As a real estate investor, you want the highest return on your long-term investment.
Owning a rental property is costly and raising your return on investment (ROI) as much as possible is essential to making the time and money you put in worthwhile. To effectively raise your bottom line, you need to lease fast, lease well, raise pricing fairly, and conduct preventative maintenance.
Here are 10 ways you can manage this and more to make the most money from your rental as possible:
1. Bring up your Curb Appeal.
Nothing affects your home value quite like aesthetics. The way your home looks from the outside sets tenant expectations and impressions, and they will be quick to judge.
That’s why you need to make all the simple improvements you can to the exterior of your property to keep it looking top-notch. Keep the siding clean and the paint fresh. Paint the front door a fresh, fun color. Mow and trim the lawn. Replace or hedge dying or overgrown flora.
A neat exterior will give tenants the right impression, keeping quality tenants interested and ready to pay more in rent for a higher value property.
2. Create Quality Marketing.
You want to showcase your good-looking home to as many people as possible. Good marketing means ensuring excellent tenants who will care for your property and make you money, and this takes a lot more than a sign in the yard.
Start by taking quality pictures. Nowadays, this isn’t too hard—newer phone cameras can take photographs in stunning definition, but you still need to understand some basics about framing and lighting. Find some images of homes on the internet that stand out to you and try to replicate them with a quality camera.
Then upload these images along with a carefully curated and proof-read description of your home listing on all the listing sites you can. Check out Zillow, Craigslist, or Apartments.com, just to name a few.
The keyword in marketing your property is quality. Create a quality listing with quality images and you’ll be guaranteed to find interested renters even at higher prices.
3. Set Competitive Pricing
Now you need to determine pricing. The rent price can make or break your ROI, and you want the most you can get without losing money during long vacant periods.
That’s why you need to start through comparison. Explore similar properties in the area on Zillow, Craigslist, and similar popular listing sites to get a good idea of what people are willing to pay for a property like yours. What does your property offer that could be leveraged for a higher price? Factor these into your calculation and aim just a little high.
You want to start high since it’s easy to adjust pricing downward. If you list your rental and no one is reaching out to you, you know you’ve gone too high. See what you can get, but don’t experiment too long—the longer your property sits empty, the less your ROI.
4. Sell Quality
Once your quality marketing has caught the interest of some quality renters, you need to focus on the interior of your property for your upcoming showings.
If you haven’t already, professionally clean the apartment if at all possible—a spotless, beautiful property will automatically raise the worthwhile value for the tenants while setting expectations for them on how the property should be maintained.
Next, you want to make that property as inviting as possible. Open the blinds to bring in natural lighting. Freshen up the home with simple and subtle scents that any potential renter will find pleasant and inviting. Offer some baked goods.
You want to showcase a quality home and present a memorable experience. Consider giving the potential tenant a small gift like a gift care to local restaurants or discounts to partnered businesses.
By giving the prospective tenant a pleasant experience, you’ll leave them wanting to give back through signing that lease.
5. Screen your Potential Tenants.
Nothing cuts into ROI quite like problematic tenants. Damages to your property and the cost of an eviction will set you back, so you want to be as sure as possible upfront that your tenants aren’t the kind of people who will neglect paying rent or mistreat your property.
That’s why screening through background checks, rental history checks, and employment checks is so important. Can the prospective tenant pay rent? Are they making around three times the monthly cost of rent in income? Do they have any past evictions? Why?
You need to answer these questions to find the right fit. A quality tenant will take great care of your property while paying rent on time—that’s a relationship worth the time and effort it takes to find.
6. Offer Additional Services at Additional Cost.
You’ve laid the groundwork and have interested—or even signed—tenants. Now how do you keep that ROI rising?
The answer: offer additional features at an additional cost.
For example, consider opening up your listing to allow pets—with the stipulation that the tenant pay a fee for pet rent.
This is a great way to expand your list of interested tenants or increase the income generated from existing tenants. People love pets and will be willing to pay extra to share a home with a lovable, furry creature.
Allow pets in your property with a pet deposit and pet rent to offset any potential damages while still generating much more in income.
Then, consider offering other services and options to your tenants, such as: higher-cost month-to-month leases, lawn services, laundry services, or home improvements. Your options are only as limited as your imagination.
7. Raise Rent at Lease Renewal.
Your tenant may not like it, but it won’t exactly come as a surprise either. At lease renewal, you need to be raising the rent at least to offset inflation, then to adjust for market changes.
A lot can change in a year, and it pays to once again research the area and compare rent prices of similar homes. Create the expectation even at the original lease signing that rent will increase in the following year, even if that amount is small. This will keep your tenant satisfied even when they see the new number.
But don’t raise the rent too much. If you already have quality tenants, increasing the rent by much more than a single-digit percentage could lose them and leave you marketing once again. Time the property is left vacant is money lost, so consider risk when calculating an appropriate increase.
8. Conduct Regular Inspections.
Nothing will save you money like preventing disastrous maintenance issues, and the best way to do that is by scheduling regular inspections.
Keep a schedule of maintenance tasks that need a check-up, then hire inspectors in advance. You can provide your tenants an itinerary of when to except inspectors both to provide them the courtesy of notice and let them know to keep an eye on certain aspects of the property.
Along with inspections, schedule regular maintenance tasks you don’t want the tenant responsible for on their own. Replace furnace filters, clean gutters, and maintain HVAC systems consistently.
And when an inspector comes to you with a suggestion, follow through on it.
9. Replace or Repair Before it Breaks.
Preventative maintenance will lower your expenses. Despite how you may feel about a costly expenditure at the time, you will save money in the long run by going forward with that repair or replacement before it becomes a larger problem.
If possible, try to align these replacements with tenant turnover so your tenants don’t have to suffer the inconvenience of much work being done in their home. But do not put off needed repairs for long.
Consistent and effective maintenance is essential to keeping your tenants satisfied enough to renew their lease. They won’t stand for living in a property that is falling down around their ears and property management that doesn’t respond to their requests in time.
Avoid these problems by conducting maintenance before problems occur. But since that can’t always be the case, you also need to actively communicate with your tenants and respond to their problems and concerns.
That brings us to our final tip for increasing your return on investment:
10. Be Accessible to your Tenants.
Tenant satisfaction—and thus higher rental values—hinges on property management that is open and responsive. No tenant wants to feel like they are talking to a brick wall when attempting to reach management with a problem. That’s why you need to make contact accessible, friendly, and personal.
Your tenants will likely only contact you for two reasons: to pay the rent or to make a maintenance request. Since these are two things no one likes to do, positivity and friendliness is a must. You are providing a service, after all.
Consider ways you can make tenant experience positive so that your tenants see you both as approachable and caring. If disruptive maintenance or a management error occurs, think of personal ways you could offer them consolation without necessarily giving them a rent discount.
Who are your tenants? What do they like? What do they need? Think of stores or restaurants they would appreciate and throw in a gift card as a yearly on-time rental bonus or a consolation for a lengthy maintenance process.
This can be a great way to show you listen and care while keeping your costs low and your ROI up.
Rake in a Higher Rental Income
As long-term investments, rental properties require constant dedication to maximize returns. Through diligent work in presenting, marketing, occupying, and maintaining your property, you will see your returns increase with every year. Effective management of your property will cut costs, raise rental values, and keep your best tenants wanting to renew their lease each year, making your investment worth every dollar.
For more tips on maximizing returns for your rental property, contact 208.properties today.