Making the most out of a real estate investment requires landlords to reconsider their rental strategies on a regular basis. If you stop learning, your profits will likely suffer over time.
Top Strategies to Get More Profit From Your Rental Property
If you’re interested in getting more profit from your rental property or properties, incorporate these habits into your 2018 real estate management plan.
1) Decrease Turnover and Vacancy
As most landlords will tell you, fewer things are more trying in property management than constant turnover. If you want to save yourself from headaches and frustration—and a loss of profit—do all you can to reduce turnover and prevent vacancies in your rental property.
Turnover costs you more in the long run than you might think. You’ll lose rental income as long as the property remains unrented, which depending on cleaning and repair needs, could be longer than two months. You’ll handle those aforementioned cleaning costs and repair costs, and if you’ve been saddled with a nightmare tenant, these damages may turn out to be far more than the security deposit.
Action Step: How to Reduce Turnover With Your Rentals
2) Get Great Tenants from the Start
Landing the dream tenant is arguably the most important way to increase your rental profits. Expand your pool of prospective renters by posting a detailed rental listing on a variety of websites and channels—don’t let Craigslist serve as your one-stop-shop for tenants.
When the applications begin flooding in, take your time to meet with applicants in person—in-person screening can help you find a renter that’s respectful and hopefully provide a foundation for a productive landlord-tenant relationship. Don’t forgo background screening; it might cost you a bit more upfront, but this investment is more than worth it. Use certified services that give trustworthy insight; online options like Transunion tenant credit reports and criminal history checks are a good place to start (it’s what I used to screen my tenants!).
3) Increase Rental Rates in a Strategic Way
Pricing your rental property may take a bit of trial and error, but it’s important to work hard to find that sweet spot. Should you price your unit or home too low, you’ll fill it quickly—but miss out on hundreds or thousands of dollars in rent. If you price it too high, you can find yourself sitting on a vacant property for months. While location is the paramount determiner of price, the condition of your property and amenities offered can help you pull in more. Use Rentometer.com to find that balance and get the most out of your rental.
4) Charge Late Fees
It’s great to have a friendly relationship with your tenants, but don’t forget that you’re running a business. While it’s natural and admirable to have empathy for a tenant’s financial situation, late rent shouldn’t be an acceptable option.
In your lease, make it clear that late rental payments are subject to a penalty fee—and enforce it. Admittedly, collecting late fees from a tenant isn’t always an enjoyable aspect of this profession, but a necessary one. Make sure tenants understand from the get-go that they are responsible for timely payments—and will face the consequences if they don’t get rent to you on time.
5) Add Amenities that Provide Supplemental Income
Want to get more profit from your rental property? If you own a multi-unit rental, consider adding different revenue streams.
- Installing a coin-operated laundry unit in your property provides convenience for tenants, and added profit for you.
- You might also consider adding vending machines throughout the property; this type of revenue may be small at the onset but it will definitely add up over time.
- If you own a single-family property, you might consider offering cleaning services or landscaping services. Talk to local providers, and charge a service fee for the hire and management of their services.
6) Take Advantage of Available Tax Breaks
Make sure you’re taking advantage of all possible tax breaks for your rental business. Throughout the year, write down all possible allowable expenses in order to reduce your tax bill. The following can be claimed for tax credits:
- Loan interest
- Depreciation of assets
- Maintenance costs
- Insurance premiums
- Legal fees
- Management fees
- Office expenses
This is a comprehensive but not exhaustive list. Consider working with a tax professional or financial advisor to ensure you get the most from your tax return this year.
Make 2018 the year of profitability. Use these tips and strategies to improve your bottom line and make your rental business as successful as possible.
Are you ready to get more profit from your rental property?
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.