A rental property is an excellent investment, especially in hot real estate markets like the west coast or central, yet bustling metropolitan areas. You’ll find all sorts of advice about purchasing property and quickly increasing that investment on TV and online too. Unfortunately, blog posts that take minutes to read and edited TV shows often fail to show the true amount of labor involved in having a profitable rental.
Don’t get swayed by misleading fixer-uppers. Instead, follow these tips to make your rental property truly profitable.
“Rental property is an excellent
investment, especially in hot
real estate markets.”
Being a landlord is a job, not a hobby
While many people enjoy viewing property listings and envisioning how to fix up that house next door, being a landlord requires additional effort that doesn’t always fit into that daydream.
Renting a property requires you to provide a livable space for actual people. You’ll need to follow local laws regarding utility use and payment, maintenance, inspections and more. While a hobby is often something you do on your own time, being a landlord requires you to work on the timelines of your renters and local government.
Understand the costs associated with rental property ownership
The best way to create a profitable rental is by understanding the costs associated with owning and operating that rental.
Standard owner costs include getting the property up to code by replacing worn carpets and appliances, as well as repairing needed plumbing, electrical and roofing issues. New paint and repairs can be expensive, so having a solid estimate of costs upfront can help you maximize that budget. Don’t forget the need to clean your rental after renovations or between renters.
You’ll also need to take into account the fees and costs of rental ownership itself. Utilities must be paid as long as the power and water are on, whether or not you have a renter. Your rental will be subject to property taxes as well as additional taxes associated with owning an investment property. Depending on your finance options, you may have mortgage associated costs too.
The key to managing the costs of property ownership is understanding the associated costs and preparing for these expenses.
Remember time is money
You’ve heard it before, but it’s true. The time you spend working on your rental is worth money. What’s also true is that the time your rental remains vacant will cost you even more money. The best way to maximize the profit from your rental is to find and retain reliable tenants.
Hopefully, you’ll be lucky and attract some great tenants right away. Referrals and word of mouth can be great resources in sending the right people your way. If you don’t have reliable renters knocking down your door you’ll have to advertise your openings and verify the prospective renters who respond. You want your rental to be occupied as much as possible to increase the return on your investment.
Don’t be afraid to ask for help
Attracting new leases will require a point-of-contact for tenants from advertising to ongoing rent and maintenance. Usually manageable with a small number of units, this can quickly get intimidating if you have a multi-family property — or even if you have a full-time job. Don’t be afraid to call in help when you need it.
A property management company can help property owner maximize the return on investment by dealing with many of these issues for one price, taking you out of the equation entirely.
You can also look for solutions that outsource just part of the rental property labor. If you’re handy with a hammer but hate paperwork, consider hiring a property manager or accountant. If maintenance isn’t your deal, you may want an on-call handyman instead. Customize a solution that maximizes your time and investment.
Have you invested, or considered investing in, rental property?
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