Scott McGillivray refers to the 2008 housing-market crash and the recession that followed as a gamechanger for homeowners.
“A lot of people couldn’t get approvals for mortgages. People were scared to get financing or to get into the real-estate market, but everyone needed somewhere to live,” says McGillivray, who’s been investing in real estate for over 18 years.
Rental rates went up and the focus turned to ensuring tenants have a great rental experience.
“The best way to have the best tenants is to have the best property,” McGillivray says. “The caliber of your space will dictate the caliber of your tenants.”
With the ease of using the internet to list and rent properties — including the rise of homesharing companies — it’s easier than ever for owners to become entrepreneurs, renting out their properties and earning extra income.
“Anyone with an empty bedroom in their house can start generating $500 to $900 a month by just having a student boarding in their house,” says McGillivray. “For a lot of folks, that makes a big difference. An extra $800 a month rent for a room you don’t use? It’s hard to see the downside.”
Tips from an expert
Whether you’re leasing out an apartment, renting a room in your home long-term or booking short-term guests for vacation rentals, there’s a market for your property. Still, you have work to do.
“Don’t just post it and say, ‘we’ll see what will happen,’ because you will make mistakes,” says McGillivray.
He recommends adding amenities like cable, internet, dishwasher, in-suite laundry and outdoor spaces to increase the amount of rent you can charge and to get a good return on investment. Upgrades, such as kitchen or bathroom renovations, add value as well. Price properties in your area so you know how much rent to charge.
When you get a rental applicant, do a tenant application, credit check, reference check and always have a signed lease. Make sure tenants have insurance and check that your insurance incorporates your rental property and liabilities. Then follow local laws about rent, deposit and damages.
McGillivray always amends the standard lease to cover important details for the property, including courtesy quiet times, where to park and other finer details.
Rental marketing 101
Market your property to both local and a global audience. There’s a large international market for vacation rentals. For example, McGillivray rented his Florida property to a couple from Germany, who found the rental listing online. Word-of-mouth used to be the norm for advertising rental properties, but now it’s the internet and social media.
“Social media has definitely added to the excitement,” says McGillivray. “You can showcase the property at its best. You’re selling a lifestyle. You’re selling an experience.”
Landlords set the tone and should build long-lasting relationships with their renters.
“Instead of being scared of tenants, I tell investors, you need to embrace these tenants. These are your customers,” says McGillivray, who advises giving new tenants a welcome gift basket with a personalized note. “No business that treats its customers poorly ever does well.”
Kristen Castillo, [email protected]