How to Start Your Own Property Business on a Shoestring Budget

Many people interested in property harbour a desire to get into the industry, to start a property business of their own, but are all too often foiled due to lack of funds, especially in these credit crunch times when buy-to-let mortgages are so difficult to obtain.

But it can be done, and the best way to begin is to start a property rentals business.

This can be achieved with very little capital.

A chap I know, let’s call him Michael, started his own property lettings business with less than fifty quid in the bank.

He had a friend whose parents died around the same time and left the house to their only son. They were divorced, separated, and both owned their own property. Sales were slow at the time and though there was no outstanding mortgage on either house, the guy was keen to see some incoming funds flowing into his account.

Michael had been considering starting a property lettings business from home for some time and saw his chance. He jumped in and offered to rent out the houses and he did just that, both being let within a month.

Always keep your eyes and ears open for unexpected opportunities and seize them when they appear.

Afterwards, he started his business proper by placing small card ads in shop windows, and asked his brother to put a poster in his shop window too, then began ringing landlords advertising properties in the local newspaper.

In his first month he gained six instructions to let property, successfully let four of them, and already he was well on his way to establishing a full-time property business.

Of course there were some people who would not deal with him because he was a one man band, trading from home. He did not have an expensive high street shop or office, and didn’t boast a backup team of highly trained and highly paid staff.

But he was able to successfully counter those points by saying that because he was only running a small business, he would be able to give a great deal of personal attention to any landlord and property he was instructed to let.

Additionally, he was able to offer his landlords VAT free fees, a big attraction to any hard pressed landlord, and there were always going to be enough of them to keep him busy, and his business growing.

You could do the same. Why not?

If you are looking to establish a property business, starting a residential letting agency is an ideal way to begin, even if you only have minimal seed capital.

6 Property Management Rules From the Rental Bible

Here’s some landlording rules that will make your landlording a more enjoyable and profitable experience.

RULE# 1. Acquiring your tenant – the first step in making property management easy on yourself is picking the right tenant. That means selecting a tenant that loves your place and not just likes it because a loving tenant is a long term stable tenant. You say ‘How do I know when someone loves my property?’. Simply put, you can see it in their eyes. Typically, after you show the property, the loving prospect will say “What do I have to do next? ” and have a deposit waiting. If they leave your place saying” I still have a couple places to see it”, that usually means that the prospect is making a safe exit, making sure the door doesn’t hit their behind on their way out. Make sure their deposit is in secured funds like cash,money order, or cashier check if the move in is a rapid one. Check is fine as long as you have about 10 days ahead of move in or have checked the account personally as a check can come back bad several days later due to a bounced checked or a stop payment.

RULE# 2.-The Lease- A valuable piece of documentation is the lease. It states the rules of the house, when the rent payments are due, the rental duration, what happens should things go wrong or tenant doesn’t comply. This is valuable should you have to go to court.

Rental agreements can’t be created by you, they must be created by an attorney. The specific points in the lease must coincide with landlord-tenant state laws. You can purchase a law approved agreement and add items to the addendum section if need be.

RULE#3. Rent Payments- Rent payments should be check or money order. Why you ask? It creates a trail should you need it in court to prove rent payments were made or not. If you make this your rule then its hard for the tenant to dispute that rent was paid when it really wasn’t. The tenant also wouldn’t be able to say that his room mate stole the cash or similar. I always give a receipt upon rent pick up. You may also make payments convenient to the tenants by allowing them to do bank deposits. Simply make out several months deposit forms in advance with your bank account number on each.

Late payments should require a penalty after a grace period. The grace period is typically 3 or 5 days. After the grace period, either charge a percentage of the rent or state a flat fee. Typically charge is 5 or 10%. You have to have them feel a little responsible for the paying the rent.

Partial payments can cost you. Once you accept a partial payment, you’re giving permission to the tenant to stay and possibly forfeit the balance of the month by law. Partial payments should be accompanied by a receipt stating the remaining balance and when it should be paid.

RULE# 4. Security- Typically a month’s security is held to compensate you the owner should any destruction occur to the rental unit. According to Florida law, that money should be put in a bank account with the tenant being given the bank holding it and also stating if an interest account, who gets the interest and approving that with the tenant.

Security is not to be used for rent. It’s your one leverage tool to remain at your side. Once allowed to be used as for a missed rent payment, the tenant could do anything to your premises and you have no compensation. The tenant may after using it say that he changed his mind about moving. That leverage would be gone permanently.

RULE#5. Maintenance- Remember that a happy tenant is a long term tenant. That means that when he calls, you respond with good speed. In so doing, you protect yourself against tenant excuses for not paying rent. If there are excuses, they will surely surface at rent collection time.

