This article, written by Stephanie Taylor Christensen, was originally published on Citi’s Women & Co.
Do you dream of using your digs as a way to generate revenue? Do you think about buying investment property to bring some passive income into your financial life? We asked some female property owners for their best financial tips on how to succeed asa landlord.
1. Recognize the value of trust. Jenna Rose Robbins lives in Playa del Rey, California, and rents out two separate properties. One is the home she once lived in but began renting a few years ago while waiting for the housing market to improve; the other is her primary residence, which she rents with the help of services like Airbnb when she travels for several months on business. Through both experiences, Robbins has learned the inherent value of trust—even if it means sacrificing potential rental income. “You need to have a tenant you trust, whether long or short term,” she advises. “I’d rather have my unit empty than worry about who is in there and the damage they may cause. Money can’t replace piece of mind.”
To mitigate risk, Robbins conducts full background checks (not just credit checks) and calls as many references as possible. “Work managers are great to speak to,” she notes, “as is the tenant’s current property manager.”
2. Manage rent carefully. Sara Geber of Los Gatos, California, who has owned three properties (and made money from them) has learned the importance of a competitive price. “Set your rent at 5 to 10 percent below that of comparable properties,” says Geber. “If you do that, you’ll always attract tenants and you’ll often get to choose the most attractive applicant.” Furthermore, your renters may stay longer if they feel they’re getting value. That saves you the additional expense of having to find new renters often, not to mention the cost of property upkeep in between tenants.
Another tip: Making the rental payment process convenient can also save you and your tenants time and headaches. For example, instead of waiting for a rent check to arrive in the mail, consider using a personal payment service like Popmoney®, which would allow your renters to send money to your U.S. bank account easily with their phone, directly from their bank account, using the Citi Mobile® App.
3. Budget for the unexpected. Fatesta Batement of Dallas, Texas, first became a landlord in 2006 after deciding to rent out her existing home and buy a more spacious one. Though she was initially hesitant to trust strangers with her property, she eventually grew so comfortable that she bought another investment property, with cash, “as is.” Because the home already had tenants, she assumed the rental process would be painless.
Batement soon found out otherwise. Not only did the tenants struggle to pay their rent, but the home turned out to need major electrical repairs that she hadn’t anticipated. Though she’s now in the process of turning it into a transitional space to help the homeless, she learned the importance of being financially prepared for the unexpected. “Set aside money for repairs and unpaid rent,” she suggests. “Every day it is something different. But I wouldn’t change my decision to be a real estate investor.”
4. Be willing to pay for help. Dr. Gayle Carson lives in three cities (Miami Beach, San Diego, and Palm Springs) and has rented out two different homes, both in vacation destinations. She recommends investing in a property manager if you live a distance away and, if you have multiple properties, approaching your side job as a landlord just as you would a business.
5. Think like an entrepreneur. Though Elizabeth Dodson of El Dorado Hills, California, was fortunate to find great tenants when renting out her former home in Maryland, she learned the challenges of being a long-distance landlord—specifically when it comes to helping tenants deal with things like locating the correct settings for fans and thermostats. As a result, another entrepreneurial pursuit was born: Dodson and two business partners were inspired to create their own company, called HomeZada, which gives homeowners the ability to track everything about their homes in one place.
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