Leasing or Rent-to-Rent is one of the most effective ways of earning passive income through property investment. It is a strategy where you can utilize your asset to generate profit with minimal work from your end – you let your property do the work for you.
However, doing this successfully requires finding the right tenant. This is a crucial part of the process. You have to be careful and clever. Here are the top tips from our property experts:
If you are to find the right tenant, you have to look in the right places. More specifically, you have to place your ads on the right platforms. Some of the factors you have to consider are demographics and budget range.
If your rental is ideal for college students, then you may want to enlist in social media groups or place ads in student hubs, perhaps a cafe or a bus stop. If you are targeting more high-class tenants, then you should advertise on affluent sites and locations too.
Like any business partnership, a healthy landlord-tenant relationship is built on good management of expectations. It is important that your renter is aware of your ground rules from the beginning. This will avoid complaints and possible conflicts in the future.
Now, there would be rules that you certainly cannot bend, but you also have to be open to negotiations on other items on your checklist. It is understandable that some candidates will have specific needs that may not completely align with your requirements. For the right tenant, some degree of flexibility will be worth giving.
If someone shows a keen interest in the property, you should always take time to meet and talk to them personally before signing any contract. Have a list of questions to ask them and collect information that you can use for background checking.
Some of the basic things to determine are their source of income, the stability of their employment, and their reason for leaving their last residence. Providing a simple form that they can easily fill out could be helpful in this.
While getting to know the person deeper is important, you also have to balance your approach with a welcoming tone. You do not want them to feel like they are being interrogated and risk putting off a suitable renter.
Understand renting laws
All forms of business, including property rentals, are subject to governing laws. As a landlord, understanding these applicable laws is your responsibility. Make sure that your tenancy agreement is compliant with the rules. If you are unsure, consider consulting the document with a qualified lawyer.
Knowing the established guidelines will help you define the boundaries. It will keep you from being over-restrictive and at the same time, it will help you determine if your tenant is demanding more than they should.
For example, under UK law, you should be allowed to access and inspect your property even if it is being leased. However, it is the tenant’s right to be given at least 24 hours advance notice.
Be patient
Be careful not to rush. Remember that finding the right tenant for your rental is not as simple as finding a customer for an everyday commodity. Once you accept a tenant, you will be tying yourself to that commitment for the entire duration of the lease.
There could be a temptation to fill the house right away and start earning money, but you have to be patient and smart. If the inquiries are too few or do not match your target, then you should re-strategize your ad placement.
Before you go…
Here at Assets For Life, we guide starting property investors become successful business owners. Join our upcoming event, The Property & Business Summit with our founder, Liam J. Ryan!
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