New Orleans Real Estate Investors Association

1. Do Your Homework Before You Buy

Location, Location, Location… Search out the areas that have low vacancy rates.

Talk to local realtors, property managers, and seasoned investors who have been

renting units for over a decade before you take the plunge and buy a property.

For example, I want to own property were supply of rental properties is low and the

demand is high. I own properties in a town where the schools are in the Top 50

Schools in America. Demand for rental property is high and my average days on

market to rent are usually less than 2 weeks.

2. Price Your Property Correctly

It is important to have the competitive edge in rent for tenants. Look at the other

rentals in the MLS and on various rental sites (www.rentals.com, www.rent.com,

and www.forrent.com). If you offer a good price compared to the competing

properties, it will rent faster than the other properties.

3. Make Sure Your Property is in Drop Dead Gorgeous Condition

All tenants want to live in a really nice home and when they are happy there, they

don’t move. I had a tenant in Connecticut that loved their kitchen and bath in my

rental property and lived there for 12 ½ years! The house was in such great

condition when I rented it to her that I never stepped foot into the house during the

entire time that she rented from me.

4. Go After Long Term Leases with Tenants

This is why I usually don’t raise the rents on my tenants at the end of the first year

when the lease expires. I usually offer a 2 years lease with no rental increase as long

as the tenants pay on time every month. The longer the tenant stays in the house,

the deeper their roots go into the neighborhood and community. The worry of

costly vacancy will be avoided for more than 24 months.

5. Respond Quickly to Tenant Requests

When a tenant calls about a clogged toilet, an air conditioning that is not cooling, or

any other malfunction, then the landlord or property manager should respond

quickly. Remember that unhappy tenants move. Move outs are extremely costly for

property owners. I have some properties that are over $2,000 per month. Those

vacancies hurt your profit margins greatly! I like to have the maintenance person on

site less than 24 hours for all minor issues.

6. Don’t Wait Until the Last Minute Before the Tenant Moves Out

Start advertising before the tenant vacates so you have multiple new prospective

renters ready and excited to look at the upcoming property. I want to do a walk-

through 2-3 weeks the tenants move out so I can have all the handymen and

contractors lined up to do the necessary repairs the minute that the tenant moves

out of the property! Every day that the property is vacant, you are losing money!

7. Lease with the Option to Buy

This option will attract a high caliber Rent to Own tenants who are looking to test

drive a property prior to committing to home ownership. In the Rent to Own

situation, the tenant gets time to get accustomed to the neighborhood, schools, and

surrounding areas without being rushed to buy a property. They will be more likely

to pay their rent in a timely manner to avoid losing their right to buy. This strategy

can also save the 6% in realtor commissions. If the property is in an area that is

appreciating rapidly, be careful not to set the option price too low because you want

to get all the appreciation as the prices in the neighborhood climb upward.