What Is A Rent Guarantee And How Does It Help Protect Landlords Financially?
Posted on: 21 January 2022
Residential property management companies take a lot of burden off of landlords, as they handle finding tenants for your properties, renting them out, and maintaining for you. Whether you own a large number of properties or simply don't want to handle your properties yourself, a property management company makes renting out your homes much more convenient. In addition, some property management companies offer a rent guarantee service that can prevent your passive income stream from being disrupted. You'll need to pay a slightly higher fee to the management company for this service, but it helps make your month-to-month income consistent. To learn more about what a rent guarantee entails and why it's beneficial to landlords, read on.
What Is a Rent Guarantee?
Nonpayment of rent is a large problem for landlords, and a rent guarantee prevents a tenant's nonpayment from affecting your income stream. If one of your tenants can't pay rent due to a sudden disability or losing their job, your residential property management company will continue to make the usual monthly rental payments for the home on your tenant's behalf.
Many rent guarantees also cover the eviction process. If your tenant isn't paying rent and you need to remove them from your property, the residential property management company will handle the eviction process for you and pay all of the legal fees associated with it.
In return for this protection, a small fee will be deducted each month from the rent that is collected from your tenants. This covers the risk that the management company takes on by agreeing to guarantee your rental income.
How Does a Rent Guarantee Benefit Landlords?
Even though residential property management companies find and rent out homes to reliable tenants, problems such as a sudden illness can always occur no matter how reliable a tenant is. Guaranteeing that the rent for your unit will be paid protects you financially by ensuring that you have a stable passive income.
You can also use this rent guarantee to protect multiple properties. Events like a market crash or recession can lead to several of your tenants becoming unable to pay rent at once, which can seriously reduce your monthly income. A rent guarantee ensures that these events don't affect your cash flow. Guaranteeing a stable rental income makes it easier for you to budget for maintenance expenses or save money to acquire more properties on the market.
If you're managing your properties on your own or using a residential property management company that doesn't offer a rent guarantee, you may want to consider finding one that does. A good property manager makes it much easier for you to rent out your homes, and a rent guarantee makes sure that your monthly income is reliable. Using a company with a rent guarantee is a particularly good idea if your rental income is your main source of income since it protects you against a financial downturn that could lead to the majority of your tenants becoming unable to pay rent. While you'll have to pay an additional fee for the service, it's a great way to protect yourself financially. To learn more information about property management, reach out to a company such as New Leaf Properties LLC
Share