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State-Specific Resources for Landlords, help to and handle the situation of Rent relating to COVID-19

State-Specific Resources for Landlords, help to and handle the situation of Rent relating to COVID-19

  • Posted: May 07, 2020
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How should Landlords as rental housing providers respond to and handle the situation of Rent relating to COVID-19

On March 16, 2020, The White House signed an Executive Order allowing local jurisdictions to enact eviction protections for renters that experience substantial financial hardships as a result of a tenant’s medical expenses, childcare, loss of wages, layoffs or reduction of hours relating to COVID-19 (Coronavirus). Following the order, cities have issued executive orders or have passed ordinances barring certain residential evictions.

 

State-Specific COVID-19 Resources

 

 

Here are a few ways to approach this delicate and challenging issue

1. Communicate With Renters:

First, communicate with your renter. Empathize with them and let he or she know how you feel about these unprecedented circumstances. Explain that all of us are in the same situation and because you want to ensure you can continue to provide them with a safe, well-maintained home, that would be impossible without receiving the rent you depend on to maintain the building and to support your own family.

2. Empathize:

Now, the remainder of the steps here are more concrete, but I want to make sure we address this. Tenants are people, and they are going through a remarkably scary time, as well. Perhaps it’s even worse than you’re going through, because you’re probably more financially educated than many of your tenants. So before anything else, listen to your tenant. Talk with them. Empathize with them. We’re all in this together, so let’s remember to be human and keep people before profit in our discussions.

3. Explain That Rent Is Still Due:

For as long as there have been tenants and landlords and bills to be paid, there is a super interesting piece of human behavior at play: People will pay the bills that give them the greatest consequence of not paying. In other words, most people financially struggling can pay most of their bills—but not always all of them.

This is why late fees are so vital in normal landlording. When the choice between paying rent and buying a flat-screen TV are presented to a tenant, the late fee and threat of eviction tips the scale toward using that money to pay rent.

But we’re not really dealing with flat-screen TVs today, are we? Regardless, the principle still applies. It’s likely your tenant is going to have to make some serious decisions on which bills are being paid. This is why after talking with the tenant and sympathizing with them, I believe it’s still important to let them know that the rent is still due.

As I’m sure you’ve heard, evictions are being suspended in most areas of the U.S. right now. The ability to issue a late fee might also be banned soon. Your tenant very well might assume that this means the need to pay rent is being suspended, and it’s your job to inform them otherwise.

Even if you can’t evict right now, it doesn’t mean they still don’t owe the rent, and it doesn’t mean you won’t evict when the courts open back up. You don’t need to be a jerk about it, but letting them know that you have a mortgage and other bills to pay is going to be important.

4. Give Your Tenant Options:

Once you’ve explained that the rent is still due, now it’s time to help the tenant navigate this difficult time. We plan to do this by giving them their options, as they may be unaware of the different ways they could come up with the rent.

First, we plan to keep an eye on programs that the government is designing to help tenants. This is a rapidly changing time, so we’ll keep current on assistance programs. Right now, there is a very real possibility that the government is going to issue cash payments to every adult American, which could help. But even if they don’t, there may likely be local, state, or federal programs that could.

Also, we are going to offer other suggestions, as well. For example, could they borrow the money from a relative? Or could the rent be paid via credit card?

In fact, to help where we can, we plan to offer to pay the fee associated with using a credit card. Now would be a good time to get set up with a rent collection system that has the ability to get paid via credit card.

5. Rent Deferral Plan:

Now, Its like some loans, banks can take one or two payments and move this to the back of the loans. Well these are not loans so…..

If I brought this up at the beginning for tenants, most everyone would jump at it. Remember, humans will naturally pay the most pressing bill, so I need them to know that rent is incredibly high on their priority list.

So, step five is our “worst-case” measure that will only be mentioned to tenants when they can’t or don’t pay their rent—not when they call and say they won’t be able to. We will still let the tenant know that rent is due on the 1st, give them the options I just mentioned, and even still issue a late-notice to the tenant if they miss rent.

If they really have exhausted their options and just can’t pay the rent?

 

Rent Deferral Plan

Having this documented plan in place shows the tenant that this is not us winging it—but we have a system in place to handle this crisis for everyone.

