Whether you own a single rental or many, the goal is to make money to cover the mortgage and or to subsidize your income. Here are a few tips to help maximize your profit.
Conduct Preventive Maintenance
Always keep your property in good condition and conduct preventive maintenance. This helps keep down repair costs and increases the value of your home by handling rental maintenance and repairs properly. Keeping the home in good condition encourages tenants to do the same, not to mention it reduces the risk of liability.
Set Rental Price Correctly
Research your rent prices and make appropriate rent adjustments. Issuing reasonable rent increases on an annual basis will increase your profit margin. But be careful not to over increase the rent. Doing so will encourage tenants to vacate the property. Increasing rents in the spring and summer months ensures if tenants move out, a replacement tenant can be found quickly.
Have Written Rental Agreement
A written contract sets expectations of who pays for services and utilities. Without a written lease, you could pay for items which you expected the tenant to cover. Always follow your own rules. This includes collecting on late fees. Encourage tenants to pay on time. Late fees are there to ensure tenants pay their rent in a timely manner. Breaking simple rules such as waiving late fees allows tenants not to follow other rules set forth.
Screen Tenants Thoroughly
A good screening process will reduce high tenant turn overs, risk of eviction and possibly bad tenants who damage properties.
Have good landlord insurance and ask your tenants to carry rental insurance. Homeowner policies don’t always cover tenant occupied properties. Always check your insurance policy to make certain it covers a rental property in case of a lawsuit or injury.
Focus on Tenant Retention
Hold onto your good tenants. Good tenants take care of the property as well as pay their rent on time. Renewing leases with good tenants ensures that they stay in the property as long as possible. Turnovers are expensive in terms of repairs, painting and cleaning. If you own multiple properties consider hiring fulltime professional repair people who can handle minor repairs and simple tasks things such as cleaning. Make paying rent easy. Making paying rent convenient for you and your tenants will ensure timely payment. Treat your rental(s) as a business. Understanding your bottom line and keeping accurate record of transactions and events can help minimize costs and liability.
Understand the Law
Know state and federal laws and treat tenants professionally. Best practice is to respond to all tenant inquiries and requests, emails and phone calls. When a property is treated like a business, you maximize your profits. Because you make tenants happy by handling things on time, you avoid legal battles and keep your finances in mind.
Know Your Limitations
If you don’t know something, seek advice or the help of a professional such as accountants, attorneys and licensed contractors. It is best to pay for services rather than handle things on your own and end up creating a huge liability and possibly endangering yourself, your tenants or your property.
For additional tips on maximizing your rental income or if you need help managing your rental property, please contact us at New Bridge Management.