Investing in rental properties can prove to be a lucrative investment. Property value increases each year, after all. Moreover, Bergan & Company, an experienced team of rental property managers in Denver, says that passive revenue from your rental property can give you peace of mind knowing you have spending money for emergencies.
If you’re looking to improve the profit of your rental property investment, make sure not to get ahead of yourself. Pour your attention to optimizing the rental operations and making your current portfolio as lucrative as possible first, rather than expanding it immediately.
Reduce Vacancies and Turnover
Property vacancies and turnovers cost you money. A high turnover rate requires you to re-advertise your property, possibly remodel or repair, and conduct more property showings.
Finding long-term tenants is an excellent way to reduce your vacancy and turnover rate. So, focus on the needs of your target tenants for a better marketing strategy. Once you get your ideal tenant, remember to foster a good landlord relationship with them.
Take note that rental vacancy rates were just a little over 25% in 2016 — showing higher demand for rental properties. If you have consistently high vacancies despite all your efforts and the market trend, you might want to check how you are running your rental property like whether your rent is competitive.
Be Vigilant with Rent Collection
Collecting rent, as well as late fees and other payments, might be difficult. It is an essential part of the business, however. You won’t make a profit if you don’t receive your rent, after all.
Make sure you have a contract with your tenant to keep everything clear and above board. Specify the amount to be paid per month, the late penalties if they can’t make the payment, and any other fees you would require. Make sure to state the terms of eviction clearly, moreover.
Lastly, a close relationship with your tenant is not a good reason to let them get away with not paying rent on time. Be polite and courteous, but remain firm about the agreed upon contract.
Partner with a Reliable Property Manager
If you’re having a hard time managing your property on your own and keeping up with your job, consider working with a property manager. Hiring a person or firm to manage the rental logistics of your property can save you money down the line.
A property manager or realtor can arrange the marketing, online listings, and showings of your property. They can also take care of rent collection, contracts, and even run background checks on potential tenants. Your property manager can also advise you regarding your price point and provide you with resources to set a competitive rent.
Buying property to rent out is a good investment. However, you need to pace yourself; balance your property portfolio expansion with keeping a streamlined operation. Remember: one efficient operation is better than two inefficient ones.