*First, there is a really important question we will ask each tenant: “How much CAN you pay toward your rent?”

Chances are, even if they can’t pay all their rent, they can probably pay some of their rent. Maybe their rent is $1,000 per month, and they can only pay $300. We’ll accept that $300 and move onto the deferral plan.

 

Rent Deferral Plan, allows the tenant to opt into a payment plan for their rent over the following 10 months. The deferral plan is an addendum to their lease that gives them the ability to take their rent and pay it in equal portions over the next 10 months (beginning the second month after enacting). It basically gives them an extra month before the increased payment begins.

For example, let’s say we’ve gone through all this, but the tenant simply cannot make the April 1st rent. They owe $1,000 in rent and because we asked what they can put toward it, they are able to pay $300. The remaining $700 becomes $70 per month and gets added to their rent beginning June 1st.

So, starting June 1st (not May 1st, and I’ll explain why in a second), they will pay $1,070 per month in rent until next March. Why not start the payment next month? Simply because I have a strong suspicion that this is not going to end that quickly and a one-month deferral may not be enough time to get back on their feet. This is why we’re going to wait an extra month before adding the extra amount. Furthermore, it is our company policy that during this time, a tenant will be allowed to use this twice. Of course, we won’t tell them this immediately, because we want to work through steps one through four first on the next month, as well. Rent has to remain a priority.

 

If after two months they are still unable to pay, the tenant may just need to be removed. This is completely uncharted territory we find ourselves in today, so I’m not going to lie to you and tell you I know exactly what we’ll do then. But the government can’t forever stop evictions and stop making people pay rent while continuing to force mortgage payments and foreclosures—or nearly every single landlord in the country will eventually go bankrupt.

If this social distancing, job loss, and potential economic meltdown continues, we’ll make new rules as it happens. My guess is that the government will offer more and more programs to attempt to help, because remember—you and I are not in this alone. Everyone is trying to figure this out. And we will. Humans have an incredible ability to figure stuff out when the night is darkest. We will get through this. We will survive. We will emerge stronger.

I hope this sheds some light on what I’ll be doing in my personal rental portfolio to handle potential rent issues in the near future. Maybe you’ll be doing something different—and that’s great. I encourage you to share your thoughts below and let us know what your plan is. And perhaps together, we can help the world move forward financially.

We are offering landlords an Agreement Form and Lease addendum package to help with this Rent Deferral Plan

Download the Forms for Covid-19 Agreements with Tenant Today!

Private and/or Non-Profit COVID-19 Resources

 

 

NationalEvictions.com is here for Landlords, Property Owners and Property Management Professionals.  We can prepare notices to be sent to Tenants, Have them Served to your Tenants,  If and when the Notices expire have all the court forms ready to file with the courts for Landlords. 

Find out more about your rights and our services on our website: https://NationalEvictions.com

 

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What Is a Landlord Walk Through Checklist. How do i make one?

What Is a Landlord Walk Through Checklist. How do i make one?

  • Posted: Feb 06, 2020
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What Is a Landlord Walk Through Checklist?

A landlord walk through checklist is a guide that covers what to look for when surveying a rental unit. It should include information on the rental unit, questions and descriptions regarding the condition of each room and appliance, and lastly, leave space for additional comments. The right checklist can help even the most organized landlords and tenants streamline the walk through process and catch all of the details in a rental unit.

*Walk throughs are typically done before a tenant moves in and after they move out. In properties with leases longer than about six months, it is not uncommon to complete a walk through once or twice a year. This process ensures landlords are aware of any potential repairs, damage done to the unit, or lease violations on behalf of the tenant. While it is not necessary to frequently check on tenants, an annual or semi annual walk through helps landlords maintain the condition of their properties.

*We inform Landlords and Tenants to both do a walkthrough of the unit being rented, walk the entire rental use a checklist and mark off everything you see and take notes. We also suggest taking pictures of the before that will go along with the paper copy of the walkthrough form. Then both sign this form, make copies and now the Landlord has one for the rental file and the Tenant has one for later use!

NOTE: Upon move out these forms and key to condition – as such everything should be the same or better then when you moved in condition. This form will be used by both parties in any dispute over the Security Deposit.

