How to Keep Your Rental Property in Top Shape for Max Profits

Generating long-term income from rental properties is a great wealth-building strategy, but you have to devote time and attention to your tenants if you wish to achieve your profit potential. You have to operate as a landlord and be on call for anything that comes up, including repairs and random problems.

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Real estate investing isn’t a hands-off business – unless you hire a property manager. For instance, Green Residential property managers in Housten, Texas handle landlord duties for their clients, which enables the latter to become more profitable.

If you don’t retain a property manager, though, it’s all going to be on you. Assuming your goal as a real estate investor is to maximize your profits, here are some ways to get there.

Hiring a property manager is the best way to maximize your rental property income. When you don’t have to perform the duties of a landlord, you’ll have more time to acquire further rental properties, explore new possibilities such as commercial real estate, and work on your overall investment strategies.

You’ll also have more time to research the local market and judge when to raise the rent and when you may prefer to sell your investments if they aren’t making the cut. You can hire an individual manager, but if you have more than one property – or multiple units – it’s better to hire a professional property management company.

You can’t always rely on your tenants to report problems. That’s the reason regular inspections are critical.

You’ll have to check your local laws in order to schedule and perform your inspections legally, but by no means should you skip them. Forgoing inspections may cost you some serious money in preventable repairs when things go wrong.

Regular inspections don’t have to be frequent. If you perform inspections too often, you’ll annoy your tenants. Regular inspections may be performed every four to six months, depending on the need. For instance, if your property is exposed to harsh weather, such as heavy snowfall in winter and heavy rains in the spring, it might be smart to perform structural inspections every four months.

Tenants are accustomed to their landlord raising the rent. It has to be done at some point, so don’t hesitate to do it when it’s warranted. Just make sure you set the new rates in compliance with the tenant’s lease. Experts say a 3 to 5% increase is reasonable.

It’s understandable if you hope to keep long-term tenants by offering them a discount on their rent, but you shouldn’t make it too good a deal. You bought property to turn a profit, and every month you give a tenant a deal, you risk losing money.

Let’s say the market rate for your property is $1,800/month, but you’re charging your tenant only $1,200/month. In effect, you’re losing $600/month, which amounts to $7,200/year. After ten years, that would represent a $72,000 loss. If you lose $600/month on, say, five properties, that’s a $360,000 loss over ten years.

If you’ve felt the need to keep rent low to attract and keep your tenants, consider the possibility that this might not be necessary. Consult with experienced investors about your situation to get their insight, especially if you’re fairly new to real estate investing.

Tenants rely on landlords to handle problems in a timely fashion. Sometimes issues are more pressing than they might appear.

For instance, if a tenant’s toilet breaks and they can’t fix it, it’s crucial for you to get that fixed asap. Not responding to a tenant’s repair request can frustrate your tenants, and might even lead to their breaking the lease or damaging your property.

You should take tenant requests seriously and respond to each request as swiftly as possible. If an issue can wait, at least respond enough to let the tenant know you’re aware of the issue and handling it. From there, you may schedule the task for a later date and your tenant will still feel like you’ve taken care of them.

Another reason to respond quickly is to fix problems before they become bigger. For example, if a tenant reports a leaky roof, it’s critical to get it handled right away, before the leak spreads to the walls and creates rot in the drywall.

The more leverage you can get, the more profitable you’ll become. A property manager will give you leverage by reducing the time you have to spend being a landlord.

Responding to repair requests in a timely way will also give you leverage, in the sense that you’ll take care of issues before they expand into bigger problems. The more you can reduce your workload, the more profitable your properties will become.

Published in: Home advice | Author: Lynn