Being a landlord comes with its fair share of challenges and financial considerations. Recently, I received a call from a concerned landlord who found themselves facing a dilemma. The cost of maintaining their rental property in Tustin was eating into their profits, and they were uncertain whether they should continue renting or sell the property. Through this experience, several valuable lessons emerged that can help landlords navigate similar situations and avoid future pitfalls.
Lesson 1
Regularly Check Fair Market Rent with Your Property Manager One of the primary reasons this landlord found themselves in a precarious situation was the lack of communication with their property manager regarding the fair market rent. It is essential to check in with your property manager at least once a year to stay updated on rental market trends in the area. By doing so, you can ensure that your rental income is aligned with the prevailing rates, preventing you from falling significantly behind.
Lesson 2
Increase Rent Regularly to Offset Ownership Costs To maintain a profitable rental property, it is crucial to account for the ongoing costs associated with property ownership. Raising the rent periodically allows landlords to keep up with rising expenses, such as property taxes, insurance, maintenance, and repairs. By increasing the rent in a responsible and reasonable manner, landlords can help offset these costs and ensure the property remains a sound investment.
Lesson 3
Don't Fall Too Far Behind in Fair Market Rent Once landlords fall significantly behind the fair market rent, catching up becomes increasingly challenging. This situation often arises when landlords neglect to raise the rent for an extended period. Gradual rent increases can be more manageable for tenants, and it ensures that the landlord's income keeps pace with the market. However, when a substantial gap forms between the current rent and fair market value, it can lead to financial strain and potential difficulties in bridging the gap.
In the case of the concerned landlord in Tustin, we were able to explore the benefits of being a landlord and find a solution that allowed them to keep their property. However, this experience serves as a reminder of the importance of staying up to date with fair market rent values. By regularly checking in with your property manager, increasing the rent responsibly, and avoiding falling too far behind, landlords can safeguard their investments and maintain a sustainable rental business.
If you own a rental property and would like to know the fair market rent in your area, please don't hesitate to reach out. As a resource, I am here to provide you with the information you need to make informed decisions about your rental property.
