Want to become a landlord? You are in good company! In today’s economy rental units are on the rise. In the hot housing market people are snatching up properties, flipping them for resale or rental. Does this sound interesting to you? Who doesn’t like the idea of raking in rent checks to pay for the mortgage? Still, being a landlord is not for sissies, it takes work and commitment.
First, and foremost, figure out if you can afford to become a landlord. To be a successful landlord, you have to make sure the money coming in from rent covers what goes out, otherwise you are operating at a loss. From advertising expenses, management costs, insurance, property taxes, utilities, mortgage payments and the maintenance of the property itself, it’s important to know what you are signing up for. The old saying goes, “Don’t trip over dollars to pick up pennies.” You must calculate all the monthly expenses and carrying costs for the property: mortgage payment, property taxes, insurance, (hurricane, home owners and flood insurance, if applicable) property manager’s fees, (If you choose to use one), homeowners association or other condo fees. Can you carry the extra debt? What if the tenants don’t pay their rent? Two percent of tenants do not pay the last month’s rent or fail to pay at some point during the term of the lease. Are you prepared for either situation? Since your rental property may sit vacant occasionally or may require repairs, prepare for the worst. You must have a decent cushion to cover such situations. Most real estate experts say that properties should be able to rake in enough rent in 10 months to cover your yearly costs. Good to know! Ask yourself whether the personal costs are worth the trouble and is the financial return going to be worth it.
Assuming you want to become a landlord, let’s figure out what your duties will be. As a general rule, landlords must keep a home habitable. That includes: Keeping the structure sound, watertight and hazard-free. Making sure plumbing and electrical systems work and are safe. Providing reasonable quantities of hot water in accordance with your lease. Exterminating pests.
From lawn maintenance to cleaning, it’s your job to keep your property looking good, inside and out. Once the tenant moves in, the inside is their job!
Do your due diligence in finding a good tenant. Various companies, some on the web, offer credit and background checks for landlords. DO NOT SKIP THIS STEP!! You are not in this to make friends, you are in this to make money. Do not apologize and stick to your guns or you will rue the day you didn’t. Choose wisely!
Even before the tenant has moved in, establish yourself as a high-quality landlord. Be willing to walk them through the lease and review every clause. Never forget a rental agreement is legal and binding to both parties. Share the rights and responsibilities that both parties have in signing the rental agreement. Then the rules will be out in the open and shows that you are someone they can trust from the get-go. Ask your real estate agent for a copy of a good rental agreement and any suggested addenda.
Be accessible to your tenants. They will need to contact you from time to time so give them your cellphone number and email at the very least. Although they should not abuse the privilege, they should be able to contact you if an emergency situation should arise.
Respond to your tenant’s calls or emails as soon as you possibly can. If you self-manage your property you should have a list of vendors for service calls as situations arise. If you choose to hire a property manager, instruct them to do the same. If you are going to be away, as a courtesy, tell the tenants in advance you may not be able to respond as quickly as before and have a back up contact.
If your property is a condo, or community with rules, restrictions and covenants these must be added to the rental agreement, as they will be enforced! Always respond to maintenance requests, even if it’s just to take a quick look, it will make the tenant feel respected and think of you as professional and courteous.
To get and keep a good tenant, you may want to offer them a warm welcome! It’s likely they are new in town so give them a printout of directions to grocery stores, pharmacies an other facilities to smooth their transition. Have paper products, such as toilet paper and paper towels already in the unit and perhaps some all purpose cleaner. (They will think you are thoughtful while you are encouraging them to keep the place clean! ) Provide them with change-of-address packets from the post office to show them you think of the little things.
Respect their privacy. Tenant/landlord laws vary from state to state so take the time to research your rights and your tenant’s rights as well. It is their property while they are renting it, a tough idea to wrap your head around, I know! As much as you’d like to, you can’t just drop by, you must give notice in advance!
Are you thinking this newsletter is uncharacteristically negative? Being a landlord has it’s pluses, make no mistake, but we need to be honest about the potential for a negative outcome to our well made plans when strangers take over our property! Much like the “Hotel California”, it could be heaven or it could be hell!
In next month’s newsletter, we will delve further into the age old dilemma, do I sell or do I rent? The question can be agonizing, but we will present negatives and positives for both solutions! There is lots to think about. Hopefully, if you choose to become a landlord, you will have what it takes to be a great one!
LET’S EAT OUT!
Just a few blocks down from Costco in Honolulu is Yohei Restaurant. I first dined there more than 30 years ago when we had a going away party for a
colleague. At that point, I knew virtually nothing about Japanese food or drink. My first lesson was when the owner’s wife rushed over to my table to pull out chopsticks that I had stuck in my rice bowl. Apparently, I had created the meal for the dead, hardly a good omen! I was so embarrassed but I
learned something that day! Since that time, I have enjoyed many special omakase prepared by the head chef and owner, Obara-san. I have always enjoyed the special attention he gives to familiar guests. The pandemic has restricted my dining out for a long time but in two hours I am on my way to pick up two orders of Butterfish Misoyaki, rice, tsukemono (Japanese pickles) and miso soup. Also an order of Maguro (tuna) Nigiri Sushi. The latter includes 3 piece chutoro (medium fatty tuna), 3 pieces of aburi (seared fatty tuna), 3 pieces of akami (leaner cut) and other tuna based dishes that are all destined to please my palate! I will even get maguro with natto (fermented stinky but delicious soy beans)! When they reopen, if social distancing allows, try to sit at the counter where Master Chef Obara-san works his wonders with his omakase. You can sample their beer and sake selections. The simple dishes are reasonably priced but his omakase is more pricey but well worth it! I, personally, cannot wait for them to reopen but I am more than
happy with their takeout.
1111 Dillingham Blvd. #101 Honolulu
Parking is next door
Currently the hours are 11 am to 7 pm
WHAT’S HAPPENING THIS MONTH ON OAHU?
Although group gatherings of more than ten people continue to be prohibited, as Oahu moves to wind down the stay at home orders, the following outdoor activities are permitted: Most hiking trails continue to provide a wonderful way to enjoy our beautiful island. Although, popular Diamond Head State Park and the Nu’uanu Pali remain closed. The Honolulu zoo is open and the animals there have missed you. To release pent up energy, the off-leash dog parks have unlocked the gates for you and your furry friend.
Other openings include: skate parks; the KoKo Head shooting complex; and city pools. The Wet’N’ Wild Water Park in Kapolei opened today. Phew, just in time, since it is pretty warm outside.
Yes, the beaches are open! Finally… However, the revelers who chose to indulge themselves over the Memorial Day weekend, forced a setback. Now the Kaneohe sandbar, Mokulua Islands and Flat Island are off limits.
Popular tourist attractions, including Hanauma Bay, the Arizona Memorial, Polynesian Cultural Center and many others will open at a later date.
Malls and shopping centers are now open for business. Hair, nail and tattoo salons are ready to serve your needs. Restaurants will open on June 5th for seated dining, with restrictions. Churches have opened their doors for in-person services with spaced seating to satisfy the distancing guidelines.
Cathy, Mary and Jeff