1.Strengthen your tenant-screening process
Choosing tenants wisely is critical. Non-paying or always late paying tenants aren’t easy to deal with. Late payments can mean an unpaid mortgage and delayed property maintenance. The best bet is to choose a highly qualified tenant from the start. Take some time to assess your current methods for screening tenants. If you are doing it yourself get a feel for their employment and financial habits and talk to past landlords if you are at the stage of thinking they might be a suitable tenant. If you are not 100% confident consider using a property management agency to make it ironclad.
2.Re-evaluate your rent
Rents for many properties have been coming down lately, particularly in areas where supply outstrips demand. Homes that have been put on the market and not sold at the price the owner wants have been put into the rental pool, causing a glut in some areas. If you haven’t re-evaluated your rents in a while, it is high time to do so, particularly if you have a lease expiring soon. If you need help determining whether an increase/decrease is warranted, contact a local property management company. They can help you run through the comparisons and see what your property should fetch in your rental market. Nobody wants a drop in rent.
3.Start saving
Every landlords needs a good emergency fund and this year has made that abundantly clear, with the reintroduction of loan-to-value restrictions and the Government’s tax changes for landlords. A smart property owner should have funds to not only cover unexpected repairs and expenses but months of lost rent and income too. As a general rule, a landlord should have at least six months of expenses in savings. And if that’s not possible, consider signing up for rent guarantee insurance. This covers rent non-payment and can help you stay afloat if your tenant goes MIA.
4.Plan your updates and repairs now
Will your property need new heating/airconditioning? Does the exterior need repairing, replaced or repainted? Want to update the kitchen and command a higher rent with new tenants? Then start planning projects now. Construction supplies have been in short supply and their prices are on a hot streak at well. If you don’t want your project delayed or costing more than you hoped for, having a plan is crucial. You might consider buying in bulk, spreading your material purchases out over a few month, or just watching prices and being strategic when timing your purchases.
5.Consider diversifying
If you really want protection make a plan to diversify your portfolio. Instead of focusing solely on buy and hold rental properties, venture into short-term rentals, with services, such as Airbnb, renovate and sell, extend existing properties, buy multi-unit flats/apartments or invest in commercial property funds. The more you can spread into various market niches, the more cushion you will have if one sector is hit hard.
6.The bottom line
The more effort you put into prepping now, the most protected you’ll be should something go awry.
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