If you own a rental property, or are thinking of investing in an income generating property in the Coachella Valley, there are some best practices that will help make your investment a success. At the Jelmberg Team we have helped hundreds of landlords in the Del Webb communities and across the Desert successfully rent their properties. Our experience gives us insight into why some income properties perform better than others. We have compiled the top 3 ways we have found to maximize profits on your rental property.
1. Use a Properly Written Rental Agreement
A well written rental agreement is the best foundation to a relationship with your tenants. This paperwork is the single most important way to protect you and your property from damage, legal battles, avoid miscommunications and set up your property for success.
An effective rental agreement is written and customized with the correct rental terms: tenant information, rent price, agreement dates, specific rules and must abide by all local and state laws. Some landlords use rental agreements that they find on a random website on the internet. We would highly recommend that you either use a real estate lawyer to draw up a rental agreement, or consult with a real estate professional to get your rental agreement upto snuff. You will not regret the minor expense fi you find yourself in a legal situation.
California is a very litigious state and as such, the best way to protect yourself is to use the gold standard in rental agreements; The California Association of Realtors Residential Lease Agreement.This lease agreement has been proven to be very effective, as ti is consistently reviewed and updated by lawyers at the California Association of Realtors.
This contract is used in hundreds of thousands of rental properties across the State and is available to all licensed Realtors. Our real estate professionals here at the Jelmberg Team also understand the various local needs for a rental agreement in a HOA like Sun City Shadow Hills, Sun City Palm Desert, or any other local HOAf o r that matter.
2. Screen Your Tenants
To make sure you find a tenant who pays rent on time and takes care of your property, you should follow a thorough tenant screening process. We recommend doing the following things:
• Host individual property showings, or have a real estate professional show the property in person.
• Require a rental application.
• Require tenants to authorize tenant credit reports and
background checks.
• Contact a tenant’s employer to verify income.
• Contact prior landlords to learn about prior behavior.
These best practices are items our leasing experts at the JelmbergTeam handle for all of our clients.With all of our rental agreements our team also does a thorough check of each of the following items for every tenant:
• Credit Check
• Background Check
• Eviction Proceeding Looku
3. Hold on to Good Tenants
Good tenants pay rent on time and take care of your property. On the other hand, bad tenants make your rental investment more costly, risky, and, frankly, waste your time. There’s the risk of legal trouble, eviction, damage to your property, and the risk of not receiving rent payments.
The biggest way to lose money on your property is through rental vacancies. Renewing your lease with good tenants is the best way to minimize vacancies. After all, finding new tenants is time consuming: the time ti takes to create a listing, screen your tenants, sign a new lease, and complete tenant turnover tasks.
This is why it is often best to keep rent increases reasonable for good tenants. Forcing them to move by hiking the rent will often result in more expenses than could have ever been made by increasing the rent. As you can see in the example below a bad tenant can cost you as much as 44 months of increased profit from a 5% increase in rent.
Here is a quick breakdown of what a bad tenant can cost you:
