Scott Esmail, Scott Esmail Property manager

What are the highest cost things to replace,when buying a rental property?

Hey Folks,

When buying a rental property this is what I tend to look at when doing my walk through of a potential rental to gauge what it may cost me to get the house rent ready. These are some major costs your should consider when purchasing a new rental.  First if you see that the property only has cosmetic items like paint, light fixtures, a major cleaning and other minor repairs that are not too costly, this is ideally what you want. The major cost come in when you’re looking at some of the following, the roof replacement, furnace and ac unit replacement, windows replacement, flooring replacement and foundation/structural.

ac inspector

Most of the items are going to cost a minimum of  $3000 or more. An example is the cost for a new ac inside and outdoor ac unit for a 1200 sq ft house is approx $3000 plus taxes installed. The smaller the house the more inexpensive, the larger the more it will cost because there is more square footage. Also the cost can depend on the type of finishes or quality of materials you install. Personally I don’t like to install the cheapest product available, I tend to go up 1-2 levels from the lowest quality, the cost for the labor will be the same and sometime the difference in material cost isn’t that much for a nicer product and usually the materials will last longer. Not to mention you might be able to get a bit better quality of tenant. I also don’t go for the top finishes mostly because tenants seem to be hard on rentals. For example you can do your best to qualify a tenant but once they move in they might sneak in 3 dogs that can do a number on your floors. It’s happened to me a few times already and by the time you notice the damage has been done. My suggestion is once you’re in contract on a property hire a licensed home inspector who can identify the life left on this stuf, also many of them can give a rough estimate on the cost to replace. I have found that they tend to be a bit low on their costs and its usually about 20-30 percent more on top of their rough estimate. If the house is vacant the inspector will request that you have the utilities activated so that he can check everything.

After factoring the total costs for everything, if the property still looks like a good deal and your going to buy it, I would put aside an addition couple thousand just incase something come up or I go over budget which can often happen.

Written by Scott Esmail Professional Property Manager

Scott Esmail Property manager

How to qualify a tenant

I’m sure many of you have been in the position where you have rented a space to someone thinking they seem like they are going to be great tenant(s) with little issues but you were sadly mistaken. Qualifying a tenant can be very difficult and challenging. You don’t want the property sitting vacant for to long but on the other hand you want someone who is going to pay their rent in a timely manner without causing you too much grey hairs along the way. In my experience of course you want to get someone in your vacant space as quickly as possible but even more so you want that person(s) to last a significant amount of time because as we all know the turn over costs could be painful if it doesn’t work out.  For example if that person(s) only lasts two months and lets say you collected $1600 of rent in that time but now they destroyed you house causing you to file an eviction, not getting rent until that goes through, then on top of that once you finally get rid of them you have to change carpets, getting rid of excess amounts of trash etc. This mistake can be very costly and often you lose more than you gain.

 

howtoqualifyatenant

Here are the ways I qualify my tenants and ever since I started this strategy I’ve seen a significant decrease in my turnovers and found that I get more quality tenants who stay a lot longer. I use a program called APPFOLIO, it has honestly been a life saver. I will do a blog solely on this program but in a nut shell here is what you can do, have your potential tenants simply apply on this site it screens their criminal background, credit history, rental history, employment etc, this information is key in choosing a good tenant. On top of this I always request them to show my proof of rental payments from where they are living now. If they can do this I’ve found that you will get a much better tenant because chances are if they’ve paid rent to their past landlord they will pay it to you. When people tell me they can’t prove anything and paid cash I usually run the other way. Of course there are always some exceptions, if everything else checked out ok in their background search then I will usually request a strong co-signer in addition. Generally the minimum requirements I use is 1 year of employment and rental history to qualify. Combining all these factors together you are surely to get a more qualified tenant.

 

Written by Scott Esmail