Every property investor will agree that without tenants you do not really have a property business.
Your tenants will pay the rent set by you. This rent will be used to pay for:
Your mortgage repayments
Recurring property maintenance
Fixtures and furnishings in a furnished property
Any money left over will be used by the property investor for
Advertising
Finders fees for further property acquisitions
Further acquisition financing costs
Legal fees
etc.
As you can see, there are numerous expenses here. To be successful, you need to treat property investing as a business and not just a hobby.
I know of a lot of people who have tried property investment only to find that their costs far exceed any income – this is certainly NOT the right way to run a successful business.
As with any business you need to look for ways to reduce costs or increase the income. Now the only way for you to increase the money coming in would be to increase the rent. This is not as easy as it may at first look.
If you were to increase the rent over and above the rent dictated by the market you may never be able to rent out your property. A tenant will only ever pay market rent unless your property is one of the best properties on the market and in an exclusive area where it is very difficult to find rented accommodation.
Unless your property meets the above two criteria, I would forget about increasing the rent. You must therefore focus on reducing costs.
One way to reduce costs is by making the best use of your tenants.
For example, you could ask your tenants to do a lot of the simple upgrading tasks on your property for you. I’ve often asked tenants to paint my properties for me! If I supply the paint in a colour that is agreeable to both myself and the tenant I find that they are only too happy to paint the house for me.
By painting the house, the tenants feel more involved in their property and also house proud; hence they often stay longer resulting in fewer voids.
I also make it clear to tenants that I am looking for other properties in their area. If they know of any vendors that may be looking to sell, please let me know. This is another way to find that elusive deal. I am happy to pay the tenant a finder’s fee for this service.
Finally, when a tenant decides to move on, I ask him/her if they know of anyone that might want to rent the same property. I normally ask them to put a notice up at their place of work or local pub.
Again, I will offer the tenant a small financial incentive if they are successful in finding me someone.
This financial incentive is far less than it would cost me to advertise the property, hence I’m saving money straightaway.
I’m sure you can probably think of a few more ways your tenants can help you run your business. The bottom line is that you must treat your tenants as an asset and help them help you grow your business.
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