With housing prices skyrocketing, a shortage in housing supply, and an increasing number of people needing extra space for remote work, it is as good a time as ever to own property. Although you should be excited about the increase in value of your asset, you should also be careful in how you use your rental property. Thankfully, we are here to help you navigate and answer some questions you may have about the current market and what you need to know to be able to maximize one of your most important assets.
- Hold on To Your House: After the last housing boom and subsequent bubble, it is reasonable to look at your options and consider selling your house while it has its current value. Although this could be tempting, the current signs point to keeping your house. Even before this last boom, there was a considerable housing supply shortage that is not changing, so prices are expected to continue rising. Additionally, with more people being priced out of the buying process, the supply of rentals for family homes is not meeting demand, so if you have a home in this category, you may be surprised to find out what you can get monthly from people moving into your area that can’t afford to buy.
- Talk to Your Tenants: Although the rental market is booming, don’t lose sight of the fact that having quality tenants isn’t guaranteed. Be mindful of the fact that increases in value aren’t accompanied by increases in salary for your tenants. If you have tenants that are reliable and take care of your property well, consider your costs that have increased and make sure to give your renters as much time as you can when you propose an upcoming rent increase. You don’t want to force good tenants into a situation where they need to move if you can come to an agreement that allows you to get closer to the value of your home and keep quality people.
- Strengthen Your Screening Process: If your tenants have decided to move elsewhere and you need to find new inhabitants for your property, the good news is that there is no shortage of takers and the risk of you having to carry your mortgage without a tenant is fairly slim. However, it is easy to get excited about the increase in rent that you are about to receive and make a quick decision that could end up costing you in the long-run. Make sure that you have a clear and accredited background screening process. Although it could take you more time to get someone into your home, it is worth it to have a reliable tenant that you can trust with your property.
- Reinvest in Your Property: Although all signs point to prices being stable and even continuing to rise, every property owner should be mindful of using this boost in income wisely. First, look at any upcoming repairs that could be major and make sure you have a plan for anything that might need to be replaced such as an AC unit. Once you have those major items taken care of, think about upgrades on the margins, such as landscaping, kitchens, appliances, or yard space that could be just enough to induce a higher bid from a potential tenant and pay for itself!
- Save Wisely: Something that the last couple years should have taught all of us is that it never hurts to be prepared because anything can happen. Especially if you are an owner of a single rental or a small amount of properties, it is important to take advantage of higher rental prices and make sure that you have a few months of your mortgage put aside in the event that something happens where you are not receiving rent.