to staying and your mortgage payment being made.
Keep the property well-maintained. If you want good tenants, long-term 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 when and if you’ll be unavailable.
Once you’ve established a strong rapport with your renters and you trust their judgment, you can set-up an account with a local plumber or handyman. Let the tenants know that if they can’t reach you, they can call the plumber or handyman directly for emergencies. While this may not be ideal, it will give the renters the ability to take care of your property and get the help they need in their home.
As you know, communication is key. Also, proactively doing an annual property inspection will ensure that you catch issues before they arise. This simple tip can save you thousands of dollars. And you can be the one to do the inspection, so you don’t necessarily have to pay a professional. This will keep you up-to-date on the state of the property, allowing you to plan for future repairs or upgrades.
Most importantly, just think of a small leak that you might find and get fixed quickly. Imagine if that wasn’t detected for months or years. Water damage is costly, especially when secondary factors such as mold also occur. Again, it doesn’t take too much extra effort to keep your rental in good shape for you and for your tenants. And, most importantly, that keeps it rented. Just remember – rental income equals mortgage payment.
Be a Good Landlord
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 on 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. It’s amazing what open lines of communication can do for this relationship. It’s easy to do, doesn’t have to cost anything, and often keeps bigger issues from arising. A good landlord is also a good leader, being open, honest, and fair.
A good landlord will also recognize and reward good tenants. This can be through birthday cards, thank you cards and or gifts or just a friendly call. A small holiday gift at the end of the year is also a wonderful way to celebrate your great relationship. The gift doesn’t have to be expensive, just thoughtful. A little can go a long way, in this respect. The longer you keep your good renters happy, the longer they will stay, and the longer your mortgage payment gets made without interruption or issue.
In any economy, it’s important to do all you can to avoid facing the difficulty of paying the mortgage. That applies just as much to a real estate professional as it does to someone who only owns one rental. These simple tips can help as you work to develop a strong relationship with lasting, long-term, on-time rent-paying tenants. And they will help you to keep your properties bringing in the income you need every month to make your mortgage payment.