By: Robert Dornan
While managing property can seem overwhelming at first, rental vacancy rates are consistently declining, making it an extremely lucrative field. Whether you’ve just purchased your first property or already manage several, there are always ways to get more value from your rentals.
Effectively overseeing property can help you reduce your vacancies while getting more in rent each month. This, in turn, will allow you to purchase more property and increase your income, but it all starts with efficient management.
Things like requiring tenants to have their own insurance can be one way to cut costs. Typically, renters insurance covers water damage, smoke damage, and the like. If something does happen to a unit, it’s likely that your tenant’s insurance policy will cover the damage, saving you money. The following tricks will also help you extract the greatest possible value.
Manage Your Own Properties
While property managers sound like a great way to take some of the pressure off you as a landlord, they can add significant costs. If you have the time and knowledge necessary to manage your own properties, you can save substantially by not hiring a property manager. The job is now easier than ever with the ability to post your listings online.
Resist the Temptation to Raise Rent
It’s logical to expect that higher rents to lead to more income, but this can actually have the opposite effect. The average turnover rate for apartments is roughly 50% each year, and the turnover process involves surprisingly high costs for things like marketing the property and cleaning it between tenants. And, that’s not to mention the loss of rent for any vacant periods.
By lowering rent, you make it much easier on yourself to find new tenants for recently vacated properties, allowing them to stay as close to 100% occupied as possible. Simply staying slightly below the market rate will pay off in the time and money you save with fewer vacant properties.
Don’t Always Pay for Tenant’s Upgrades
As any landlord knows, there are always a few tenants who are hoping that you’ll pay for their improvements or renovations. Whether it’s a fresh cost of paint, updated countertops, or a new ceiling fan, you aren’t responsible for these cosmetic adjustments. You shouldn’t feel obligated to provide the funds.
Another strategy often employed by landlords looking to contribute something is to pay for the raw materials while leaving the job itself for the tenants. This compromise helps make home projects affordable for tenants without leaving you with the cost of labor.
Avoid Larger Properties
It’s tempting to envision listing a house or other larger living space, and while it’s true that you’d be able to extract more in rent, you’d also be responsible for substantially more upkeep. Everything becomes more expensive with a larger property, including property taxes, repairs, and homeowner’s insurance.
While you may eventually be able to add these types of homes to your rental portfolio, it’s safer to start with small, modest rentals that are easier to manage. Once you have a steady income and an understanding of the market, you can consider investing in a bigger property.
Rental properties of all kinds are significant investments, and it’s important to do everything you can to maximize your return on investment. These tactics are great ways to start improving your rental management strategies. They’ll help you earn more money and eventually be able to purchase new properties.
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