Have your team of maintenance pros on hand. If you’re on a low budget then hopefully you have handyman skills. If not try to get a talented handyman. You’ll need specifically on your list an electrician, a plumber, a general handyman, and a landscaper. Electrical and plumbing work is so specific skill sets that you need specialists. A handyman may be able to do a variety of tasks like tiling, carpentry, and even roofing.

Arrange a time to do the work. Give 24 hour notice of work to be done. As long as you stick with the schedule,there can be no complaint from the tenant about you not taking repairs seriously.

Maintenance doesn’t mean room service for every everything that “breaks”. Replacing light bulbs should not be part of maintenance except upon move in.Tenants need to learn this from the beginning else you’ll have an unbelievable number of repair calls.

RULE# 6.Tenant Evictions- Unfornately, sometimes you have to remove a tenant from the property. Maybe this happened as a result of non payment of rent or misbehavior that violates the lease.

For rent non payment, this requires a 3 day notice to evict in Florida. Other violations of the lease require a 5 day notice. The notice should be delivered in person or posted on the door if not there and a copy left in the mailbox. I tend to take a snapshot of it posted on the door with a timestamp. After the 3 or 5 days, its up to you the landlord to file a complaint with the clerk of court and carry through the eviction. Remember that the 3 or 5 days doesn’t include holidays and weekends.

Remember eviction is a last resort, communication should be used first. Eviction means communication has broken down and the relationship cannot be mended. If late rent, ask why. Is there a work related problem? Does the tenant have a plan to resolve the issue? If a behavior related problem, can the tenant curb their behavior?

Eviction can be a lengthy process. It can take months in some states or as little as 2 weeks in Florida which is landlord friendly. You as landlord stand to lose a month’s rent plus evictions costs but if they don’t communicate with you then by all means do the eviction. A number of tenants are betting on your delay and that delay usually costs the landlord a few months of rent.

Commercial Property Management – Checklist for Property Management Handovers

When you take over the management of a commercial or retail property today, the information that you gather from the outgoing property manager or landlord will be critical to the establishment and future success of your property management processes.

Information is Critical

Lack of information in the handover process means problems and potential errors in the future. On that basis you should have a specialised handover process that you can implement on and with the handover of every property type within your local area. A checklist will help your activities as you bring in the new property to the management portfolio.

Here are some ideas to incorporate into your handover checklist:

  1. Get complete and comprehensive details of all leases and licensed occupied areas within the property. You will need to check these against the tenants physically in occupancy and the rental invoices that are raised for tenancy payment. Everything has to cross relate accurately.
  2. Copies of lease documents should be checked against the original documentation. Also look for side agreements for any extension or variance documentation relating to the original lease.
  3. Copies of correspondence relating to existing tenancy matters should be handed to you. Ask for this specifically and drill down on the details of each matter.
  4. Get copies of the current rental invoices and cross reference these to the tenancy schedules for the property. It is not unusual to come across in errors in the tenancy schedule or the rental invoices.
  5. The tenancy schedule should be checked against the actual leases and other occupancy papers and the signed documentation between the landlord and tenant.
  6. Check all outgoings charges and expenses that are applied to the tenancies within the managed property. The charging process should be shown on the rental invoices; you will need to check this amount and the process of recover that is adopted. It is not unusual to see errors in the outgoings recovery with tenants in managed properties. The process of checking will involve you getting copies of the current outgoings budget and the recent outgoings reconciliation.
  7. The arrears that apply to the property and any tenancies should be identified as part of the handover. They are sometimes discharged at the time of settlement, although the question should be raised in case you are taking over the ongoing pursuit of the arrears with any existing tenants. If that is the case you will need copies of all previous correspondence and claims.
  8. Current vacant tenancies within the premises may be the subject of lease negotiation. You will need copies of the lease offers that are or have been made and the status of the existing negotiations.
  9. Details of the maintenance issues within the building will be required. The essential services within the building will be critical maintenance contracts to identify early in the Handover. Any threats to the stability and function of essential services should be identified and addressed immediately. The maintenance contractors for the building will understand the function of the existing plant and machinery; get details of these contractors and then set up meetings as quickly as possible.
  10. Ask about any orders or notices that apply to the property or any part thereof. Check out any encumbrances, rights of way, or easements that apply to property usage.

So these are some of the main items that apply to the property management handover process. There will always be more issues and items to look at although these items listed above are the big ones to immediately get under control.

