by Wallace Gibson, CPM, GRI
JUST LOOKING IN THE LOCAL NEWSPAPER CLASSIFIED ADS or ONLINE RENTAL LISTINGS for COMPARABLE RENTAL RATES…. Prospective tenants have many ways to check comparable rental rates besides the newspaper and Craigslist. Local property managers, Realtors, the Internet listings. Property owners renting their own property need to check these sources in addition to the newspaper. Local property managers can provide a list of rental rates – current and past – for various areas, subdivisions, buildings. For apartment rental rates, owners should check the Internet listings on Craigslist, their local apartment association and community sites.
LISTENING TO WHAT OTHER PEOPLE ARE GETTING FOR SIMILAR PROPERTIES…. While this information should be put in the mix in determining the property’s rental value, there are often circumstances that are not relayed that could cause the information to be less than helpful.
A country property often reported as being rented for $1,600/month was, in fact, being rented in one year increments to residents new to the area who did not know that the property was over-valued. When the tenants determined they were paying $200/month too much, they quickly found other property as they no longer trusted the property owner. The rental property owner then had a vacancy and downtime which, in reality, brought his annual income to the market rate of $1,400/mo which, if he had quoted this market rent originally, he would still have a tenant in residence and not had the hassle of multiple move-outs and the expenses of re-renting.
VACANCIES ARE BAD….Planned vacancies are good. Vacancies allow for major renovations and repair projects – replacing a bathroom in a property with only 1 bath, rebuilding a deck/porch/patio, replacing carpet/refinishing hardwood floors, converting fuel sources (propane to gas). Sometimes these can be done with a tenant in place; however with a little pre-planning, a lot of hassles and inconvenience can be avoided.
Another reason is to put the property in the proper rental cycle.” Many rental markets are geared to the school year – either public schools or colleges or universities – more prospective tenants are planning for September and October move-in dates and avoiding the back to school rush of late July and August.
USING A POORLY WRITTEN OR PREPARED LEASE…. There are numerous sources for good lease documents including a low-cost computer program that can be purchased from Nolo Press (LeaseWriter) where the document can be formulated for the specifics of the state in which the rental property is located. Unless a lease is prepared for the specifics of a property or the desires of the rental property owner, the use of an attorney is unnecessary. Most local property managers will share their lease format. In a pinch, forms can be purchased from the local Realtor association. From whatever source, the forms should be no more than 3 years old and clearly state the duties of the resident and property owner.
AND LASTLY, NOT CHECKING ALL PROSPECTIVE ADULT APPLICANTS’ RENTAL/CREDIT HISTORY…This is the easiest part of the process and is most often the portion of the process that rental property owners are least likely to perform. Most states allow for the collection of a credit check fee to allow rental property owners to check a would-be rental resident’s credit. In addition to the old standby of a retail CBI report, property owners can now obtain a scored credit history much like a mortgage credit report that will alert them to the prospect’s past delinquencies, recorded judgements and the possibility of their being over-extended on their current credit obligations. These are all valid business criteria that a prospective landlord should use when screening applicants for their rental property.
Wallace Gibson, CPM, GRI, is the owner/broker of Gibson Management Group, Ltd., a full-service property management company offering 45 years of professional property management services for investment property owners in Central Virginia * Charlottesville, Fluvanna, Louisa and Greene counties. Her firm’s website is http://VaHomes4Rent.com and she blogs at www.propertymanagementmaven.com.