The first thing you will do is try to determine what rents are your particular real estate market. There are plenty of tools you can use like Rentometer, Zillow, or Craigslist and see what market rents are. Determine what current landlords are asking, and see what the condition of the property is. If the condition of your rental property is far better or if your rental property has more square footage, then you can charge more for rent.
Then you need to start marketing and get a person into your unit. Do you want to list on the MLS? Not a bad option because what you're going to get on the MLS is you're going to have real estate agents go through, take people through that are vetted. Since they are already vetted, you will generally have a little higher-level candidate with a real estate agent. By using a real estate agent, you're going to give way either a full month's rent or a half a month's rent as commission. Depending on what it is, what the cost is, what you're offering there, but it is a good way to get a good solid tenant.
The other way to market a vacant rental property is to list it yourself on Zillow, Craigslist, and FaceBook Marketplace. With Zillow, I generally find that I'm getting a little better, higher quality tenant, and I've been getting a lot of millennials lately. They've been very good payers. It seems they want to be mobile. They don't want to own right now, a lot of them. So especially the younger ones in their twenties. They're looking to stay mobile and they're renting and they're generally great payers and very good tenants that take care of the place overall.
What costs should you put on your tenant? What duties should you put on your tenant? I'm going to break it up here between a multi-unit property and a single family. Let's start with single family.
If you're looking at a single family, you want to put lawnmowing onto them. Maybe you provide them with a lawn mower. Unless you know somebody there in that neighborhood, that's willing to do it very inexpensively for you and you can incorporate that in your rent. You could do that, but otherwise put lawn mowing on the tenants, as well as snow removal. If you're in an area that gets snow, you want to put that kind of maintenance on tenants. Tenants most likely will not want to manage a flower bed. If you have flower beds you may have to maintain the flowers and mulch.
You will have to clean the gutters out because that's something no tenant is going to want to get up on a roof and do gutters. That's something you want to do annually, or really depending on where you are and how many trees you have around. Water, sewer, put that on tenants. You could find out what your average charges are per month, and what I do is I let them know what the average cost is per month for water, sewer, and trash. Some boroughs or townships do water, sewer and trash, all in one billing cycle. You want to put these utilities on tenants because otherwise some will use a lot of water and not be careful with it.
Same goes for the heating and cooling bill. I know there are instances when there is shared heat in a multiunit, but break that up. Make tenants pay for the heat because there have been tenants that will have the window wide open in the winter with the heat on. Then you are using a lot of oil or gas. And you don't want to run into that. And for your single-family properties have then tenants pay. Generally you're easily able to put those utility costs on tenants. What I like to do, I like to give tenants a spreadsheet or word document that explains what your rent is. Here's what your average utilities costs are and here are your responsibilities. Make them sign that as part of your lease and send it to them via DocuSign. Because if the tenants are not doing their job (following the lease), then you've got something to go back to them with. And the tenants can't say they didn't know because they signed this document.
Multi-unit rental properties. I own a few multi-unit rental properties and you are going to be responsible for doing yard maintenance. You're going to be responsible for doing the snow removal and those kinds of things, whether it's a two unit, or a three, four, or five or 12 unit building like I'm renovating right now. All those costs are going to end up being on the landlord. You can build those cost in and any amenities that you add, like onsite laundry in the units. The 12-unit apartment building, we're renovating, we're are putting onsite laundry in each unit. So now we can charge a little bit more for rent compared to if we don't have that. In a multiunit apartment building, many of multi-family properties have shared laundry where it is coin operated.
If you have onsite laundry or another amenity, you can justify increasing your rent a little bit accordingly, and it's going to help you rent that property a lot easier as well. Water, sewer, etc, you could divide that up. If you have 12 units, if they're all two bedrooms or three bedrooms, it's very easy to do and you just divide it up and average it and put those costs on them as much as possible. On a 12-unit building, I'm probably going to have to incur that expense and just incorporate that into my rental cost analysis. If you have separate meters, tenants in multi-family can be responsible for gas and electric. You want to put all those utilities in the tenant’s name and you want to make sure you let the utility company know that you are the owner of the building and tenants will responsible for paying the utilities.
When the tenants move out, ask it to automatically transfers into your name. So the utility company does not shut it off. Then you don't have to make that phone call and get them to come back out there and turn the electric on or off again. I've been there done that. You don't want to deal with it. It's just a waste of your time. That's basically how you're going to determine what you have tenants pay for and what you pay for.
You want to maximize your profits as much as possible and you want to make it desirable so tenants will stay there for as long as possible. One little difference between the multiunit and single-family properties, for single family people generally stay longer in single-family than a multi-unit building. That is something to think about as well. Although the cashflow isn't going to as good as multi-family and the maintenance is much higher. Both are great investments for long-term buy and hold. I hope you guys got a lot out of this.
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