 

 

What Should You Include on Your Landlord Walk Through Checklist?

The ideal walk through checklist for rental property owners and landlords should survey the entire unit, without leaving room for any guess work. A thorough checklist is crucial, particularly during move in and move out, because it allows you to note the existing property condition and any changes that have been made during tenancy. Further, a checklist may reveal the potential for upgrades or modifications that should be made to unit. That being said, here are a few items you should include in every walkthrough checklist:

  • Flooring: As you walk through the property, keep in mind the flooring in each room. Make sure there are no missing tiles, peeled up corners or broken floorboards in the unit. Each of these issues should be repaired right away to prevent further damage to the rental property.
  • Walls: Many property owners or landlords will repaint rental units between tenants; this not only fixes any scratches made by the last owner but it keeps units looking fresh and clean. Keep tabs on the status of walls before, during and after tenants occupy your property to make sure you know the right frequency to paint.
  • Smoke Detectors: No rental checklist for walk through is complete without checking the smoke and carbon monoxide detectors. Look for them placed throughout the unit, and test the alarms to ensure they are working.
  • Heating & Air Systems: This is the first thing you are likely to get a maintenance request for, if they aren’t in good condition that is. Review the heating and air units throughout the rental property and make sure they work as they should. Double check with a professional if you are unsure about anything.
  • Entry Way: Are there stairs leading up to the unit? What about a long path? Depending on the layout of your rental property, it could require certain safety features. Double check that all stairs have properly installed railings, and that all paths or outdoor areas are well lit when needed. This helps make sure your property is accessible to all tenants, and it’s a good chance to double check the curb appeal as well.
  • Kitchen Appliances: Always check the stove, oven, dishwasher, refrigerator and other appliances when doing a walkthrough. Make sure all appliances are working as they should, and be sure to check any vents and lights. It is crucial to catch and potential issues before they develop into more costly problems.
  • Doors & Locks: Some landlords will change out the locks between tenants, while others will only distribute “do not duplicate” keys to ensure they are given everything back. No matter which route you choose, double check all doors and locks with your tenants to see if everything is working as it should.
  • Light Fixtures: Turn all of the lights on and off as you walk through the unit to determine if each fixture is working as it should. While you may not be responsible for changing old bulbs while a tenant occupies the unit, it is a good touch to make sure each light is fresh when completing a move in walk through.

 

Landlord Walk Through Checklist:

It is a good idea to add a renter walk through checklist to your files, this way you have one available whenever you need it. By creating a system for the process, you can make sure property maintenance and tenant issues are handled efficiently and consistently.

Keep each completed checklist organized with the rest of your tenant paperwork, especially when it comes to move in walk through s. This will help you cross reference old notes, should any issues arise with the property.

If you are preparing for your next walk through, download our checklist today: You can copy the form below or download our form here

 

 

OTHER FORMS FOR LANDLORDS AND TENANTS CAN BE FOUND ON OUR LEGAL FORMS SECTION

 

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Florida Passes Remote Online Notarization and Electronic Will Bills Together

Florida Passes Remote Online Notarization and Electronic Will Bills Together

  • Posted: Jan 03, 2020
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Florida Passes Remote Online Notarization and Electronic Will Bills Together

New Paragraph has to be added to Notary Documents in Florida, Find the link and read pages 14-15 Add them to your documents!

See the Changes on Page 14-15 of the new Law

In addition to the creation of the remote notarization requirements, changes to Florida Statutes Section 117.05 require revisions to the form of the notary block to be contained on instruments and affidavits, and this change in the form is mandatory (on all forms, not just forms that are electronically notarized). The relevant portion of the statutory acknowledgment of a principal in their individual capacity should read as follows (the yellow-highlighted section is the new required language):

The foregoing instrument was acknowledged before me, by means of ☐ physical presence or ☐ online notarization, this ____ day of _______, __(year), by __________ …….

Similarly, for an instrument requiring an oath or affirmation, the relevant portion of the statutory certificate should read as follows (the yellow-highlighted section is the new required language):

Sworn to (or affirmed) and subscribed before me, by means of ☐ physical presence or ☐ online notarization, this ____ day of _______, __(year), by __________ ……

All other portions of the notarization block remain in effect. The failure to include this language commencing on January 1 may result in the document being rejected for purposes of recording. The important date is the date the document is signed. If a document is signed before January 1, then the “old form” is fine, even if the document is recorded after January 1. That being said, if the document is signed on January 1, then it should be on the new form to avoid any potential recording issues.

