Property Management Tips: How To Be A Great Landlord
Managing real estate for sale in Kona Hawaii is almost always more difficult than investors anticipate. The concept seems simple: purchase real estate for sale in Kona Hawaii, market it, find good tenants, and reap a return on your investment. However, property management can be wrought with a host of unforeseen challenges. You may have difficult tenants that damage the property or fail to make payments. If you live in an economically unstable area, you might face rapid turnover in tenancy, resulting in costly vacancies. Unexpected repairs could offset rental profits. Negligence on either your or your tenants’ part could end in an expensive lawsuit. You never know what you could be up against as a landlord.
There are, however, a few crucial steps you can take to ensure that your property management endeavor is simple, enjoyable, and profitable. So long as you find and retain good tenants, craft your lease with careful deliberation, and invest in the right areas, you’re looking at a successful investment operation.
Invest in the Right Area
Before you can even begin thinking about finding and retaining good tenants, you must set yourself up for success by selecting the right area for investing in real estate for sale in Kona Hawaii.
Some investors have found incredible success investing in low-income areas. However, successful investing in bad neighborhoods is a rarity and, by extension, a specialty. Investing in poor or crime-ridden neighborhoods can lead to a multitude of problems. Unstable family situations or violence could incite legal trouble or lead to property damage. Impoverished individuals will have difficulty making payments in a timely manner. You may be compelled to become involved in disputes between tenants, wasting time better spent on other investing endeavors.
That being said, you don’t necessarily want to invest in high-end real estate for sale in Kona Hawaii. Again, some investors are highly successful in doing so, but investing in wealthy areas truly is a specialty. For most, the profit margins for high-end properties are incredibly slim. Furthermore, wealthy individuals are likely to have aesthetic preferences that require renovation or remodeling, thereby decreasing net profits. Should the economy begin to decline, you will have difficulty attracting tenants willing to pay a price that is actually profitable for you. On the whole, investing in high-end areas is not lucrative enough to justify the extra time and effort spent on pleasing high-maintenance tenants.
The most profitable areas to invest in tend to be middle-class areas with access to good schools, public parks, and shopping centers. Look for neighborhoods with low crime rates and a close-knit sense of community, where trust and rapport make it easy to foster honest and beneficial relationships with tenants.
Finding Great Tenants
Your primary objective as a landlord is to find and keep good tenants. Should you fail to do so, you will face rapid turnover, property damage, and unmet payments. These complications will compromise your ability to reap a return on your investment in real estate for sale in Kona Hawaii.
Finding good tenants requires a lot of work, but it is, in our opinion, most definitely worth the effort. It is critical to run a search on potential tenants’ backgrounds and credit scores. You can even use your county database to determine whether they’ve had a civil suit filed against them. You should also inquire about your potential tenant’s education, profession, history, work hours, and lifestyle. An older individual with a steady job, a stable family, and an easygoing lifestyle is a better choice of a tenant than, say, a group of college kids that drink and party every night.
Retaining Great Tenants
Retaining good tenants is just as critical as attracting them. In the case of condominiums and apartments, the latter is conducive to the former. So long as all of your tenants are quiet, courteous, and clean, you’re unlikely to face disputes between tenants that could drive out your best renters.
You also want to establish rapport with your renters. Renters don’t want to be treated like a business endeavor; they want to be treated as real individuals with real lives, and should be. Check in with your tenants regularly to inquire as to whether their needs are being met. Ask about how their children are doing. Send cards or small gifts around birthdays and holidays. Small expressions of care and gratitude will go a long way in incentivizing long-term tenancy. Some landlords even offer discounted rent for early payments or a rent reduction for long-term residents. In so doing, they effectively incentivize timely payment, tenant referrals, and long-term residency.
Creating A Lease
It is crucial that landlords craft a transparent and strict lease on real estate for sale in Kona Hawaii. Be explicit with your expectations for tenant conduct. Clearly state what you are willing to provide as a landlord and always fulfill your end of the bargain. Outline what behaviors are unacceptable, such as overdue rent payments, loud noise, or property damage. Always establish fines for misconduct, and don’t make any exceptions. When you clearly delineate consequences for poor behavior, you incentivize good behavior and thus minimize losses.
You also want to be deliberate with the time period that your lease covers. A promising start/end date for a lease is in late May or June, when market activity tends to be at its highest. If your lease ends in times of low demand, you may be forced to accept a poor tenant just to avoid vacancy.
Finally, have a lawyer take a look at your lease once you have finalized it. Oftentimes landlords unknowingly incorporate an illegal clause into their lease and end up with an expensive lawsuit levied against them. To further protect yourself against harmful legal ramifications, thoroughly record the condition of your property before your tenant moves in by taking photos and videos. Should you file a case against a tenant that refuses to cover property damage, you will need evidence that there was no damage prior to the tenant’s occupancy.