Should You Rent Out Your Condo? Consider These Things First
Have you asked yourself: Should I rent out my condo?
At a time when condo rental demands are an all-time high, there’s no reason you shouldn’t rent out your condo unit. Demands are higher for affordable to mid-range condo units, especially those located near the central business districts (CBDs).
Condo rentals in Metro Manila also have the highest yields, at 5.1% on average.
But before you jump into the bandwagon and calculate how much you could be earning from renting out your unit, there are several things to consider first.
Things to consider before renting out a condo unit
1) Assess your readiness
Making the unit available for rent means giving up that space (and the control over it) for a certain period. Are you sure you’re 100% ready for this?
To put it in perspective, you should be asking yourself also if do you want to be a landlord. Do you have what it takes to be an innkeeper?If you think renting out the condo means freeing yourself of the monthly responsibilities, then this business (or side hustle?) is not for you. Accountabilities are not transferable in this aspect, mind you.
For one, you still have to care for the unit, and now, the tenant. You need not only tend for some of his, her, or their needs, particularly those about living conditions, but you also need to make sure they follow the rules.
2) Abide by the rules
Speaking of rules, condo management has strict regulations about renting out units. They regulate with the sole purpose of protecting the image of the condo and protecting the condo owners. Having more renters than owners is not a good selling point.
Some associations only allow short-term lease, while others permit both short and long-term rentals. Check with them what you can do with your rentals so you won’t be penalized.
Prepare a contract between you, as the owner, and the renter that comply with the requirements of the association. In this way, you may prevent any legal issues from arising. If they happen, you have the contracts to back up your claims.
The contract outlines payment terms, list of responsibilities of the landlord and tenant, house rules, and eviction rules, among others. Discuss the agreement with the prospective tenant, so everything’s in black and white.
3) Furnish the unit
As already stated above, this may depend on the needs of your would-be renters. So it would be wise to determine your target renters first.
For example, if you are targeting the young, college student demographics, think of how you can make their lives easier while at your place. A study area, a reading nook, and a mini-fridge are some of the things you can put or install in the condo. This is tricky, but you can always put yourself in their shoes. If you are going to rent a condo, what are your non-negotiables? Then, try to incorporate those things into the unit. Your priority now is the livability of the condo unit. This is practicable more so that you can put a premium in the unit, which is discussed in the next section.
4) Decide on the right price
Condo rentals are a business and a lucrative one at that.
Like other businesses, you must have a selling proposition (why renters should rent out your condo unit and not the others) and the right price.
Monthly rental fees should be competitive but reasonable. Based on the example above, if you are targeting college students, pricing it a bit too high may mean vacancy for an extended period. You don’t want that to happen because of idle money.
Do the prospecting yourself. Ask your condo association how much the owners charge their renters. Or, ask your co-owners who are into the same business directly.
While at it, learn about all the factors that make the unit or the residential building the right fit. Is it near the university belt? Are there any modes of transportation going to and from school? Does the condo have a mini library that is open until midnight?
Anything that adds value to the condo living can be an opportunity for you to price your rental fee comparably. Your goal is to settle on a price that is not too low or not too high. Whatever it may be, do not lowball.
5) Prepare the let-me-show-you-the-condo talk
Allow your prospects to schedule a visit to the condo. Prospects respond more to concrete experiences, such as seeing the unit in actuality.
Don’t be too technical about it, though. Share your experiences instead. What made you fall in love with the place? What small luxuries in life that you get to experience when you live there? Make your spiel relatable.
Paint a picture of how their life may change if they choose to rent out your condo. Feelings and experiences are not only relatable; they also tend to stick in your memory better and for longer.
If having doubts, think of this word: convenience.
With all these, you shouldn’t be asking yourself whether you should rent out your condo. The business opportunity is here. All you need to do is grab it.