Over the past few years, we’ve watched families, businesses, and communities rally around providing access to technology for life’s most important moments. Some of these efforts take time, but on the other side of these coalitions, lies impact-full solutions that will benefit generations to come.
 
bill (House Bill 409), but also included an E-Will bill as part of its legislation. Governor Ron DeSantis added his signature HB 409, bringing the efficiencies of remote online notarization to the half a million notaries that call the Sunshine State home. The bill will take effect January 1, 2020.
 
For the over 20 million residents of Florida, and nearly 500,000 notaries, anyone can now buy or sell real estate, sign and notarize documents, or set up Wills to protect their loved ones — entirely online.
 
“Remote online notarization provides the single biggest opportunity of our careers,” said James Schlimmer, Managing Partner at Cottrell Title & Escrow. “It gives millions of real estate professionals the ability to differentiate themselves and provide a convenient, on-demand closing experience for buyers and sellers that just makes sense.”
 
House Bill 409 will also allow remote notaries to execute fully electronic wills, in a state where more than half the population is over 40. One survey found that 40% of Baby Boomers (ages 53-71) do not have a will.
 
“It’s a win for the entire state of Florida,” said Cody Barbo, Co-Founder and CEO of Trust & Will. “When a top-five populated state passes something this innovative, it changes the entire industry. Our mission is to help everyone leave a lasting legacy, no matter if you’re a parent, a Baby Boomer, or someone who wants to have peace of mind for how their loved ones will be taken care of. Florida is taking that step to help us realize that vision nationwide.”
 
Florida is the 11th new state to adopt RON legislation in 2019, and 21st overall.
 
NationalEvictions.com

See the Changes on Page 14-15 of the new Law

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Clauses Every Lease Should Have

Clauses Every Lease Should Have

  • Posted: Nov 15, 2019
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Clauses Every Lease Should Have

NOVEMBER 4, 2019 BY KEVIN (Thanks Kevin)

Your lease is the contract between you and your tenant. For any contract to work and be legal, certain clauses are necessary. If these clauses are left out or are poorly written, the the landlord runs the risk of serious problems in the future. This post describes several clauses every lease should contain.

Before I get to clauses, let me start off by saying that there is no universal, standard lease. Situations between landlords and tenants differ. Properties differ. State and local laws differ. Thus the lease found at Office Max or even my lease will not work for you. A lease needs to be tailored to your unique conditions. Plus, it should be reviewed by a competent real estate attorney from your area.

That said, here are some clauses every lease should have.

Duration
While tenant turnover may be a cash flow killer, I would strongly advise against open ended leases. Instead, every lease should contain a duration or a length of time the lease runs. You want a definite end date, so that either you or the tenant can get out of the contract (with a no-fault eviction if necessary). Traditionally, with residential leases, the duration is a year, but that amount can be adjusted to fit your particular situation. Six month or two year leases are not unheard of.

Term
Most residential landlords set the term lengths of their leases at one month. In other words, while the duration for the lease may last for a year, the term is monthly. This term is why rent is due to most of us every month. Some leases have weekly terms. Hotels have daily terms. Terms can therefore vary, but are important clauses as they set out when we get paid.

Cost
Don’t forget the most important part, which is how much the rent is. Rental amounts need to be clearly spelled out. I think most of us know that, but it deserves a mention as it is so important.

Extension
What happens when your lease duration is up? Does the tenant have to move? Do they need to sign an entire new lease? Does the existing lease continue on in some fashion?

I have seen landlords do all of the above. But the most common way to extend a lease at the end of its duration is to go by the term. Most of us landlords use monthly terms so the lease becomes monthly, or month to month, in duration. Of course this can also be weekly or even daily. Whatever it is, it has to be spelled out in the clauses of the lease what happens when the duration is up.

Late Fees
How much will be charged if the tenant is late with their rental payment? How much can you charge? When is a rental payment considered late? All of these items should be spelled out in your lease so there is no confusion. Plus, you need to provide incentives to get the rent in on time. State laws often dictate when and how much landlords can charge with late fess. So know and understand what those laws say.

