When a property is first purchased and ready for rent, pictures
will be taken, we determine what price to ask for rent each
month and we advertise the property on several websites.
When someone gets on the website and searches for a
property in Omaha for rent they choose the area they would
like to live and the price they want to pay. Several properties
will appear. If your home appears and they like the pictures
they will send us a message asking to see the home. One of our
showing people will set up the appointment to show it to the
person. After the person see’s the home they will decide if
they would like to rent the property. If they choose to rent the
property they will begin the application process. We send them
and application and a background report. The background
report checks for credit history, rental history and criminal
history. After all of the information is gathered we determine
to rent or not rent to a person because of this. If they are
denied we keep looking for a better renter. We don’t accept all
people who apply because it is most important we find the
correct person who has the best chance of being a good renter.
If the property you purchased does not rent quickly it is not
because you made a bad purchase. It is very dependent on the
changing factors we listed. Some homes we feel are the very
best we have may not perform well during a particular time
because of these factors. In addition, some may rent much
quiker than expected. On average, it takes 30 to 45 days from
purchase to get a property ready for rent and rented. The
following year those times generally become much shorter.
Questions we are asked
Question 1 HOW LONG DOES THIS TAKE?
That is the question that is very hard to answer. The amount of
time it will take to rent a property will depend upon many
things. If someone does a search in September for a 3
bedroom, 2 car garage, specific location of town, price $1350
many things could happen. They could discover 50 properties
on the list. This means the area has a lot of competition. The
following year during the same September and search there
may be only 7 houses available. The same can be said about
renters. One year 40 people may be searching an area and the
following year the exact same area will have 12 people looking.
This works the exact same way as when someone purchases a
home. Sometimes a neighborhood may have several homes on
the market. That means prices go down and the homes take
longer to sell. This same neighborhood may have only a few
homes the following year and prices go up and it sells much
quicker. It’s about supply and demand. Areas around town
change weekly and there is no way to predict when those
change occur. We can only adjust price and condition to give
the property a better chance. One home that rented for $1450
and rented the very first day may take 8 weeks and finally rent
for $1300 the following year. It only takes one right person to
rent or buy a home. In addition, the first year you purchase a
home it may be empty longer. This is since renters must give
notice to current landlords that they will be moving out.
Usually this notice is 30 days. Many people will need that much
time before they can start renting. During the second year a
home is available for rent we are allowed to show the property
before the renter moves out. This could be good or bad. The
renter who is currently in the property may keep everything
very clean and organized. When the property is shown to new
renters this may leave them with a very positive view of the
property. The opposite may also be true. The current renters
in the property may have smelly dishes in the sink, a messy
house, and a pet that barks during the whole visit. This could
leave a negative impression. If this happens you may ask for
less rent that year in order to get the property rented quickly.
Question 2 Maybe if too many people in the group buy rental
homes in Omaha the market will not be as good.
This is simply not the truth. The amount of rental homes the
group accounts for is less than 1%. For instance, Omaha and
the surrounding areas have approximately 600 rental homes on
the market. This does not include apartments or condos. We
currently have 4 available that belong to members of the
group. The demand for rental homes in Omaha has always
been very high.
Question 3 Why did my renter break the lease?
I have had renters break the lease for several reasons including;
Couples breaking up, someone lost a job, military service got
transferred, job getting transferred, can no longer afford due to
medical bills and many more. While we can’t prevent someone
from breaking the lease we do the best we can. When
someone calls and explains they must break the lease we have
the difficult task of trying to help the Landlord come out as well
as possible. Kevin begins by trying to negotiate the best
possible terms. The goal is to do this without the courts and
leave the property in good condition. Kevin tries to offer
favorable terms for both parties. Generally we ask that we can
begin advertising the property, select a move out date, and also
write up a contract where they surrender the deposit and pay a
fine. This is much better than going to court, paying a lawyer,
arriving at the property with a sheriff to kick them out and the
renter leaving a damaged property with a huge mess. I feel it is
always best to use negotiation for everyone involved. When
you decide to become a property investor you will at some
point have a renter break the lease. It is our job as property
managers to try and deal with this situation in the best possible
way.
Question 4 Why does my property have so many repairs?
This is one of those questions that I never like to hear. I say
that because it is my goal to keep costs low. When you
purchase a property, the inspector can only see items on the
surface of the house. The plumbing may have an issue that
does not show up until after the home is in use. The air
conditioner could have a problem and the previous owner only
repaired it enough to sell the home, a normal household
accident happens that causes damage like a dishwasher
breaking and causing damage to a wood floor. It could be any
number of issues in a home. Today in my personal home I have
a repair man fixing the dryer and a few months ago replaced
the furnace and air conditioner. These things happen with any
home but happen even more often when you first purchase a
home. You begin to discover all of the items that were
probably problems for many years that the previous
homeowner didn’t mention. I have had rental properties that
cost me many thousands of dollars I wasn’t expecting the first
year of owning. Those same properties may have very few for
several years after. The point is to keep the investment in good
repair so for many years after it provides good returns.
In conclusion
In conclusion, owning a rental property is similar to any other
investment. If you have ever invested in the stock market you
know the prices look great some years and other years they
begin to plummet and everyone starts to panic. This is the
same way with owning real estate. One year you are telling
friends how great it is and the following year you tell the same
friends you want to get out completely. Investing in real estate
is for those strong people who can weather the storm. Warren
Buffet wrote
“Our favorite holding period is forever.”
To build true long-term wealth, you must buy and hold real
estate. Expect the ups and downs when you purchase a Real
Estate Investment. Over time you will see the ups are greater
than the downs and you have reached a favorable destination.
