As the Denver rental market continues to skyrocket with few properties available for rent and many possible tenants willing to pay a premium to call the Mile High City home, you may be thinking about the possibility of renting out your current home or investing in a Downtown Denver rental property. But, before you add landlord to your resume, it’s important to understand the financial and maintenance responsibilities associated with running a rental property.
Being a landlord requires a balancing act between accommodating legitimate concerns from your renters and holding tenants accountable for submitting payments in a timely manner, as well as maintaining the basic condition of your property. To ensure a smooth landlord experience, make sure to incorporate the following five tips into your rental property strategy.
Run a Comprehensive Background Check
Making sure you get good renters to occupy your property can make or break your landlord experience. In today’s highly competitive rental market, landlords have the luxury of being picky when choosing the right renter for the property. Take advantage by going through a due diligence background check process (at least financial and rental history) to ensure your tenants are in the appropriate financial position to afford your rental for the long-term, as well as have good references from previous landlords on how they live in and leave their rental properties at the conclusion of their lease.
Protect Yourself with a Solid Lease and Suitable Down Payment
You can narrow down your search for the type of renter you are looking for by providing specific lease guidelines that outline whether smoking, pets, etc. are allowed on your property. By being upfront in the beginning about your terms and property/renter expectations, you can easily narrow down who will be a good fit for your property. It also is important to ask for first and last month’s rent, as well as a down payment up to one month’s rent, to encourage tenants to invest in taking care of your property and fulfilling their lease obligations.
Require Payment in Certified Funds
No one wants to be known as the bill collector. To minimize the stress of having to collect rental payments each and every month from your tenants, set up a bill pay system between you and your tenant with certified funds requirements. Certified payments (tenant bill pay, cashier check, money order) help ensure that you will receive sufficient funds from your tenant each month in a timely manner. It also helps eliminate the tendency for tenants to push out the date in which they write you a rent check, which could ultimately delay the funds you need to cover the property’s mortgage payment each month.
Prepare Yourself with a Maintenance Plan
Being a landlord can really put your handyman skills to the test, especially if you are renting an older single-family home. To manage the maintenance responsibilities of a rental property, it’s important to make connections with reputable handymen, plumbers and electricians that you can trust to do the job right and charge appropriately for their work. When the furnace goes out on a -20 degree Sunday afternoon during the fourth quarter of the Broncos game, you don’t want to miss the big game because you’re searching through Craigslist to find a maintenance company who can take care of the problem quickly and inexpensively. Having good contractors on speed dial can make managing a rental property a lot less stressful.
Or, if you aren’t interested in being responsible for the maintenance of your rental property, then a Downtown Denver condo or loft with an inclusive HOA might be your best choice. HOAs that take care of a property’s maintenance needs can help take the stress out of landlords always having to be on-call 24x7.
Enjoy Someone Else Paying Your Mortgage
One of the biggest financial advantages of renting out your home is that your tenants are contributing to paying down your mortgage. If the market allows for it, it can be advantageous to charge a monthly rent that at least covers the amount of your mortgage payment and includes an extra buffer for possible maintenance issues that may arise during the leasing period. After you have paid off your mortgage, the monthly rent you receive from your property can become an additional revenue stream that can be used for your kid’s college expenses, family’s retirement planning or supplementing your income.
If you are interested in testing your property on the hot Denver rental market, give the expert real estate agents at New Era Realty a call. They can help you find the best Denver rental investments in the hottest downtown areas – whether you’re interested in the Highlands, LoHi, Riverfront, Ballpark or any of the other surrounding Downtown Denver neighborhoods.