Notice of Termination
Both side to any contract, like a lease, need advance knowledge that one party to the contract is terminating the relationship. In the landlord world, this notice of termination means the notice given by a tenant that they are planning to move. How long should this notice be? Most landlords require at least the term of the lease, which is most commonly a month. But why not require a little more? Would not 60 or 90 days of advance notice give you more time to market and re-rent the property and reduce the interruption of your cash flow? We have found in our business that it does.

Allow Showings
Once a notice of termination has been provided by your tenant, you need to get the property re-rented. How do you do that if you cannot show the property? In our leases we insert a clause that allows us to market and show the property once a notice of termination has been submitted. Sometimes tenants complain about the intrusion, but we just point out the clause in the lease they singed and that usually ends the discussion.

Overstay
What happens if a tenant gives you notice of termination, whereupon you re-rent the property but the existing tenant does not move when they saw they will? Where does your new tenant go? Who pays for the expenses incurred? Could get pretty sticky if you do not have the proper clauses for tenants that overstay their lease. In our business, we charge $100 per day of overstay. That clause tends to keep things moving.

Local Needs
Some states require special stipulations in leases. You may need to tell folks where their security deposits are held for example. In Tennessee where I work and live, leases need to have special provision related to notices of non-payment of rent. Not having such a clause can lead to lost time, income and much frustration for the landlord.

Leases are legally binding contracts. What they say and how they say it is important. Carefully consider the words and clauses in your lease. Do not use a “boiler plate” lease and have a competent real estate attorney in your area review it. What you say, or not say, can make all the difference towards helping or hindering your life as a landlord.

 

 

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What Is A Rental Property Business?

What Is A Rental Property Business?

  • Posted: Jul 31, 2019
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How To Start A Rental Property Business

As Antoine de Saint-Exupery once said, “A goal without a plan is just a wish.” Consequently, the best plans have developed a reputation for helping people in every industry realize their own goals, no matter how lofty they may be. There literally isn’t a single professional who couldn’t benefit more from a well-crafted strategy, and real estate investors are no exception. Buy-and-hold investors, in particular, stand to better their long-term outlook when they take a moment to establish a sound rental property business plan.

A proven rental property business plan can help lay out the systems and benchmarks investors need to realize success at a higher level. That said, only one question remains: what does a rental property business plan look like?

If you are interested in starting a rental property business, there are several valuable lessons to take away from experience. Meanwhile, here’s a guide for developing a bullet-proof rental property business plan; it may be just what you have been waiting for.

 

What Is A Rental Property Business?

A rental property business is a venture through which an investor will purchase and manage one or more income-producing properties. These properties can have one or more units that are leased out to tenants in exchange for monthly rental fees. Investors can have an effective rental plan without having to directly manage these properties; property management companies can be hired to carry out the duties often associated with landlords, such as rent collection and maintenance.

 

Is My Rental Property A Business?

Renting a house may be considered a business endeavor, depending on who you ask. This may seem like a controversial question, and there are at least two answers to take into consideration. From a financial standpoint, renting a residential property may result in passive income. It is important to note that investors do not have to pay self-employment taxes when reporting their rental properties. Therefore, many would argue that owning a rental property is not considered a “business,” specifically in the lens of tax filing. From a career standpoint, however, many individuals make a living on passive income derived from their rental property companies; in this lens, renting a house can be considered a business. When all is said and done, it’s entirely possible to manage a rental property portfolio as a business, but those with a single rental property may not necessarily need to start a company to collect passive income. It’s only once the portfolio starts to grow that turning the practice of renting into a business becomes more important.

 

A Rental Property Business Takes Time!

