Today on our blog, we are discussing ways that landlords can maximize profit from their rental properties.
Raising rent is the most obvious way to increase your profits. If your rent is too low, you are probably able to rent your home quickly, but you’re missing out on thousands of dollars in rent. Price it too high and it will sit on the market for months, running up vacancy costs.
Even if you have to cut your rent, decreasing your vacancy rate will increase your profits. Minimizing vacancies sounds obvious, but sometimes emotions can get in the way. On the surface, it sounds contradictory to the first suggestion. Perhaps you desire a $1,500 per month rent. However, the current market is only willing to pay $1,400 per month. Two months of vacancy time in which you are trying to capture that extra $100 per month will cost you $2,800 in lost income. Even if you eventually get your desired price, it will still take you 28 months to recoup that lost income.
One of the key factors determining tenant retention is customer service. Make sure you’re treating your tenants with respect and professionalism. They are the paying customers, so their concerns need to be dealt with urgently and to their satisfaction. A good landlord tenant relationship keeps tenants from moving, which will keep your turnover expenses low. A happy tenant pays rent on time, takes better care of property and stays longer. You might also consider signing good tenants to a longer term lease. Here, we offer signed tenants an 18 to 24 month lease so we can control and minimize turnover.
Target Perfect Tenants
Getting the perfect tenant for your property allows you to set a higher rent rate. Make sure your property is appealing to highly qualified tenants because they will be more likely to take care of it and less likely to leave.
Take advantage of all the available tax benefits. Keep track of all allowable expenses so you can deduct all the applicable expenses and reduce your overall tax bill. Landlords can claim all the repair costs. Keeping your property in excellent condition makes it much easier to find quality tenants and allows you to charge more, making it a win-win situation.
If you’d like to talk to one of our property specialists, please contact us at InvestPro Properties.