Posted by By Paul Branton, Director of Investor Services for Home Rental Services
A rule of thumb is defined as “a broadly accurate guide or principle, based on experience or practice rather than theory.” After over a decade of working in an industry, you hopefully become aware of the inner workings that are not common knowledge to those with less experience in that line of work. Sometimes, this industry knowledge is referred to as insight, but sometimes, it’s just a “rule of thumb.”
As Home Rental Services celebrates thirty-four years in business this month, we thought we’d share just a few rental investment “rules of thumb” with you.
Owning rental property is not really a passive an investment.
Despite what some folks out there say… directly owning investment real estate requires a fair amount of active involvement.
There is almost always a distinguishable difference between normal wear & tear and tenant damages.
If logic and reason are applied to the situation, its often fairly simple to come to the appropriate conclusion.
Children (and adults) can cause just as much damage as pets.
As I personally live in a no pets household, I have had the opportunity to use this example countless times over the years.
Yes, you can say you don’t want to allow pets in your home. No, you can’t say you won’t allow children or adults to reside in the home. I have three children in my home and I visit numerous homes each week with any combination of adults, kids and pets….. some of those homes look better than mine and others do not.
Properties with these features have lower vacancy rates:
1) Pets are Allowed
2) The Yard is Fenced
3) The Basement is Finished
Turnover costs average one month’s rent for each year the tenants reside in the home.
This is a true “rule of thumb” as it’s not an exact science, but it does come close more often than not, based on our experience. Given this data point, we encourage our clients to set aside one month of rent each year to be prepared for necessary repairs/improvements when the tenants move out.
The most successful rental property owners handle their properties like running a small business.
1) They treat their customers (renters) well.
2) They proactively invest in the properties. (Maintenance, updates, improvements.)
3) They have a clearly defined goal for the business.
I hope that you enjoyed this quick look at a few of the rental investment “rules of thumb.” If you’d like to discuss any of the above further or have other questions, don’t hesitate to reach out to us! Wherever you are at in your rental investment journey, we’d be happy to help!
Paul Branton, Director of Investor Services
Home Rental Services Blog 