HOW TO BE A SUCCESSFUL LANDLORD IN HAWAII
With a bit of focus, your investment property can yield great results
You need a can-do attitude, good business sense and a professional team working with you.
If you’re like most landlords, you have two primary goals:
• Protecting the value of your residential investment property
• Getting the best possible cash flow each year.
As long-term property management professionals, we are often asked to help our clients reach these goals. Through our years of experience, we’ve found ourselves giving the same recommendations, time and again. We hope it will help you get the most from your rental property.
FIRST IMPRESSIONS
If you were looking for a long-term rental, would you choose your property? These may seem like strange questions but think about them for a minute. Ask yourself –
Is the location…
- Safe
- Quiet or noisy
- Convenient to schools? shopping? work?
What is the condition of the property?
- Does it need to be painted?
- Has the carpet been professionally cleaned?
- Are the screens in good condition?
- Are the windows clean?
- What about appliances? Are they in good repair or are they rusty?
- If applicable, is landscaping maintained?
In other words, how impressed with prospective tenant be when they visit your property for the first time? Is it inviting and homey? Does it make a good visual impression? Does it sound peaceful and quiet? Does it smell fresh and clean or are the pet odor or mustiness?
Remember, you are competing with many other owners for good tenants. To get the best, you need to offer a good product in good, clean condition.
When it comes to taking care of your property, it’s up to you to set the standard. Your tenant will take his cue from you. If you deliver the property in clean, good condition, showing pride of ownership, your tenant is far more likely to keep it that way.
If repairs need to be made, do them. Procrastination is the repairman’s friend so the sooner the problem is fixed, the less it costs. If a faucet drips or the tub needs caulking…take care of it. If the screens are torn or in poor repair, replace them. A residence that shows how much its owner cares will rent faster and at a higher rent, to better tenants.
We recommend professional carpet cleaning as well as professional house cleaning before advertising your property for rent. This shows that you expect the tenant to maintain the same high standard.
Professional property management companies always make sure the condition of the property is well-documented before the tenants move in and you have the right to expect the tenant to return it in the same condition when they vacate, with some allowance for normal wear and tear.
TO FURNISH OR NOT TO FURNISH?
If your property is located in a resort or highly transient location, you may consider renting as ‘turnkey furnished’. This means you provide everything, including linens, towels, kitchen equipment etc.
Another option is to include furniture and appliances without household supplies. This is considered a ‘standard furnished’ unit.
In either case, it's important to complete a detailed inventory and have the tenant sign for it when he moves in. And remember, when inventory items wear out, you are responsible for replacing them.
Of course, you may choose to rent the property unfurnished. On the Big Island of Hawaii (Kailua-Kona, Waimea, Waikoloa or Hilo) this usually means that standard appliances (stove, refrigerator, washer/dryer, dishwasher are in the unit) and all other items removed.
Also important to note…a furnished or fully furnished rental does not always equate to more rent. One can anticipate anywhere from $50 - $100 more per month if fully furnished. Many long-term Big Island tenants have their own furnishings and prefer their own belongings.
Before you decide, it always a good idea to discuss your options with an experienced long-term residential property management company, with knowledge in your neighborhood or apartment complex. The manager should be able to guide you as to what will be the most cost effective and help you get the most rent for your property on the Big Island of Hawaii.
A GOOD MENTAL ATTITUDE
Owing investment property can be a challenge, so its important keep in mind, that its basically ‘a business’. When the hot water heater quits, the roof springs a leak and you find out your wonderful tenant is being transferred to Outer Mongolia all in the same week, you may ask yourself why you ever got into this in the first place.
Everyone has experienced similar clumps of problems, but “coping skills” depend a great deal on the way each owner approaches his/her long-term investment. This is especially important if you’re planning to rent your family home where so many emotions and memories reside long after you move out, or if you’re renting the property you purchased as your future retirement home.
The first step to a successful rental experience is to detach.
You need to be able to look at your situation objectively and make good business decisions about the property. When you shift your mental attitude from homeowner to business/ Landlord, you’ll have taken a huge step toward success.
Once you’ve made that leap, there are three more very important things you’ll need to do.
1. Accept the fact that you can’t control everything about the property. No matter how good tenants are, they won’t do things exactly the way you would. This doesn’t mean they don’t care; it’s just that they aren’t you!
