Whether you’re a new investor or a long-time property owner hoping to maximize your rental income, there are plenty of ways to ensure a good start and keep the success going. The most profitable rental properties share a few qualities that you’ll need to make note of, but focusing on your management and maintenance practices will be key to turning a bigger profit.
Keep reading for a breakdown of some of the best ways to make your rental properties prosper.
1. Choose the Right Property
To get the best possible return on your real estate investment, you’ll need to find the right property. There are key features that make some rental properties more profitable than others. Some of the most important ones to consider before making a purchase are your property’s location and local laws and taxes.
Your property’s location has a significant effect on its performance. You’ll need to research the area surrounding a prospective property to assess its potential. For instance, you’ll need to look into the crime rate, school system, shopping options, and job opportunities in the area. If your property is in a safe neighborhood with convenient access to essential amenities, you’ll be more likely to find and keep good tenants.
As you study up on the location, you should also research the local rental market. Knowing how your potential competition is faring will help you get a sense of the area’s supply and demand, expected rates, and market trends.
Further, local laws and taxes could throw a wrench into your rental plan. Check out the property tax rates in your property’s location and see if you’re still comfortable with the profit you’d receive with this amount deducted. If the taxes are too steep or the location doesn’t offer what your tenants need, you may want to keep looking.
2. Develop Your Financial Plan
If you’re just starting out with real estate, it would be wise for you to spend time developing a strong financial plan. Rental property purchases–especially good ones–are sizable investments. Even if you are able to find a property with all of the right features, there could be financial barriers that get in the way of your success.
You may struggle to find the funds to make your purchase or be unable to turn a good profit in your first few years of operation, which could leave you with a significant financial burden that will thwart your investment’s potential. Thankfully, there are options that can help you finance your property purchase and offer long-term aid. Commercial loans, partnerships, or even syndications can help you put together the capital to make your next big real estate investment.
If you already own a rental that needs a financial pick-me-up, you can benefit from some of the following tips on how to streamline your property management for maximum profit.
3. Manage & Maintain Your Own Property
Once your property is bought and booked, management and maintenance are your biggest responsibilities and expenses. Opting to DIY your property management and maintenance tasks will help you save money and maximize profits by staying on top of what your property and your tenants need.
Being a landlord can be demanding, but you’ll save a lot of money by doing as much work as possible yourself instead of hiring professionals. Start doing minor fixes and improvements like replacing broken fixtures, repairing floors, patching walls, and tending to appliances yourself when possible. If you absolutely have to hire out for bigger jobs–like plumbing or electrical work–you may even be able to deduct those expenses when you file your taxes.
No matter where you are in your rental property investment process, there are ways to make sure that your efforts pay off. Keep these tips in mind as you search for properties, organize your finances, and jump into your management role. In no time, you’ll see your rental income climbing!