Learning how to start a rental property business isn’t all that different from just about every other entrepreneurial endeavor. Investors simply need to identify several key elements prior to getting started; that way, they can start their business on a solid foundation. Here are some of the most important steps to consider when drafting a rental property business plan and becoming a real estate entrepreneur:

  1. Join a local REI club and start networking
  2. Pick a niche and choose your rental property market
  3. Figure out the proper financing and secure it
  4. Conduct the appropriate research and hire a manager
  5. Implement systems to improve efficiency
  6. Manage the properties and scale the business at a sustainable pace

Join A Real Estate Investor Club

Joining a local real estate investing club or association provides networking opportunities, not the least of which may actually help rental property investors find a partner—or perhaps anyone else who may help them further their rental property business plan. There’s absolutely no reason to think new investors, and specifically aspiring rental property owners, can’t find a helpful hand at a real estate investor club. These types of meet-ups are specifically designed to help their attendees, and there’s always someone willing to lend a hand. At the very least, investors will gain insight into local professionals who are most likely already doing the one thing they want to do.

Pick A Niche & Choose A Market

Determining where to invest can often be more important to investors than how much capital, or experience they bring to the table. After all, the golden rule of real estate still persists: location, location, location. There is perhaps no factor that is more influential to the success of a rental property investor than the location in which they choose to invest. The location will determine everything from demand and price, not to mention the property’s long-term potential. Therefore, a truly great rental property business plan will want to make sure it answers these questions, and many more just like them:

  • How distant a market am I willing to invest in?
  • Do I have a team in place to handle the day-to-day, or will I have to commute back-and-forth?
  • How much will commuting and market research cost me?
  • How stable and diverse is the economy in a market? Are there various business sectors that can help keep jobs and businesses? Is there one main employer?
  • What’s the average market price for property acquisition?
  • What’s the average rental price?

There’s no rule that says investors need to live in the markets they invest in, but there is no excuse for neglecting to mind due diligence and research the local hosing market. To invest successfully, investors need to know every detail about a specific area, not to mention the specific niche they intend to serve. If for nothing else, investors need to know their renters just as much as the area they are investing in. Picking a niche, not unlike focusing on college housing or single-family homes, is the easiest way to target a specific audience. Therefore, it’s at this time rental property investors should decide who they are going to serve; only then will they be able to tailor their rental property business plan to see the needs of their audience.

 

 

Figure Out Financing

Securing financing is probably the biggest hurdle rental property investors face. However, financing a real estate deal isn’t nearly as hard as many new investors make it out to be. As it turns out, there are countless lenders just waiting for an opportunity to give a savvy investor the money they need to invest in real estate. Outside of traditional sources, like institutionalized banks, today’s real estate investors have access to more funding sources than ever before. Private money lenders and hard money lenders, in particular, have become synonymous with the best ways to secure funding, and are as willing to work with investors as investors are eager to work with lenders.

These “alternative” sources tend to coincide with higher interest payments (often three to four times higher than traditional banks), but the added cost is well worth it. In exchange for their higher rates, investors not only receive the money they need to complete a deal, but they also receive it a lot faster than they would if they went through a bank. Whereas banks can take upwards fo a few months to distribute funds, alternative lenders can have the money in investors’ hands in as little as a few days—if not hours.

It is also important to note that securing financing should be done prior to even looking for a home. That way, the investor will know exactly how much home they can afford, and which investments are worth pursuing further.

Conduct Research & Hire A Property Manager

Becoming a landlord means investors will be responsible for maintaining the appearance and function of the rental property. Whether or not the investor is a handyman, however, is a moot point, as it’s highly recommended that they hire a property manager. While it helps to know everything about a subject property, enlisting the services of a third-party property manager is an essential step in a rental property business plan. Through their help, investors may expand their portfolio without adding on countless hours of work. If for nothing else, a property manager will take care of everything. From finding tenants to collecting rent, property managers will see to it that everything is covered. Meanwhile, the investor is free to add more assets to their portfolio and increase their passive income cash flow.

Systemize

There are many rental plan options for landlords, such as specializing in low-income neighborhoods or university towns. Alternatively, they can choose to specialize in higher-income, urban neighborhoods. Different strategies require different skills sets, so landlords may find better success if they pick a niche in which they specialize. However, regardless of the niche, landlords will need to set up a system for running applications, credit and background checks. Adding proven systems to a rental property business plan is the surest way to make success habitual. Therefore, investors will need to create a system for every single process associated with rental property investing. That way, there will always be an appropriate course of action, regardless of the situation. Property managers, for that matter, make it a lot easier to implement systems.

