2021 brought new challenges to long-term property owners. In January, I paid 10% additional costs to turn-over (rental move-out and re-lease) for necessities such as paint, new carpet, and basic light and plumbing fixtures. At year’s end, landlords need to anticipate into the mix:
- locating available contractors,
- higher rents due to a housing shortage,
- shorter timeframes in which available housing units await new tenants
- advances in technological innovations remote management easier (Zillow’s ‘average’ rental price, doorbell monitors, clandestine door locks)
There is no need to panic despite these opportunities. The number one enemy of a long-term owner is a vacant rental. Conventional wisdom says your renter is anticipating a hefty price increase. The term ‘Inflation’ headlines every tweet, blog, and news podcast. As such, it is in your interest to make a win-win for both you and your tenant by keeping them in. Here are a few suggestions I tried this year:
- Nearly 100% of my renters accepted a 2-year lease. This is a sign of the times. Not once in 2 decades of owning properties and managing them has this happened, ever. For them, it is means housing security. For you, it is delaying an otherwise challenging & costly make-ready turnover.
- Provide them, in exchange for the higher rent, a new needed appliance, overdue repair, or, my favorite a stunning Kohler kitchen sink with a touch-sensitive, wi-fi enable faucet.
- Don’t leave out your loyal and hardworking landscapers and regular maintenance crews who expect a raise. Anticipate this. Grant them this. It is in your interest to keep them (and keep them happy). Finding suitable alternatives may be an expensive and time-consuming option.
Your bottom line should not however be disregarded. If your finances are stable, then everything else functions. Here are a few money saving secrets for your long-term rental.
a. Refinance your property. Baron will be saving over $600 monthly on just two properties. Rates continue to remain at historic lows. Until this year, Baron discovered leveraging multiple refinancing was a possibility.
b. Get new quotes for your hazard insurance. One property in a high-tax state demanded a 25% renewal increase even though I had been a long-term client. After scouring multiple sources and asking other property managers, I managed to obtain a 10% reduction in the prior year’s insurance price with a national carrier. (Secret: The zip code where you receive your mail is equally important as the zip code where the rental property is located.)
c. Be your handyman. When repairs or construction occur, be present and ask questions. Engagement with experts who work on your home opens more and better possibilities. This year, one contractor sought $1,600 to repair two small panels of a wooden fence. After politely telling him that I would get back to him, I purchased some lumber and a Ryobi air compressor. After a few mistakes, I managed to repair the two panels for less than $250. The result is that I now have a strong sense of accomplishment, and the squirrels can better navigate between the neighboring property lines.
d. Last but not least, fire your property manager. This has always been a standing mantra of Baron Prop Mgt. Why give someone 10% and have them stand in between you and your tenants. Yes, it is scary at first to consider taking on this responsibility. However, if your ‘managed’ property is turning over, 1) visit the property on the move-out day of your tenants. 2) Call a Thumbtack handyman and walk the property. 3) Hand the contractor the keys after receiving an estimate, and be on your way to becoming an independent owner.
Baron welcomes any comments or suggestions or if you just need a little bit of coaching, feel free to write at firstname.lastname@example.org.