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How to make money in rentals

By: Brian Kennedy
Wednesday, April 18, 2007 9:56 AM

OK, I had never given much thought to rentals since they don't generally produce enough income on their own and there is a lot of work to do to get a tenant interested.
But I have recently had a revelation.
I recent started farming rental buildings that were self-managed and was surprised to find that a number of them never gave any though to posting vacancies on MLS.
Many of the property managers expressed real concern about the quality of the tenants that were showing interest in the units and had not given much thought as to how to attract better qualified tenants. 
I was very surprised to find that more than one owner simply didn't do credit checks on rental prospects and never did any type of income verification.

If I I can pass along one tip that helped me, offer a free credit check.
Then, come up with your own lease application that includes a full disclosure about income verification as a condition of acceptance.
I always get copies of the prospects last pay stub as a requirement for consideration.
Get signed on with a credit check service and buy in bulk.  You pay much less and can do much more volume with minimal lag time.
I don't mind dual agency so I try to get as much dual agency as possible. On a $1200.00 per month lease, I usually walk off with $900.00 per unit after accounting for the credit check fee and the split with my agency.

Three or four of these every month has really helped in keeping the money coming in.  

I found that offering a Free service, which I do anyway in any rental scenario,  was just small enough of an incentive and really got owners to consider listing with me. In some cases I even discounted the commission fee if they were willing to do an exclusive building-wide leasing agreement.

I hope this information helps.

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Comments

Ritu Desai
Member Since '04

Ritu Desai said:

I do rental and few of my rental have eventually purchase homes or refferred me to their friends and family. As you mentioned they are good source of income. My broker does not take a split on rentals which works out great.

April 18, 2007 12:13 PM

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Brian Kennedy
American Invsco Realty

Brian Kennedy
Member Since '07

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