Many Military Homeowners have common questions and concerns when it comes to renting out their home. For some, the idea of keeping their home as they move to a new duty station seems too risky; this can be due to many myths and rumors told from those with little or no experience at all.
This blog will specifically target the unnecessary fears that can be easily alleviated by hiring the correct Professional Property Management Company. USAA put out a great article which can be viewed here: 6 Survival Tips for Renting Out Your Own Home. Let’s start by going through their list and then expanding on it from the eyes of a licensed Professional Manager.
- Find a good tenant – a good tenant is the cornerstone of a rental property. Many owners are simply concerned with an applicants credit score, but a seasoned property manager knows there is much more involved. As the tenant rented a home before? How far do they work from the home? How often do they stay in one place? How many years have they been employed with the same company? These are great questions that not only help find the best tenants but help reduce maintenance costs, vacancy and reduce risk. Take for example a military member who has only lived in the barracks vs a military member who has owned their own home. Which person do you believe will have the experience, knowledge and ability to reduce cost of maintenance? Further, compare a tenant commuting 2 hours a day to work vs 45 minutes a day. Which tenant will likely renew their lease after one-year? These are factors true Professional Managers take into account when finding the best tenants.
- Determine how much rent to charge – I hear all the time from inexperienced landlords, “My neighbor rented his house for $3,000 so mine must be $3,000” or “Zillow says my house is worth this much”….I can tell you there are many factors and nuances when it comes to renting your home. Paint, flooring, allowing pets, upgrades, views, location, and rental terms are just to name a few. A landlord should be flexible when it comes to setting a price for your property and also be able to understand that when your property is vacant each day you are losing money. As a Professional Property Manager I can tell you our strategy changes vastly for each home, and only experience can teach you how to efficiently increase your total revenue.
- Protect your rights with a lease – The lease is much like the Military Code of Conduct. There are strict rules to follow and repercussions if they are not met. I can not tell you how many times I have been shocked by the lack of protection homeowners have by writing their own lease. A simple search of the internet brings up thousands of high-risk and weak lease contracts. A true Professional Management Company will have a air-tight and solid lease that works to fully protect the landlord in all cases.
- Protect your property with insurance – Landlord insurance is critical when it comes to your reducing risk for your rental property. Traditionally we have seen that a transfer from your current homeowner policy to a landlord policy is about the same cost to you. Still, it is wise to ask your management company for references when selecting the correct policy for your home.
- Hire a management company – Just as in the military each member has a critical role in securing a victory for the mission. Specializing in your job ensures you are the best person when needed. My first advice when hiring a management company is to choose a company who specializes in property management. You want someone who focuses clearly on how to find the best tenants, reduce vacancy and maintenance costs and not be distracted because they are trying to wear too many hats. Further, the article located on https://www.military.com displays another great benefit, “One big advantage of using property managers is emotional distance. “Often the owner will get involved with the tenant emotionally,”….a lot of times homeowners can make bad decisions based on emotions from competing interests from tenants, a property manager can be the buffer you need.
- Prepare property for evictions – The good news here is evictions are not as scary as you may have heard. First, with our company the chances of having an eviction is around 2.00%. Second, the average loss in an eviction is around 2 months rent. Ask your management company on how they handle evictions, most of the time they can take care of the entire process without needing you.
Now that we have a basic understanding of the foundations of your rental property, let me alleviate the common concerns and questions I hear from Military Homeowners.
Question 1: What if I need to move back into my home?
Effective communication is crucial here. As long as you are communication with your manager they can setup the current tenants lease to end at the same time you wish to regain possession. A worst case scenario would involve you having to wait until your current tenants lease ends until you regain possession; still our negotiating with tenants in lease have worked to get them out sooner at little cost to you.
Question 2: What if I am overseas or out of State? Do I need to come back for anything?
This can really depend on the management company. You will need to read their contract and ask them questions regarding to things like representing you in small claims, or handling of billing. As a reference our management company can literally handle everything for our Military Homeowners, from representing you in court, to handling all paperwork online, paying property tax, HOA matters and billing, mortgages etc. We are setup to handle all matters pertaining to your home and you can trust it will be handled as it is our own.
Question 3: What if my property goes vacant and I can’t afford the mortgage?
This question has larger implications when it comes to your financial well-being. A typical property management company has a 5% vacancy rate resulting in 18 days on average lost rent per year. It is wise to run a performance sheet with your manager to help you budget for costs to include vacancy, maintenance and miscellaneous expenses. Our company vacancy rate is around 2% which means you should expect 7-8 days lost rent per year.
There may be other questions or concerns you may have when it comes to renting out your home during a PSC move. Feel free to contact me directly anytime at (909) 247-0069 – Grant Blanchard with Access Asset Management Inc.
