Q. How do I know what to charge for rent?
Ans. You want to make sure you can cover your mortgage payment, insurance, and taxes. You want to still have enough for maintence unless you are in a place were appreciation is climbing. I always want a minumun of $200.00 per month extra cash flow. Now you must also consider if you use a property management firm. They will eat up a portion of your profit. For me, time is very important and the headache of dealing with tenants is worth the money I pay them monthly.
Q.
How much does a property have to cash flow to make sense?
Ans. Knowing your market is important in this case. I have done deals with a lot of cash flow on the front end and may have to give alittle back over time. But, I always want to break even. Most of the time $200.00 of extra cash flow is sufficient. But, again this is were being an expert in your market is important because those small losses add up (especially if you are dealing with a bunch of properties).
Q. How do I know If a person will make a good tenant?
Ans. It is important to interview prospect tenants so that you get an impression of this person. Someone with a history of moving in and out of apartments within a relatively short amount of time is probably not a good candidate.
Q. Do I need to require my tenants to have rental insurance?
Ans. I always require tenants to carry renters insurance. In the event that something happens their things are then covered by their coverage. You must still ALWAYS carry good homeowners insurance on your property whether or not the tenant decides to acquire it.
Q. Do I need to have a security deposit before tenant(s) move in?
Ans. I alwasy require that they have the security deposit before they move in. It is also important that you give pro-rated rates.
Q. How long before a lease expires do I send a renewal letter to the tenants?
Ans. Send out a Letter of Lease Expiration at least 45 days prior to the end of lease.
Q. How much should rents go up each year?
Ans. I always increase rents from 8% to 10 % a year but again knowing your market is very important.
Q. What if a tenant gives me half of the rent a second time, when can I evict?
Ans. I made this mistake in my first rental. My tenant could only make half the payment. I thought "Well half is better then nothing" so I accepted the partial payment. The next month comes along and they did not give the full rent again. I accepted half of the rent payment a second time with the understanding if I did not get my rent in full they would have to move out by the 15th of the month. By accepting money it was consideration and I could not evict them until after the 5th of the next month. A good rule of thumb is to only except the full payment even if it is late.
