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F.E. Zuellig Avenue, Mandaue City, Cebu, Philippines

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How to Manage a Condo Rental: A Guide for First-Time Landlords

Do you want to earn passive income? Consider renting out your condominium unit. It’s an effective way to make money from a property you already have, especially if you plan to move to a different space.Condo rentals are an ideal real estate investment you often find in bustling cities and nearby essential establishments, making them attractive to tenants. Particularly, properties around universities and central business districts (CBDs) are popular because they make commuting easier for students and working professionals.That said, renting out a property can be overwhelming, especially for first-time real estate investors. Fortunately, this article will discuss the essentials to guide you through the process.

How to Rent Out Your Condo Unit

Putting your condo on lease is more complex than it seems. There are many factors to consider, from redecoration to the legal intricacies of placing the property in the rental market. Let’s take each one step-by-step.

1. Know your target market

student studying in her dorm room

Renting out your condo investment requires determining whom you want to rent to. Your market may range from students and single professionals to families, which affects pricing, furnishing, and rental terms.

For instance, if the condo is near a prominent university, consider leveraging this demand and promoting it to students. If it’s close to a CBD, employees will typically fill the demand, with some renting as a group to save money. All that said, knowing your target market makes it easier to manage and promote your rental property.

2. Prepare all the legal requirements

Contact the building administrator about your plan to rent your unit because you might have to secure a permit. Then, prepare a contract stating payment terms, house rules, eviction conditions, and tenant and landlord responsibilities. Discuss the document thoroughly with prospective tenants to avoid contract breaches.

Additionally, registering as a business under the local government unit and the Bureau of Internal Revenue (BIR) is necessary. After all, the property will generate money, requiring you to pay income taxes. While many landlords skip this part, they risk receiving criminal lawsuits for tax evasion, which entail severe penalties.

3. Spruce up your unit

The condo’s appearance influences demand and pricing. Furnishing the property with high-quality fixtures and furniture can boost its value, allowing you to increase rental prices accordingly. However, purchasing high-end items isn’t necessary—simply matching interior colors and neatly arranging furniture can improve its perceived value.

Next, consider hiring a plumber and electrician to fix leaky pipes and faulty wiring. Replace all locks and doorknobs to ensure tenants’ safety and relieve you of potential security-related liabilities.

4. Determine the right price

After refurbishing your condo, consider its rental price next. You might get the idea of pricing lower than competitors to increase demand for your property but don’t lowball yourself because it will compromise your revenue.

Identify competitors’ pricing to determine the market average for your property type and quality, location, and target demographics. You can often find competitor information online, such as on property rental websites and online marketplaces. Match their prices to compete, but you can lower yours if you have trouble finding a tenant.

5. Decide on your lease duration

How long are tenants allowed to stay? This figure can range from several months to years and inform your investment journey. Extended lease contracts provide better financial security since you can predict when your passive income ends. 

On the other hand, shorter leases give you more flexibility in adjusting your rates and the availability of your property, which is a boon if you suddenly need the space for personal use. 

A well-informed lease duration ensures a consistent income stream to help you and your tenant plan financially. As a first-time landlord, this aspect is vital since you’re still learning the ropes and establishing stability.

6. List your property on online marketplaces

After preparations, it’s time to list the property online to gain potential tenants’ attention. The Philippines has multiple e-commerce platforms dedicated to property purchases and rentals, such as Lamudi and Dot Property. Facebook Marketplace is also a popular option.

Remember to stage your property by taking high-quality photographs of each room portion to help prospects visualize the condo. You must also list the rental price and its inclusions, square footage, lease duration, additional incentives, and contact information. It also helps to include other terms, such as pet or smoking rules.

7. Screen tenants thoroughly

When your listing starts driving rental applications, it’s crucial to discern whom to accept. Ideally, you want those who fit your target market to make property management easier. Conducting in-person interviews, especially during property viewings, goes a long way in helping you evaluate each prospect.

Of course, financial capacity is a critical consideration—you’re running a business, after all. You can request pay slips or bank statements to determine if they can sustain fulfilling their financial obligations throughout the lease period. For better security, you could require post-dated checks to ensure payment, no matter the circumstances.

Striking the Condo Rental Goldmine

As you can see, renting out a property is more than listing it online with a price and collecting money. Your condo is an asset, so you must be careful when letting others live in it. Indeed, being a landlord entails extensive preparation and responsibilities. With proper planning, its benefits can be tenfold, allowing you to build wealth passively.

Are you in the market for your first real estate investment? Look no further than Mandani Bay for condos for sale in Cebu. This waterfront development along the Mactan Channel in Mandaue City offers luxurious property options and an exceptional lifestyle for you or your future tenants.

Contact us today to inquire about our properties.