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To Rent or To Sell……That is the Question

With the real estate market finally coming back to some form of normalcy, many property owners are thinking about whether they should rent or sell their properties. This question relies on two very important factors… the numbers and how much work and time you want to put into renting. Here are a few questions every owner should ask themselves when deciding whether to rent the property or sell it.

Question 1.

Do I need to rent it out?

Depending on the market, it could be very possible that renting would be better than selling. Today the rental market is still in very good shape. There are plenty of prospects available for rentals.

If you know you are upside down on your property more than 20%, renting may be the option. Do the numbers….. get a management or real estate professional to run the rental comps for the property in question. If you are able to get more money in rent than you would in the sale, it maybe something to consider. Keep in mind that the goal is not to just obtain enough rent to pay the mortgage. Rental properties require upkeep, so try to make sure the rent can pay for the maintenance and repairs required.

Question 2.

What is the demand for rentals in the area of the property?

Some areas are truly hard to rent in. Several factors can play a role in that, like transportation, shopping, and schools. The best way to determine if your property is an ideal place for renters to pursue, is to have a real estate professional run an analysis of recent rentals in the area; how many, how frequent and how much?

Question 3.

Do I want to manage a property?

Managing a property can be a challenging job at times and definitely one that takes patience and knowledge of the laws required for tenants and owners. There are several federal and state laws that are required to rent out your property as well as tax laws that owners have to abide by.

Another factor to keep in mind is that the property is no longer your home, it is now a business that you are operating on an ongoing basis. Tenants will have problems and complaints. The property will need repairs because things will breakdown. Every tenant will not treat your home as if it were their own, so you will have to learn to mentally depart yourself from the property and act as the manager.

Question 4.  

Is my home rent-able?

We would all like to think that our houses are wonderful, but the reality is that some properties need a little work in order for them to become rent-able. In some states and/or counties or districts, rentals have to be registered and inspected with an approval from that local district or state. What this means is that although you may think the property is fine to live in, the state may not. Simple things like a crack in the sidewalk or a broken piece of siding, may need to be repaired before the property is allowed to be rented. If these inspections are not required, you may also need to keep in mind the condition of the property when it comes to paint colors, appliances, cleanliness, and updates. Just because you love the red walls of your dining room and the 1965 old frig your grandmother gave you, these may not be the taste a renter wants for themselves. Updates and repairs should be an added expense to consider.

Overall, the choice to rent or sell is something that needs to be strongly thought through. The best help is to contact a real estate professional or property management company like Scott Property Management and allow them to help you look at all the factors and options to consider.

Good luck!!

www.scottpropertymanagement.com

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How to Get a Rental Property Regardless of Credit

As a property manager I would say that there are times that I want to pull my hair out (what little I have) with the amount of potential tenants that visit properties and just simply aren’t prepared to be good sound considerable tenants. This doesn’t mean that every prospect should have a credit score over 700, but it also doesn’t mean that is should be in the 300’s with 1001 excuses as to why.

Photographer: Daniel Acker/Bloomberg via Getty Images

Studies show there are several reasons why people are choosing to rent versus buying a home; such as low savings or high debt, low-income, and lack of access to credit. In today’s rental market where rental rates are flying through the roof, these are some of the same reasons that could also prevent someone from renting a property. BUT there are others factors which can be considered by owners and management companies that potential tenants should always keep in mind when striving to demonstrate they are a good prospect to consider for tenancy.

Lets review the list that could possible help when your credit is not so great, and your income is slightly less than 3:1 (not much less).

Character

As an HR professional, I consider showing a house to a potential tenant similar to giving a job interview ; there are certain things an interviewer (owner/manager) like myself, is looking for:

  • Showing Up on Time: If your appointment (interview) is at 2 pm, it best to show up at 1:50 pm and wait for the realtor, owner or property manager to arrive. Showing up late with multiple excuses can portray lack of responsibility and the potential for the rent to be late with multiple excuses.
  • Dress: Dress appropriately when going to discuss business with someone you are trying to  obtain something from; in this case, a home. Would you show up to a job interview with rollers in your hair, alcohol on your breath, smelling like cigarettes when the company has a no smoking policy? So why show up to see a property in any of these conditions. It sends a bad impression and first impressions are extremely hard to overcome. No one is saying come dressed in your 3 piece suit or ball gown, but come clean and presentable.
  • Rambunctious Household: It is against the law to discriminate against renters with children, but not against families that are just loud and crazy. Do not bring the entire family to the showing. If you are hoping to rent a five bedroom home, the expectation from the owner is that it will more than likely be a family. Bring only the ones that will be making the decision. The moment an owner or property manager experiences chaos from the family or extreme amounts of noise before a family moves in, that family could possibly lose it’s opportunity to rent the property.

History-

As stated above there are so many renters in the country today more so because of hardships that prevent them from buying, but even with low credit and other less favorable factors, there are things like your “HISTORY” that can help you.

  • Rental History- Tenants that can demonstrate that they have a long history of renting one property with a good report from the owner of the property or manager, could add some value to their application. Property owners and managers understand that renters will more than likely have low credit which is why other strong factors have to be considered. Having a low credit score doesn’t mean a bad tenant.
  • Work History-This is pet peeve of mine; job hoppers….those folks that have had 6 jobs in 2 years. Job hoppers demonstrate to a property owner or manager a level of instability.  We get it, in today’s world some generations find it worth their time to seek new opportunities often, but by not wanting or being able to hold down a stable job for more than a year, doesn’t appear to the owner or manager that you are someone who is seeking worth wild opportunities. It appears to them that you have the potential to “hop”, jump or skip  from the property once you are bored or want to find a job in another city, state  or country. You will be considered a risk.
  • Criminal History– Yes, if you pull my record you will find that I have a couple speeding violations…..I’m guilty of the slight need for speed, but this will not or should not prevent me or you from getting a rental property. But if your need for speed demonstrates reckless endangerment for the community, than it may. Small violations of the law will not hurt you for the most part but if you have several in most recent of years and they are adding up, it could hurt your rental opportunities. Expungements are not expensive, at least not in Maryland for first timers and minor incidents. The key here is to keep your most recent record clean for at least 5 years. Avoid getting into trouble that could hurt your ability of being perceived as a good potential tenant.

Keep It Clean

A lot of property owners and managers today are doing drive-by’s…meaning they are driving by your current home to see at least your outside living conditions, and many are doing walk-through’s, like we do at SPM. Owners and managers do not want to take the chance of renting to someone who will not take the best care of the rental property, this doesn’t mean that they are expecting a house that shined like gold and smells like Heaven, but it does mean that it should be kept in well, maintained condition, free of holes, broken doors, windows, dirt, filth, and bugs. Not everyone’s expectation of clean is the same but if you know you aren’t clean, try practicing cleanliness first for a little while before venturing out to rent a “decent” property.

As a property management company in the business for years, we really strive to find a great tenant, which reduces our turnover and evictions. Even those with great credit can be horrible tenants and those with bad credit can be awesome tenants, but so many companies only look at credit. Share with those companies that thier is more to you as a tenant than just those three numbers. Ask them to consider looking at the “whole” person and not just the tiny little part that tends to dictate who we are and aren’t, but really only tells a minor part of your story.

http://www.scottpropertymanagement.com