If you have invested in property, then there are several different options that you have as to how you can make money off it. There are long term options as well as short term. Many favour the short term money making opportunity when it comes to property investment. This is done by renting the property out, which will then put you in the position of becoming a landlord.
This is Not A Hobby
Being a landlord is not a hobby, but it is a business and has to be treated that way. It means that you are taking on an important role that comes with several responsibilities. You must be prepared for this. Otherwise, you could make a lot of serious mistakes, and your property will become a burden instead of a potential asset to generate some additional income.
Know What Your Property Has To Offer
As a landlord, you have to be able to sell the idea of renting your property to prospective tenants. Although there may be plenty of people looking to rent, you want those who are going to be the best tenants. Attracting the right tenants is going to be critical to your success as a property investor.
Doing Your Research
To learn more about your property, you can do some research. Check out what your competitors are doing because you want to be at least on par or a little better than what they are. For example, if you have a duplex or an apartment building, then see what others are renting for. You want to know what the rents are, how modern the units are and any extra amenities they offer. This will serve two essential purposes for you:
It will help you determine what improvements you may need to do to be able to compete with renting in your area.
It can help you make some crucial decisions. For example, you can determine what you will be able to charge for rent without having to do any significant upgrades. This will help if you don’t have a lot of money for improvements. It can help you to determine if you will still be able to make a decent profit. Or, this research may indicate that you will need to make some changes to the property based on what your competitors offer. Otherwise, you are not going to be able to attract good tenants.
Know Your Target Market
Your rental target market is not going to be everyone that needs to rent. Many components of your property will appeal to some renters but not to others. You need to know which ones are most suitable for what your property has to offer. Your target market is going to be based on what you have discovered from your research: Here are some examples:
- If you have several two-bedroom units to offer, then your target market may include families that need this space. This means you have to view your property rental as being kid-friendly.
- If your property rental is suited for families, then you should know something about the school system in your area.
- Then it may be that your property is more suited for seniors. You can determine this by the infrastructure of your property. For example, is it a low rise building that has an elevator? Are the units smaller in size? Are there the important amenities that seniors need within your area? Such as community services and medical services.
- The location is going to be important for your target market. If your area provides good public transportation, then your property may be well suited to business people. A lot of people like the convenience of being able to use public transport to go to work. It means they don’t have the hassle of finding and paying for parking.
Why Is It Important To Know Your Target Market
There are a few crucial components that are going to lead you to success with your rental property. Such as:
Generating an Income
The purpose of renting out your property is so you can generate some extra income. You may want to do this so you can make the property pay for itself. Or, you may be investing in property to build your retirement fund. Either way, you want to be able to generate enough money from it to cover its cost and hopefully give you some extra. Being able to charge the appropriate rent to allow you to do this is going to be based on getting the right tenants.
Minimal Turn Over
Another component of success in renting is having a minimal turnover in tenants. Every time a tenant moves out, it costs you money. You have to clean the apartment and perhaps paint it. Then you have the costs of advertising for new tenants. Plus, the time that it takes to screen and approve new tenants.
Poor Tenants
One of the biggest potential problems that a landlord may face is having to deal with the wrong tenants. These are the ones that have no respect for the property. Or the ones that neglect to pay their rent. This means having to go through the legal process of evicting them, which can be costly and time consuming. The longer it takes to evict them the more revenue is lost.
Side Effects
Then another issue that can arise with the wrong tenants is the effect they can have on the good ones. Good tenants do not want to be living in an environment where there are ongoing issues with other tenants, such as undue noise and disruptions.
Renting Success
All of the areas covered here are strong support for the reasons why you, as a landlord, need to know your target market. As a new landlord, you may be tempted to just rent out your property to the first tenant that applies for it. You are in business, and you must do your due diligence. The same approach should be taken even if you just have a second home that you plan on renting out.
