In any lease agreement, probably one of the most important things is the issue of rent. How much rent will you be collecting? When will you collect it? How will you collect it?
As we’ve talked about in the past, pricing is relative, so that part of your lease doesn’t require as much of your own personal preference as do the other parts. Once you’ve set the perfect monthly rent, you need to set up a date with your tenant when it’s due. Usually, this date falls at the beginning, middle, or end of the month, not just any random date. Choose this date and tell your tenant to make sure that they are financially prepared for it. As a sort of safety blanket, you can give your tenants a 2 or 3 day grace period to pay without being subject to a late fee.
After figuring out how much your tenant is paying you, and when, it’s time to figure out how they will be paying you. At this day in age we have all sorts of ways to pay people instantly, allowing you to have lots of options and choose what’s best for you. We all know the classic payment method: checks. Checks are easy because mobile banking now allows you to cash them instantly, but they still require your tenant to bring them to you. Online payments are great because they’re pretty quick for both you, and your tenant. An online system works well when you have a lot of tenants. Another way that people transfer money that’s becoming quite popular is via mobile apps. Mobile apps like Venmo and Square Cash have made it possible for people to transfer money to each other almost instantly. Though this is still fairly new, it may be something you want to consider.
So, you’ve fixed up your property and now it’s time to put in on the market and find a tenant to rent it out to, the only question is: what pricing strategy should you use to maximize your income?
Pricing is relative, meaning that you should set your rental price according to the area, type of property, and the cost of investment. It’s important to do research on what similar properties in your area are being rented out for to make sure that the price you have in mind isn’t too high or too low based on what you have to offer. You also need to consider the income level of the people living in the area where your property it; you can’t set a crazy high price if most people in the area have low incomes, because you won’t find tenants. The cost of investment you incurred is also an important factor in determining how much to charge for rent because you want to make sure that you’re not selling yourself short and that you’re actually maximizing the income potential for the property.
Once you’ve done the research and have a general idea about how much you want to charge for rent you can employ a few other tactics to ensure that you’re getting the most out of your property. You should always make sure to set the price a bit higher than the desired amount you want to leave a little wiggle room for negotiation (people will always want to go lower, not higher). You should also consider ending the price with with an odd number instead of with ‘.00’. People would rather pay $3,995 instead of $4,000 even though the difference is tiny. This also helps when people are searching for properties and want to search for a property under ‘X’ amount because it’ll allow your property to fall under that window.