You are defeated and wondering how this all happened to you. Your tenants have not paid you for 2 months. They are showing no signs that they will ever pay you again. You are now out of pocket and paying the mortgage on your rental property from your personal savings. You are wondering how long this can go on for. Your ROI is diminishing and so are your spirits. You are questioning why you ever became a real estate investor…
If this sounds familiar to you, you are not alone. Any veteran real estate investor has more than likely experienced non payment of rent. Non payment of rent, whether deliberate or accidental is a reality that real estate investors face.
You might be happy to hear that you can stack the odds in your favour and find tenants who are more likely to pay you on time.
This can be accomplished by following these simple rules:
1) Be strategic in WHERE you buy your first rental property
New real estate investors are guilty of ‘following the crowd’. As a new real estate investor, you can learn a tremendous amount from experienced real estate investors who are members of real estate investment clubs. The knowledge that you gain from them is invaluable. However, do not confuse knowledge with awareness. Let me explain…
Some real estate investors tend to buy properties located in specific towns, neighbourhoods, and even specific streets. Areas become well known within real estate investor circles for having a ‘high density’ of rental properties.
Enter Mistake #1 made by new real estate investors
These areas may not have the tenant profile that you personally want to attract. For instance, located in these areas could exist a transient tenant population that generally pays their rent, however is always late in doing so. A questions you must ask yourself now is: Were you aware of this before you invested in this area, or did you just simply follow the crowd because everyone was investing there?
2) Know what type of tenant profile you want to deal with before you buy your first rental property
Sounds simple, right?! You would think so, but it is not common sense to new real estate investors. Before you invest in real estate, you have to ask yourself what your comfort level is in dealing with people from different socio-economic backgrounds. Are you comfortable in dealing with white collar workers, or do you feel more comfortable and relaxed when dealing with blue collar workers?
Knowing what type of tenant profile you prefer dealing with helps. However, what is most important is to understand the financial stability of that tenant profile before you buy your first rental property is essential.
For example, the first rental property that I bought is located in a middle class area of town in a suburb of Toronto. In the neighbourhood there lives middle to high income earners. As such, the renters in this area for the most part are all middle to high income earners. In over 5 years, I have not had any issue with non payment of rent at this property.
For my first rental property, I knew that I wanted to attract a higher income earning tenant profile. As a result, I bought my property in a nice area, that was experiencing population growth, and where higher income earners were living and wanted to move to…
Finding tenants that pay you on time may seem easier said than done. However, if you are a self aware individual you will know that the location where you buy your rental property and the tenant profile that you are attracting will determine whether or not you get paid on time consistently or not.
Best Regards,
Neil Uttamsingh
PS: Do you want your rent paid on time? Stack the odds in your favour. Subscribe to my blog today!
