Guide to Renting Out Your Condo for the First Time
So you’ve heard that renting out a condo is a profitable venture, hitting two birds at once — renter helps you pay out mortgage with monthly rental payments while you get a chance to earn a little extra on the side. Sounds like a good deal, right? But as in the case for many things in life, it isn’t as easy as it seems.
A first-time condo landlord has more things to consider than just taking nice photos of the space and then posting it on the Internet. It’s more than just collecting rent each month. Once you decide to be a landlord, you are expected to develop certain skills that you didn’t know you had, and be open to learning new things. Remember that this is not a 9 to 5 job, for no one can really tell when the pipes will leak or what time emergencies are supposed to happen.
There are many considerations on matters of how to rent out your condo in the Philippines, and we will try to break it down for you here.
Know your market are
Is your condo going to be for employees or students? For families, couples, singles or a group of friends? Is it going to be for business travelers looking for a transient home or a young professional looking for a long-term lease. Before you decide on the price, furnishings, design or marketing, try to identify your market first.
Location is a big deal here. If your condo is along the university belt in Manila, then students are the most viable market. If it is within the heart of business centers, employees are your best bet.
Identify Toxic Tenants
Sometimes, it’s all about the instinct. It is important that you get to meet the tenants yourself to get an idea of who they are. Remember that at the end of the day, you are responsible for your tenant and his or her behavior. If they have too many requests or appear toxic, you would have to think hard about it, unless you are okay with stress.
It is advisable that you perform a background check. Not a detective kind of background check, but just for due diligence.
Prepare your unit
After you have identified your market and before you decide on the price, make sure your unit is in top shape and beyond livable. Check the shower, toilets, sink, paint, ceiling, etc. You must also decide whether you want to furnish it or offer it bare. Again, this will depend on your target market. For students, for example, you can put bunk beds, study tables, and built-in closets to make your condo space conducive for both living and learning.
Preparing your unit ensures that you get the most out of your property. With a unit in tip-top shape, you can ask for a better price.
Give the right price
Renting out a condo is a business on its own, which means you have to be competitive but still reasonable. Know how much other rental properties charge because for sure, prospective tenants will be going around before deciding on which unit to rent. In pricing your condo, consider the location. The more prime the location, the higher the rent. You must also consider the cost of repairs and furnishing, if any. The amenities of the condo community can also be factored in because they usually make a difference. While most one-bedroom condos look the same, some condos have pools, gym, playground, jogging paths, and landscaped rooftops while some do not. A DMCI condo comes will these privileges plus the recent real estate technologies. This means you must decide whether to add homeowner’s dues in the rent.
Your market is another consideration because if you are thinking of getting student tenants, you might have to prepare to lower your asking price a bit. Just make sure to strike a perfect balance — not too low, but not too high. If it’s too low, you risk not getting the most out of your investment and you could be accused of unfair competition. If it’s too high, finding a tenant might not be too easy.
Prepare all the documents
This part can be tedious and boring, but certainly necessary. Prepare your contract, among many other things. This will include terms of payment, tenant’s responsibilities, and landlord’s responsibilities. This also involves house rules and eviction. Make sure that you discuss all items with your tenant to avoid confusion in the future. Depending on the building administrators, you might need to secure a permit prior to renting out your condo. You also need to process tax requirements.
Wear many hats
First-time landlords must know that collecting rent is not all you are going to do. You are a salesperson, a repairman, negotiator, collector, and occasionally a security guard who watches over the unit when the tenants are out of town. There is a learning curve to all of this, and as you progress, you develop your business and management skills until everything comes naturally.
It would help to get a network of helpers such as an electrician or plumber. You can also enlist building administrators for assistance whenever necessary.
Manage your finances like a boss
So you required a two-month advance and security deposit. Stay away from shopping malls because that isn’t really your money. The deposit will be returned to the tenant once she or he decides to vacate your unit, and a good landlord will be able to return it in time. You also need to set aside a portion of the rent for maintenance and other emergencies. Manage your finances well because rental properties are a business.
Nurture tenant-landlord relationship
Establishing a good tenant-landlord relationship is important. After all, you are letting practically a stranger live in your house. That’s a quite a big deal. Trust is important here, and as the landlord, you must learn how to nurture it. You would have to compromise every now and then, and that’s okay. You will be negotiating throughout the term of the contract, and you should do so in a healthy and friendly manner.
Being a landlord may sound like an easy-peasy job, but just like any business, it requires commitment. Not all people are fit to be a landlord. But skills can certainly be learned and the level of commitment is bound to improve over time.