Whether you own a condominium, townhouse, duplex or single-family home, maximizing income is always a high priority for any investor. A routine property check is vital to maintaining your rental, but it won’t necessarily get you top dollar when competing against other properties on the rental market. Doing the minimum will usually lead to minimal returns in terms of money and time of tenant occupancy.
Here are a few tips for maximizing the ROI for your rental property:
Market Your Property Well
How you market your rental determines the number and quality of applications you receive for your property. There is a number of marketing strategies you can use to increase exposure and get more tenants.
Look for different real estate investing websites and list your property on more than one platform. The internet is the first place tenants search for properties so be sure to strategically market online.
Depending on the location and type of rental property you own, you can also target a specific group of tenants that may be likely to rent out your property such as university students if your property is near schools, or employees if your property is near businesses.
Carefully Screen Your Tenants
Choosing qualified tenants to rent out your property is vital to maximizing the ROI of your rental. Having an unqualified tenant can cause problems and can be one of the most draining mistakes any property owner can make.
In your screening process, include a background check, verification of income and employment, rental history, criminal check, and reference check. It’s better to be safe than sorry when renting out your property.
It all starts at the curb, the first impression of a home and a spot most investors neglect. Many forgo the fresh coat of paint, leave the dilapidated fence up, forget to wash the driveway, and spruce up the yard. This is not a good sign of potential renters and is a reflection of how they see your maintenance style.
While some property maintenance is generally out of your hands when it comes to condos or townhouses, you have to ensure your monthly homeowner fees are put to good use and funds are allocated to exterior maintenance.
Making Smart Upgrades and Updates
The most important areas of the house to good tenants will be the kitchen and the bathrooms. You don’t have to do complete renovations of these areas, but make sure you take care of little details that renters will find appealing.
Invest in good, high quality, matching appliances as it is among the first things a renter usually looks at after entering a potential new home. Older appliances may require unending maintenance and will cost you more in the long run.
A little paint goes a long way, and fresh paint on the walls and cabinets will make your rental look new and welcoming. Use neutral colors that will match any furniture that your incoming tenants may have.
Investing in higher quality light fixtures, adding new ceiling fans, upgrading all faucets will give the rental property a more polished pulled-together look. Tenants notice door handles, locks, and window blinds. If your condominium is set up with a laundry area, you can add a washer-dryer set to increase the value of your property.
But remember— don’t spend a lot of money on upgrades that won’t earn you more money.
Decrease Vacancy and Minimize Turnover
Find quality long-term tenants that take care of your property and pay consistently. When you find these people, do what you can to keep them. Keep in mind that rent is not the only factor that keeps tenants from moving out. The other key is customer service.
Whether you personally manage your properties or have a property manager, make sure your tenants feel respected and heard. If your tenants inevitably leave, start posting ads and spreading the word about your vacancy the minute you get a word in order to keep the transition period to a minimum.
Increase Rent Strategically
Tenants may be more loyal if they can’t find lower rent elsewhere, but this doesn’t mean that you should never raise rents when you have good reason to do so. Moving costs tenants money too. If the value of their current rental is significantly better than the value of a new rental plus the cost of moving, you still have the upper hand.
Do a little research on other rentals in the area by checking out sites such as Locanto.ph, OLX, or Lamudi. You may find there is room to increase your revenue by, say, 1-3% every year, while still remaining competitive.
Consider the following: let your tenants know about an increase in monthly utilities and amenities fees, and have that coincide with an upgrade to your property. For instance, you may plan to upgrade the windows from single to dual pane. If you schedule the work to coincide with a lease renewal, the tenant feels they are getting something out of the deal. You may even ask your tenants what they would like to have upgraded. Not only are you increasing rent, but you’re also increasing the market value of the home. In other words, make improvements that are necessary for maintenance or have an immediate return on investment.
Add Revenue Stream
If you look close enough, you’ll find there are many opportunities for profit. Offer extra house cleaning, landscaping services, or mineral water delivery to tenants. Many people will be happy to pay for something they’d otherwise take on themselves. You can negotiate the rates with suppliers, contract them out, and collect a fee as a contractor.
The benefits of upgrading your property extend beyond appearances. It will maximize your rent, improve your return on investment, and increase your home’s value for when you may want to sell. Most importantly, it allows for a healthy relationship between you and your tenant. In such an active and competitive market, you need to find ways for your property to stand out in the listings. Quality upgrades will get your rental filled fast and maximize the income on your investment.
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