Actually, This Isn’t Such A Bad Idea… Rental Investing or Cash Flow Investments, like duplexes and apartments, are very popular among many of our investors. With today's mobile workforce we have find that many Landlords are faced with subleasing situations.
According to Wendy Dressler, “Subleasing has good and bad aspects to it. Some pros include increased regularity of rent payment, greater authority over tenants, and the potential for increased revenue in a single unit.
Cons include legal regulations in local areas, damage from unpredictable tenants, and the need to apply increased diligence to property management for Landlords.
Decisions Landlords Have To Make
Now the weight of these pros and cons will differ per landlord. Some landlords have no problem stretching the limits of the law, others are more interested in remaining straightforward; both may find themselves in subletting situations. Consider some of the implications, though.
Pros For Subleasing
If you’ve got a tenant who is subletting, then the way you respond to it can either build a closer relationship with them, or a wall. Sometimes you have to build a wall, and get that tenant out. Other times you don’t.
With subletting, you may have to go on a case-by-case basis. Even those who serially sublet using some Airbnb paradigm could be reliable subletting tenants, essentially operating as an employee to the “enterprise” of your property.
If you allow one to sublet, and it’s legal, then you can increase rent slightly, and you can expect them to be more professionally courteous to your authority. After all: you’re letting them do something you don’t have to.
If the right attitude accompanies subletting, you may find they keep better care of their property, and are willing to do little chores around the property, like managing a pest control group, on a weekend, or something. You may even give them a discount on rent as they reduce the hassle you have in managing things.
Also, sometimes someone subletting brings someone who becomes a more permanent resident, and they just end up simultaneously on the lease. At that point, your tenants may be saving enough to build personal equity; which means there’s a potential they’ll become as concerned about upkeep as you are.
Depending on why you’re keeping your property, you could change the status of things. Sometimes someone buys a rental property as a PIG, or Passive Income Generator. When they reach a certain point, they may want to sell that PIG.
If you’ve got a good renter subletting and essentially letting on to be permanent residents, it may be possible to work something out such that things are switched through the bank, and all you experience is profit with less hassle.
Cons For Subleasing
Now certainly, not all situations are so ideal. Sometimes tenants sublet to shifty individuals who ruin property and cause a ruckus. Sometimes tenants go sideways on you, and begin breaking the terms of lease and pocketing the cash. And even if things are going well, subletting will require that you dedicate more effort to managing your property.
Also, if the laws in your area do not allow subletting, then you looking the other way could have legal consequences. So you’ve got to look at a situation where subletting is on the table, and weigh these pros and cons. At Rentbelly, you can get more information pertaining to subleasing. The more information you’ve got, the better.
Multiple Angles To Consider
Today’s economy has a quality to it that is good for some and bad for others; reducing traditional mortgages, and increasing secondary living styles which include van-dwelling, subletting, and rental in general. Generally, this represents a positive state of affairs for landlords.
The bad news is, you’re going to have to take a closer hand in managing your rental properties to determine if such activities are safe for your property. Anything can be made to benefit you, though. If you’re dutiful in managing tenants who sublet, this can end up fostering relationship and increasing regular income from a given property.”
So in conclusion, Landlording or investing in rental property can we very rewarding with cash flow income and the building of wealth. Be sure to update your lease agreements, we aware of best property management practices and always always screen your tenants.