Successful Real Estate Investor’s number one goal is to make a profit. Check out our five point series that will help you maintain profits and be a successful real estate investor.
Tip 1: Keep Your Leases Current and at Market by REVIEWING and AMENDING your lease contracts every year.
From year to year things can change dramatically. Don’t miss out on profit because you are making simple mistakes like not keeping your leases current or not following the market. Set a reminder on your calendar to put a renewal in front of your tenant annually. This gives you an opportunity to restructure things and address issues.
Don’t think of it as an ordeal, but something you do to ensure that you are on track with your property or properties. A one page renewal with any lease changes that includes the new rent amount and the date it takes effect will suffice. The tenant should have a certain number of days to sign it and return it making the contract fair for you and your tenant.
- A month to month lease is not good because a tenant can terminate their contract at very short notice leaving you the investor hanging. You can make changes on the lease at short notice as well; making it unsavory to some tenants.
- An auto renewed lease is not good because you could miss the deadline and be stuck with a lease that doesn’t reflect the current changes you have made to the property or the market. If you own property in an area that doesn’t have rent control you could be losing out on money. Also significant market changes could have happened and because you are using an auto renewed lease you are missing out on that profit too!
Consider any updates you have made to the property that should be included in the lease. And while you’re at it, conduct your annual inspection of the property (especially if you have not done one since they moved in). This will also give you an opportunity to ensure the property is being maintained and there aren’t any unreported maintenance issues. Review Leases Annually. If this is too tasking you can always allow your property manager to handle this for you. Feel free to contact Sovereign Realty & Management to handle this task for you annually. Remember there’s power in property management!
Next week we will discuss the importance of Budgeting for Expenses.