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 10 Steps to Becoming a Good Landlord: Occupancy and Rent
By: Darin "Sid" Cameron, CRS
Thu, Nov 30th, 2006 9:08 pm

Over the past two days we've addressed the most important step to becoming a good landlord- choosing tenants.  Today we're going to look at the next two steps...

Occupancy

The more people living in a property, the more normal wear and tear it will receive.  More people also mean more problems with noise, parking, etc.  If you own a multiunit building, these problems will eventually lead to other good tenants moving out on you.  That’s why it’s a good idea to stipulate in your rental agreement the number of people that can occupy a unit as well as specify other occupational restrictions (like pets).

You should also check with your local municipalities because there may also be occupancy laws you have to follow.  Just make sure not to base your qualifications for occupancy on discriminatory criteria.

Depending on where you live it might also be common to charge additional rents for each extra person occupying one of your units. It’s also a good idea to make sure all occupants have signed the Rental Agreement so you don’t have eviction issues with people who aren’t on your lease should you need to evict for noise, parties or damage.

Setting Your Rent Rates

One of the biggest mistakes new landlords make in setting the rental amount is to set their asking price based on their mortgage payment, personal expenses or how much profit they wish to make.  None of these conditions are really relevant to the buyer who is comparing your property to other competing properties for rent.

A better idea for determining what the market will pay for rental amounts is to consult other local landlords to see what they’re getting (if they’re willing to share) or check local newspapers and Craigslist to see what other comparable rental units in the area are asking.  It’s just common sense that you won’t get more for your units than the competition is getting.

When making that comparison, also make sure to check how long those other units have been available.  Setting your price based off a unit that has been empty for months because it’s over priced won’t do you any good.  Also make sure to look for tangibles that make your unit more or less desirable than those other units.  Beyond size and number of bedrooms, little details like being on the 4th floor of a building without an elevator is usually less desirable than being on the 2nd floor.

Once rent is established, make sure your tenants know exactly when the rent is due. If you extend a grace period to help out a tenant who needs help, make sure there’s a policy already in place for conditions that have to happen in order for a grace period to be applied and consequences the tenant must pay if they exceed that deadline.  The biggest downfall of many landlords is that “being nice” allows a pattern of late payments to be established.  Make it clear that you expect prompt payment every month.

Tomorrow I'll address Deposits.

[ Next Article: 10 Steps to Becoming a Good Landlord: Collecting and Handling Deposits ]
[ Previous Article: 10 Steps to Becoming a Good Landlord: Choosing Tenants (Part 2) ]


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Darin 'Sid' Cameron, CRS

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Darin "Sid" Cameron spent 15 years working in the technology industry which in 1998 relocated him to St. Louis. In 2004 he took over web development tasks for Kimberly's real estate team and later became the full-time Marketing and Operations Director in 2005. In 2011 Sid launched two brokerages, The Realty Store, Inc. and Realty Referral Partners, Inc, while continuing to perform marketing and operations for Kimberly's team. Sid holds a real estate broker's license in Missouri, CRS certification and was the first CyberStar in the St. Louis area.
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