How To Write Your Own Rental Property Inventory – A Step By Step Guide

Property inventories are written documents that record the condition and contents of a property. They are often written for properties that are to be rented out as proof of the property condition at the time a new tenant moves in. The tenant is supposed to look after the property while he or she is staying there and the value of the property inventory comes at the end of the lease when the landlord and tenant refer back to the document to see whether any changes have occurred to the property.

There are property inventory services companies who write property inventories professionally. However, anyone can write a property inventory. So if you are a landlord who would like to save money and do your own inventory the only things you need are not much more than a pen, paper and a digital camera. I assume you already have a computer and printer to print out the document so that it looks neat and professional.

1. Recording the information

Go to the property with a pen and paper and record relevant information for each part of the property. This should be done systematically so you fully record information for one room or one part of the property before you go to the next room. For each room that you enter have a process going in which you methodically look at each aspect of the room. You may do this literally from top to bottom such as you examine the ceiling first, then walls then the contents and finally the flooring so that no aspect of the room is left unrecorded.

For each part of the room record relevant details, for example, if you are examining the ceiling record things such as its colour and any special features such as any special decorative plaster work. Similarly, if you are examining the flooring relevant things to record are what type of floor it is such as whether it is carpeted, varnished wooden floor or tiled etc. The key thing to remember is that you should be as descriptive as possible to fully describe and identify the item you are recording. You should also include any marks, imperfections or blemishes so that the inventory is fair and accurate.

A similar process is also carried out for the contents of the room such as furniture. For example, if there is a sofa in the room write down what type of sofa it is such as whether it is made from leather or fabric and how many people it can seat and whether it is in a new condition, good condition or poor condition. For electrical items such as washing machines additional details such as the model and serial numbers should also be noted.

Try to be as descriptive and comprehensive as possible in your recording in order to produce an informative and detailed property inventory survey. At the end of the recording process you should have a description and condition of each item or aspect of the room.

2. Take digital photographs

As you go through each room, take digital photographs of notable things. This may be valuable items or electrical items. Take any photos that you think is important which should be recorded. A general overview photo of the room that pans the entire room is also helpful. You don’t need to restrict the number of photos that you take and in fact photos convey far greater information than words when it comes to property inventories. Therefore, take as many photos as you think are necessary. For the property inventory to be fair and accurate you should also take images of any imperfections, for example, if there is a crack in a window a photo of it should be taken.

3. Transcribe the information into a computer and print out the document to be signed

Once you have the raw data, input the text and images into your computer. You should layout he document so that it looks professional, clear and easy to understand. One way to lay out the document is to have three separate columns one column for the item, another column for the description and a third column for the condition. The document can also be organised room by room so that each room is given a separate section in the document. Photos for each room can be embedded at the end of the section for that room.

Basic details such as the property address, the names of the tenant and landlord should also be on the document. Blank spaces for gas, electric, water meter readings and the number of keys to be given is to be left on the document so that it can be later added by hand at the time the tenant moves in. The document is now ready to be printed and verified by the tenant on the moving in day. On that day the last details will be hand recorded on to the inventory such as the meter readings and the number of keys given. The property inventory document can then be finally signed and dated by the tenant.

How to Ensure Good Tenants for Your Property

There is no way that you can be sure that your tenants are going to take good care of your property. For this reason we have compiled a few tips that can be extremely helpful to you for making sure that your tenants are taking proper care of your property or household.

– Choosing the right tenants

Choosing the right and the most appropriate tenants is very important. As part of your vetting process, you must also make sure that you always contact the previous landlord of your prospective tenant. You should ask them whether their tenants were good with the property and if they would be able to allow them again.

– Cleaning instructions

In case you are in possession of any items that require some careful cleaning, you can supply this information to your prospective or future tenant. You can also write down all the instructions for cleaning on a laminated document so that you have to do this only once.

– Remove all your valuables and personal items

This means that you must take out all the items that have sentimental and financial value. You can also replace them with some cheaper alternatives.

– A large deposit

A large deposit can be very helpful in making sure that your tenant takes proper care of your property. You must at least take six weeks’ worth of rent as deposit and also make it clear to the client that if any damage is done on the property, the equivalent amount will be deducted from the deposit amount. This will easily ensure that the tenant takes good care of your property as if it is his property.

– Befriend the neighbors

It is important to befriend the neighbors as they can be all eyes and ears when it comes to overseeing your tenants when you are not around. You can also give them all the instructions and ask them to be highly vigilant when it comes to spying on your tenants. This is a very naughty step but a very effective step as well. It is one of the important things to remember.

– Regular inspections

Regular inspections must also be carried out for ensuring that your property is in good hands. For example you can visit your property once every three months and do an inspection. This will help you in the long run as it can increase your trustworthiness on the tenant which can have many long term implications.