2. Expect the unexpected. Pipes break and garbage disposals quit, always at the most inconvenient times. Since you are not there to fix the problems yourself, you’ll have to rely on others. Make sure you’ve discussed your preferences with your long-term rental company. Then, when it’s time for problem-solving, you know it will be handled the way you want.
3. Know your rights and responsibilities under the Hawaii Residential Landlord/Tenant code. Hawaii’s law has some unique provision you may not be aware of which affect your options as a landlord and dictate what your rental property management company must do.
Did you know for example that an absentee landlord is required by law to designate an agent to act on his/her behalf and that agent must live on the island where the property is located? In other words, you as the owner, cannot reside outside off island and manage your own property.
Were you aware that the landlord has only three business days to begin repairing problems which affect habitability such as leaky roof or broken refrigerator?
These and many more regulations have a direct impact on you as a landlord. Federal Fair Housing laws are most important to know and follow.
Arter many years of providing professional property management services, we can say with absolute certainty that success with long-term rental properties demands a team approach. Both you and your rental manager need to work together closely to protect your investment and maintain it in good condition.
A professional long-term property management company will work with carefully selected service providers – plumbers, electricians, handymen and many others whose quality work has been proven and who stand behind what they do. This team is crucial to the success of your asset and is one of the advantages you gain by having an experienced rental manager, whether in Kona, Waikoloa, Waimea or Hilo.
You should expect to incur reasonable repair, maintenance and replacement costs each year which will typically increase as your property ages. It’s a sound idea to budget for these costs in advance. In the event of a costly emergency repair, you should always have funds available. Rental income may not cover a major expense.
We hope these thoughts have been helpful to you and that your investment on the Big Island is everything you expect it to be for you and your family.
If you would like more information about current rental rates in Kailua-Kona, Waikoloa, Waimea or Hilo or to learn more about our services, please contact us at your convenience. We’d like to be part of your team. With your cooperation, our expertise and a carefully selected tenant, success is just a lease away.
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A checklist to prepare your home for the Hawaii rental market.
Reliable and professional long-term rental property management is an important aspect of owning and maintaining rental properties. It is of utmost importance that your property is well-maintained, income and occupancy are maximized, that your tenants are well screened, and that landlord / tenant rules and regulations are strictly adhered to.
A long-term rental property can be a very lucrative investment. It’s a good way to make passive income but being a landlord can sometimes seem like a full-time job. There are several factors to consider at all times to ensure you have your tenants’ best interests at heart. Responsibilities such as maintenance and repairs can be costly, so you also need to maximize return on investment and keep an eye on your finances. For this reason, many landlords work with local property management companies in Kona, Waikoloa, Waimea and Honokaa who provide assistance in a number of areas. If you’re managing your own rental property, here are a few quick tips. Understand Local Laws It’s essential to have a good understanding of Hawaii state laws to ensure you are protected at all times. Each state has different property laws. These may, therefore, vary relating to rental agreements, property maintenance, land ownership, building regulations, and so on. It’s a good idea to get clued up on these laws before embarking on a new business venture. Monitor Your Finances If you’re renting a property, there will be plenty of expenses that will need to be balanced against your rent profits. It’s important to learn how to effectively manage your cash flow for this reason. You could consider hiring an accountant to help you monitor your finances. If you decide to DIY your own finances, you need to make a realistic budget and stick to it. It’s advisable to create a specific account for emergency funds to spend on the property. Prepare for Re-leasing in Advance Often turnover is not as quick as you might hope so it’s a good idea to prepare for the end-of-lease and re-leasing in advance. This will ensure a more constant cash flow coming in from your rental property. If your tenants’ contract is ending, start the re-leasing well in advance to give yourself time to find someone else. You should also be prepared to evict tenants. In the case that you encounter problems with your tenants, you need an eviction plan in place in accordance with the local legislation and your insurance policy. Remember you must reside on the Big Island of Hawaii to manage your own property. You may use an on-island associate to manage on your behalf, but our best advice is to hire a professional rental company familiar with the island, local laws and codes. As you can see, managing a rental property is not without its challenges. This is why many landlords outsource these services to professional residential property management companies. You can rest assured your property will be in the hands of the experts.
CBIP Vacations, LLC
Brokerage License #
RB-22373