Manage The Properties

Managing a rental property is about far more than just hiring a property manager; it’s about figuring out exactly what systems will be put in place to keep the properties in good shape and the cash flowing in. This means answering queries like:

  • Are you going to be a landlord? (Or will you hire a property manager?)
  • Who will find and select tenants?
  • Will you perform repairs to maintain property? (Or hire a contractor?)
  • Who will perform yard maintenance and other duties?

Your answers will depend on your budget, and available time. The key is to use your rental property business plan to map out all management systems beforehand and ensure there are no last-minute surprises.

 

 

How To Write A Rental Property Business Plan

Starting a rental property business is one thing, but learning how to write a rental property business plan is something entirely different. While the two sound similar, the latter is a critical step that makes the former even stronger. At the very least, knowing how to start a rental property business must come before actually starting one. As a result, investors will need to familiarize themselves with the most important steps first:

  1. Determine a vision and write a mission statement
  2. Set passive income and business goals
  3. Build a team structure that is conducive to success
  4. Gain a high-level overview perspective of the company as a whole
  5. Develop marketing systems and funnels tailored to a specific audience

 

Vision & Mission

A truly great rental property business plan must emphasize one thing above everything else: the investor’s vision or mission. What an investor hopes to achieve by investing in real estate may simultaneously serve as motivation and a guide when times are less than ideal. Therefore, investors must take a minute to think about why they are investing. Is it to retire comfortably? Is it to spend more time with family and friends? Is it both of these things? Knowing their “why” will help investors build out a sound business strategy; one that gets them closer to their goals with each and every investment. Consequently, those without a mission won’t have any idea what direction to head, which doesn’t bode well for any rental property business.

 

Passive Income Goals

While closely related to one’s own vision or mission, passive income goals identify how much cash flow will be necessary to satiate investors’ appetites. That said, passive income goals should help investors meet their own mission statement. Likewise, if an investor wants to retire comfortably, they will need to set their passive income goals high enough to facilitate their desired retirement. While everyone’s passive income goals will be different, a general rule of thumb is to account for how much cash flow will be necessary to maintain their preferred lifestyle.

Remember, goals should be realistic and directly related to the reason someone wants to invest. Seeing overly ambitious goals can deter many investors from progressing, so it’s important that the goals are achievable. The sense of accomplishment developed from realizing a goals is, oftentimes, a powerful motivator.

Determining passive income goals will also help answer the most important question of them all: what type of rental property will I focus on? Residential? Commercial? Multi-family? Start from the end, and work backwards for better results; it’s the best, and most efficient, way to build a business.

Structure

Starting a rental property business may lead many investors to hiring a team. After all, it’s true what they say: many hands make light work. The more qualified individuals investors have working towards a common goal, the more likely they are to realize success. Not only that, but hiring a competent real estate team is simply one more step towards investors removing themselves from the equation and earning more passive income. That said, it’s not enough to hire just anyone; the employees need to bring something new to the table. Investors need to hire a team that compliments their skills—not that replicates them. That way, the team structure is more well-rounded and capable of accomplishing more tasks.

 

High-Level Overview

Investors need to look beyond the prospects of a single investment property, and towards the potential of an entire portfolio. While a single home can produce encouraging cash flow levels, an entire portfolio can help investors realize financial freedom. Therefore, it’s important not to forget the “bigger picture.” Sure, start with a single home, but plans should inherently be scalable. When writing a rental property business plan, see to it that everything can be expanded to include future growth.

 

Marketing

Buying a rental property is just the first step on a passive income investing journey. At some point, investors need to figure out how to find tenants to bring in cash flow. More often than not, investors will rely on their property manager to fill vacancies. However, in the event an investor neglects to hire a property manager, there are various ways to find tenants, not the least of which include:

  • Rental websites
  • Social media
  • Print media/newspaper
  • Local bulletin boards
  • Local Realtors
  • Word-of-mouth marketing
  • Direct mail campaigns
  • Previous renters

 

Is A Rental Property Business A Good Investment?

Investors will know if a rental property is a good investment if their net cash flow remains consistently positive. Seasoned real estate investors know that, in order to have a solid rental plan and business, they must first mind their due diligence and ensure that a rental property is indeed a good investment. There are several measurements available to help investors get an idea of the profit-making potential for a property.

 

 

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