Buy And Hold Investors: It Is Critical To Know Your Tenants
Buy and hold investors, do you have problems with your tenants? If your answers are yes, then you realize just how important it is to find a good tenant.
- Avoid cash flow problems and renting your property out only for it to get it wrecked. Buy and hold investors must first research their prospective tenants to check the history for
– Bank reference confirming prospective tenant is employed or at least debt free.
– Reference from employers, colleagues and previous landlords confirming tenant pays on time and takes care of the property.
– Completed rental application.
Your cash flow depends on tenants who pay regularly. It is important for you to take the time and review the above documents. So buy and hold investors should choose their tenants with this in mind.
- The terms and conditions should be written in black and white to avoid confusions.
– Any oral agreements between buy and hold investors must have a follow up letter to confirm your understandings.
– Any request made for repair and upgrade from the tenants should have a written confirmation from you.
– It would be very helpful on your part to take note of the calls made by your tenant. So that in the future, you have your own notes to refer to when tenant suddenly complains about the house and your service.
Do not forget the above points as these are tremendous help in finding a good tenant. However not everyone are transparent in their applications. Some tenants will actually come up with false references so be prepared. But once you are able to find a good tenant it will be very easy. This is the time when you appreciate the perks of buy and hold investors.
- The risks for buy and hold investors cannot be avoided. And the costs involved and the hassles of the problem tenants can immediately eat up the income from the rent, and even deteriorate the value of the house. Another factor to consider for buy and hold investors is the location of your investment. Since we want a long term investment we should avoid investing in places that are economically risky in the first place. In other words, if you are aware that there had been a long history of industry decline in that particular area avoid that particular place.
- Security deposit should protect buy and hold investors and this should not be negotiable. To avoid misunderstanding, discuss this with your tenant. The use and refund of security deposits, including allowable deductions should be clear.
- Buy and hold investors must develop a professional relationship with tenant. It is important that you can get the estimated time frame that they will be renting the property. With this idea, you can save time in finding new tenants. You can also find out if they meant to stay for a few years and are planning to buy a house in the future. This might just be an opportunity for you to sell them a house if you have a house for sale.
Of course, there is no cast-iron guarantee that your tenants are going to be model ones but references are the best indicator. Take the time to research the above points before you finally decide on which tenant is right for you. This is crucial for all buy and hold investors.