As a real estate investor or landlord, you’re bound to be worried about having tenants who struggle to pay their rent on time. But there may be times when it’s hard to pay the mortgage on your end, too. If you operate multiple properties and have your own mortgage for your primary residence, things could snowball quickly. Here are some things you can do to avoid running into trouble paying your mortgage on time when you’re juggling multiple payments.
1. Keep your properties full.
While it may sound like a no-brainer, it’s worth reiterating: Avoiding a vacant property is the most critical method for ensuring you’ve got enough money coming in each month to cover your property mortgage payments. Don’t procrastinate on advertising for new tenants when someone gives their 30-day notice. Have a streamlined process in place for screening applicants and getting properties ready for move-in quickly. Every month you’re not collecting rent from a tenant is a step in the wrong financial direction.
2. Find quality tenants.
While you want to keep your properties full, finding good quality tenants is key. Do you know where to look for the type of tenants who pay on time and won’t use your home as a frat house? Use background and credit checks to weed out people who might not be a good match. And don’t undervalue the power of personal referrals. You never know when a friend or neighbor knows someone who is the perfect fit. Reliable tenants will not only pay on time and allow you to maintain a current mortgage, but they may be more likely to respect the property and help you avoid repairs.
3. Look for long-term tenants.
Don’t assume that quality tenants will necessarily be long-term ones. Some of the best renters will only be in the area for a year or so. Renting to students or people working temporary jobs translates to a lot of turnover. That doesn’t make them a bad tenant or mean you shouldn’t rent to them — but if you want consistency, look for a person who plans to stick around Sacramento for the long haul. Less frequent renter turnover means a smaller chance at a vacancy and the beginning of a spiral that ends in a missed mortgage payment.
4. Keep the property well maintained.
If you want good tenants, long-term tenants, and tenants who pay their rent on time: do your part to keep them. Deal with maintenance issues quickly. Make repairs as necessary. Upgrade appliances or at least ensure the ones you provide are in good working order. Respond to your tenants’ calls quickly. Your property loses value if it’s not in good condition, and you may ultimately not be able to rent it for enough money to cover the mortgage if it becomes too run down.
5. Be a fair landlord.
A good reputation will help you find tenants quickly and charge market-value rent. Being a reasonable landlord will go a long in way in developing lasting relationships with your tenants. This, in turn, will help you keep them in your property longer. Often a tenant and landlord relationship can turn an average tenant into a great one simply because they want to keep that relationship in tact.
In a tough economy, it’s important to do all you can to avoid facing the difficulty of paying the mortgage. That applies just as much to an REI professional as it does to the average renter. These simple tips can help as you work to develop lasting, long-term, rent paying tenants to keep your properties bringing in the income you need every month.