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Maximize rental income and keep expenses and wear and tear to a minimum, while also cultivating healthy renter and owner relationships by carefully selecting the people to rent your condo.
Like the widely held belief in real estate that no two properties are the same, not all tenants are created equal. Some will make your job as a landlord seems like a breeze, while others may make you question why you bothered leasing out your condominium unit in the first place.
Being in a prominent and convenient address garners most condos a great deal of interest. While ensuring that you will almost always have a business, this large market also increases the chances of your property ending up being rented by not-so-ideal tenants.
One thing to remember when learning how to rent out your condo is to take the time to evaluate potential renters. This can help ensure that you not only have tenants who make timely payments but are also easy to interact with and treat your property as if it were their own.
Determine How Many People You Want in Using the Condo
Setting the maximum number of people living in your condo property help narrow down who you will entertain as potential clients. If minimizing wear and tear is a priority, a maximum of two people per bedroom is recommended. This means small families or renters of significant income, given that rent will be divided among fewer individuals.
If willing to risk the property taking on higher wear and tear, then you can open your condo to more tenants. While there is no exact law regarding how many people can live in a residence, it is best to check with property management or the homeowners’ association to best know if any rules may apply. By being open to more residents, your potential tenants will include multiple students or young professionals living as roommates to better cover the rent.
Adhere to the Rent Control Act
Being discerning of your market is different from completely alienating it. As renters tend to look for the best value for their money and immediately turn away from rates that are too high or are subject to frequent and unannounced increases, it is important that the rental rates for your property is both competitive and remains within complete adherence of the law.
The Republic Act 9653, or the Rent Control Act of 2009, indicates the maximum allowable rent increase per year in accordance with its respective monthly rent range.
| Monthly Rent Rates | Maximum Allowable Rent Increase Per Year | Legal Provisions under the RA 9635 |
| Php 4,999 and below | 2% | Landlords are not allowed to increase rent rates over 2% annually. |
| Php 5,000 to Php 8,999 | 7% | Landlords are not allowed to increase the rent rates for their old tenants by more than 7% per year.
If they have new tenants, landlords can increase the rent rate by 7% per year. Moreover, landlords are not sanctioned against imposing their own rental rates when they lease their property to new tenants, regardless of whether they exceed the 7% restriction imposed by RA 9653. |
| Php 9,000 to Php 10,000 | 11% | Rent rates for old tenants are not allowed to increase more than 11% per year.
However, landlords are allowed to charge new tenants a new rate, which may be over 11%. |
Consider Their Rental History
When fashioning an application form, include a section where they will state where their last handful of addresses were, and when and how long they stayed. Frequent changes in the address can be indicative or frequent evictions or unemployment. If not, it still suggests the applicant may not be a long term tenant.
Whenever possible, also check with at least two of potential tenants’ previous landlords, to get a better idea of how the latter does when they occupy your unit. Remember to take this with a grain of salt however, as issues between the parties may lead to details being a little skewed, but insightful nonetheless. Some questions to ask include:
- Did they pay their rent on time?
- Were they ever evicted/fined for late payments?
- Was proper and timely notice given before they moved out?
- How did they keep the property? Was it clean?
- Did they cause any damage besides what is expected of normal wear and tear?
- How were they as neighbors?
- In the instance that the applicants are first-time renters, students, or a recent graduate, they likely have no rental history, and you may have them consider having a co-signer for the lease.
Conduct a Financial Background Check
Similar to how it is ideal that monthly mortgage payments be no more than a third of a payer’s monthly income, so too should be the monthly rent. The ideal way to ensure rental payments are paid in a consistent and timely manner is to take on tenants whose total monthly income is at least three times than that of the monthly rate of the condominium unit.
Determining potential tenants’ capacity to pay can be achieved by a simple review of their proof of income and/or certificates of employment, and subsequent verification with their employers and/or business partners. In the event that the unit will be rented by someone for another occupant (i.e., parent for child-student), then the financial background check would apply to who is covering the rent.
While financial information is indeed sensitive in nature, an applicant hesitant of at least proving their employment status or indicate where or how they make a living is likely someone a little too suspicious to have to rent your property.
Know More Through Tour Talk
While giving a tour of your condominium unit and the related amenities of the development is mostly to convince potential clients that your property is the rental for them, there are only finite items the rental applications forms can answer, so it also serves as a good time to better determine if they are the right tenant for it.
Using a friendly and conversational tone, you can ask about where the applicants used to live and how their home, family, or work life is like. Remember that it is never too early to establish rapport, especially in that this also paves the way for smooth and amicable interactions that you may have with the future tenants.
Tours of the property are also the best time to discuss the ground rules which apply to your unit and with the development overall, and those of which are non-negotiable. In the event that an applicant is not amenable to any of these, then you can consider them as not the right tenant for your condo property.
There is no exact science for finding the right tenants for any property. Despite the aforementioned tips, still to consult with real estate professionals, and experienced landlords and property managers, before and as you rent out your condo.
Are you ready to become a condo landlord? Check out condos for sale you can invest in and rent out for a steady passive income.
Sources: The Balance Small Business, Property Mark
