Skyler Moore:
A huge factor of success in owning investment property is keeping it rented with tenants that pay on time. The dream tenant seldom calls the landlord, pays rent in a timely manner and well maintains the property.
The reality for real estate investors is finding all 3 of these attributes can be very difficult. It does happen and is ideal for investment property owners, but waiting around for a tenant that possess all three can result in vacant months, leaving the landlord with negative cash flow. If an real estate investor can afford a few negative months to wait for an ideal tenant, that choice is up to them, but most real estate investors rely on their properties to pay for themselves.
There are two main types of tenants. Private tenants that pay all of their own rent and bills, or assisted tenants that receive financial help to pay rent and bills. Private tenants may be working professionals or corporate tenants, while assisted tenants may be on programs like Section 8.
Section 8 is a lottery program targeted at families that need assistance in order to make rental payments. In Denver, my company does rent to Section 8 tenants that do not have any evictions or felonies, as this is a requirement we have for all prospective applicants.
Most of our Section 8 tenants are families that have a lot of expenses and not a lot of income. What we like about Section 8 tenants, is a 12 month lease guaranteed by the administering authority and a direct deposit the first of the month.
We generally do not have issues with private tenants either, as we run strong back ground and employment checks on all of our prospective tenants. The risk that investment property owners have with private tenants is a change in their lifestyle that could affect their ability to pay rent, which is a major concern today with record unemployment.
My re-development company markets some properties to cash flow investors with a 12 month lease in place, as the Denver market offers a strong rental demand with an average rental time of 10 days from advertising to lease signing. We give prospective investors the option of private or assisted tenants while conducting due diligence for their investment property. It truly comes down to the owner’s preference of tenant type, history and their future ability to make payments.
There are other programs sponsored by the government and agencies that real estate investors can take advantage of if it fits their investment strategy, criteria and cash flow requirements.
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