How to Maximize Rent & Profit Against Rental PropertiesWritten By: mcsherryproper on December 27, 2020
Suppose you are a property owner or are engaged in property management in Willow Grove, Jenkintown, Eastern Montgomery, Bristol, and the surrounding areas. If that is the case, you’re probably constantly thinking of maximizing the rental properties’ profitability under your care.
In addition to screening, you’re also in charge of essential activities like repairs for small business office spaces for rent, commercial places for rent, or commercial property rentals.
Whether you have a three-bedroom house for rent or a two-bedroom house for rent, the game of maximizing profit remains the same. Thinking ahead improves your chances of overtaking overhead expenses and improving the overall outlook for the year. Below are some ways to accomplish this.
Take Care of the Property
Care of a property might cost money, but in the long term, it will make up for all the expenses you’ve incurred in maintaining the quality of any property that you own or manage. Landlords, in particular, should have a clear plan for regular maintenance and preventive maintenance.
Filters of all HVAC units should be inspected and replaced when needed. Some landlords are notorious for avoiding the replacement of filters, but mechanical failure is imminent if you don’t do it. Clean HVAC units also reduce energy bills and fewer (or sometimes virtually no) repairs in the long term.
Residential units will have better value overall if old and worn flooring is fixed or replaced. Fixing the flooring of a rental property might even increase the rental price.
Leaks and other common issues should be fixed ASAP. Don’t allow broken plumbing and electrical issues to continue the moment they have been reported. Waiting to repair these issues will cost more money in the long term, and we are always after reducing the costs of repair.
Keeping a property in top condition will encourage tenants to do the same. It’s their responsibility, yes, but who doesn’t want to keep a pristine home as pristine as possible? If your tenants do their bit in keeping a property in good condition, tenant-turnover costs can be substantially reduced, too.
And lastly, keeping a property in top condition doesn’t just maximize profit and increase rental value – it also lowers overall risk. Maintain compliance with building codes, and you can guarantee tenants that all major risks while occupying the property are greatly reduced.
Monitor the Rental Market
The rental market fluctuates, just like any other index of value. By knowing the market fluctuations, you can adjust your rates and ultimately improve your income from rentals.
The rental rate must make sense, and it should be reasonable for tenants and profitable for the landlord (of course). If this is your first time to rent out your property to tenants, we recommend checking the price of similar properties in your area first.
If you don’t rent out your property year-round, you can get the best rental prices during the peak season, which is summer. As the demand for rentals mounts, the price also steadily increases during this period.
If you advertise your properties online, it is only reasonable that you update your rental prices when the rent increases. Renovation and the addition of new appliances should also reflect in the prices. Large-scale improvements in a property should result in a higher rental price so you can recoup the cost of the renovations and improvements.
Always Have a Written Rental Agreement
A well-written rental agreement benefits both the tenant and the landlord as it can be used to avoid pricy legal battles.
It is the best way to ensure that guidelines are enforced, and the rights of both parties are protected. Written rental agreements are especially useful if the tenancy period is below 12 months. Oral agreements are acceptable, but they carry plenty of risks for obvious reasons. Your best recourse as a landlord would always be the written agreement, a standard in property management.
Another important function of the rental agreement is that it clearly states in black and white the tenant’s financial expectations and obligations. By financial expectations, we refer to details like the tenant has to pay for gas and other utilities once he occupies the property.
While seemingly insignificant because they have entered common oral agreements between private citizens for decades, these smaller details may result in some instances when you will incur extra costs because the detail wasn’t written down.
Written agreements should also be written down, with the proper terms, and customized for each property and tenant. By mitigating the common legal risks involved in renting out your property, you will make more profit in the long term.
Consistently Enforce Rules
In the context of making your rentals more profitable, you have to enforce late fees at all times. This is done to motivate your tenants to be financially responsible (within reason, of course) and to pay on time. COVID-19 has shown that well-screened tenants can still pay on time, and the ones who can’t (temporarily) will cooperate with property management firms with a reasonable payment plan.
The implementation of penalties and late fees ensures that, for the most part, you will receive money on a certain date. Tenants will take advantage of landlords that do not regularly enforce rules. To maximize your earnings from your rental properties, you have to ensure that tenants respect your rules, foremost.
Make Payments Easier
Online payments are a boon to landlords everywhere. While cash is still important to the unbanked and certain segments of society, for the most part, you need to convince your tenants to switch to electronic payments – it’s for their good and their convenience. Offer incentives or raffles to encourage them to pay on time using online payment portals. This way, there are fewer reasons why a tenant won’t be able to pay on time.