The Old Fashioned Paper Rent Check

Written by on May 6, 2012 in Rent Collection - No Comments
Don't let your rent collection be like this!

The days of the paper rent check are numbered. While the rest of our purchases have changed – we are accustomed to paying with credit or debit cards, online banking and automatic recurring deductions from our bank accounts – rent, mortgage and HOA payments have lagged behind. These are often the only expenses people pay via check anymore.

A recent article from Multi-Housing News discussed how the rental industry is moving away from traditional paper checks into the future with ACH transactions, debit and credit cards, and even mobile payments. It’s really about looking at the generation of renters coming up and identifying how they can and will want pay the rent.

The biggest growing demographic in the rental industry is Generation Y. Classified as being born between 1977 and 2001, those between the ages of 16 and 33 now make up 25% of the population. With the housing market still weak and slowly reviving, many of them are choosing to rent and have contributed to the recent apartment boom.

According to research from MetLife, Generation Yers’  have been shaped by communication technology. Due to the range in age, some of them have used this technology since they were as young as age five and cannot remember a world without it. They were raised on 24/7 connectedness, and are accustomed to multi-tasking: juggling e-mail on their PDAs while surfing online and talking on their cell phones.

Landlords and property managers need to be aware of their changing market and begin preparing for the shift in their renter’s mindsets, if they have not seen it already. Renters will be demanding more payment options that fit into their online lifestyle and will expect the ease of being able to pay when they want from wherever they are.

RentMonitor makes it simple for landlords to offer online payments to their tenants. Check us out at http://rentmonitor.com to see how we can help you move your rent collection process online and automate it.

Photo by: British Postal Museum & Archive

Buying a Property with Tenants

Written by on January 20, 2012 in Management, Market Outlook - No Comments
Meet_Tenants

Most new landlords entering the market often buy property that is currently rented. This comes with an obvious benefit of having an income stream already in place, but can also be a bit tricky for new landlords. Here are a few things you can expect and some tips for buying a property with tenants.

Tip #1: Know that the tenants are apprehensive about the transition to new ownership. Whether the previous landlord was good or bad, they’re hoping you’ll be better, but are planning for the worst. It’s important you start your relationship with your new tenants on a positive note so they don’t abandon ship and leave you with an empty building that’s costing you money.

Tip #2: Meet with your new tenants face-to-face. This will help ease a lot of the tension and set you up as a professional person. Treat them with respect and show them you expect a cordial business like relationship to develop.

Tip #3: Address your tenant’s concerns in an honest manner. They most likely want to know:

  • If their rent is going to increase
  • What’s going to happen to their security deposit
  • Your maintenance policy
  • If you’re going to make it difficult for them to keep their pets

Tip #4: Even though you are going over your policies and expectations in person, give your tenants a written letter when you meet with them. The letter should outline the items discussed and include your contact information should they have any questions. This will make sure you have communicated the information correctly and that you are both on the same page for future discussions.

Tip #5: Use this meeting as an opportunity to walk around the apartment and address any issues your tenants have. Catching maintenance issues early can save you big money in the long run and tenants will like that you are proactive about repairs. This will also give you a good idea about what condition the property is in an what will need to be done when that tenant moves out.

Tip #6: Schedule this meeting in advance. This is common sense, but find a convenient time to meet with your tenants by calling first. It will help ease their mind if they know what to expect in advance.

Photo by: Ian Lucero

Should You Hire a Property Management Company?

Written by on January 15, 2012 in Landlord Tips, Management, Market Outlook - No Comments
Hand Putting Deposit Into Piggy Bank

There are several schools of thought when it comes to hiring a property management company to help you with your rental properties. Some say yes and some say no. The biggest question to ask is are you getting your money’s worth?

If your properties require a lot of time, have many maintenance issues, or high turnover rates, a property management company can offer you a lot of value. However, if your properties do not turn over every year, are in good condition, have very few maintenance issues, and do not require too much of your time, hiring a property management company to collect the monthly rent check could be a big waste of money. This is the conclusion Dennis Fassett came to in a recent blog post on Bigger Pockets.

Dennis had employed a property management company for a while when he decided to see what he was getting for the money he was paying. He discovered “their work every month amounts to getting a check in the mail, depositing it, then sending me a check in the mail.” So he was paying a lot of money each and every month to get a consolidated rent check.

After he did the math he realized the 10% off the top wasn’t really number he was paying.

How Much Does Your Property Management Company Cost You?

Instead, he saw that he was paying 27.9% off of the net income that he could be taking home. To read more of Dennis’ story and how he came to this conclusion, click here.

Property management companies definitely have their place and are very useful for landlords that have no desire to work on their properties. However, if you’re like Dennis, it might be time to reevaluate how you’re running your business. Could you save money by using a property management software or online rent collection service instead?

The Income & Wealth Producing Potential of Real Estate

Written by on January 12, 2012 in Landlord Tips, Market Outlook - No Comments
RowHouses1

We recently compared real estate to other forms of investment like stocks and discussed several reasons why someone would choose to invest in real estate. Another one of the positive attributes of rental property is the potential for real estate to produce not only wealth, but income.

Wealth from other investments is generated through appreciation and it is no different for real estate. Over time, a property gains value and this appreciation compounds tax-deferred during your years of ownership. Taxes are not paid until you sell your property, and even you can roll over these gains into another property through something called a 1031-exchange to defer paying the taxes even longer.

On top of the wealth generation of real estate, rental property investments actually bring in cash through the rents paid by your tenants every month. Of course, this income is offset by the expenses incurred in the management of the property like mortgage, interest, taxes, insurance, maintenance, and association dues. Smart landlords will invest in properties where the rent will at least cover these expenses from the beginning.

Over time, as the monthly rent increases (on average 3% per year) and the mortgage is paid off, the rental income can become significant. This doesn’t even take into account the appreciation on the house, that once it is sold will result in a much larger payday because your tenants have paid off the mortgage for you and essentially bought you a house.

Let us know what you think in the comments below. Why did you get into real estate? Was the income and wealth producing potential too hard to pass up?

Photo by: byrdiegyrl

Landlord Tip – Last Month’s Rent

Written by on January 5, 2012 in Landlord Tips - No Comments
Good Practices for Collecting the Last Month's Rent

If you require your residents to pay first and last months rent upon move in, you need to remember to keep up your accounting at renewal time. Every time you issue a rent increase, be sure to charge your tenant the difference in rent to make up for the last month you have in reserves. This will make things easier when your tenant moves out as they expect their last month to be paid for.

Photo by: ElyceFeliz

← Older Entries