Real estate investments are well-known for being lucrative. With monthly cash flow, value appreciation, tax benefits and more all working in your favor, you can potentially make a killing off of your rental properties. However, you may be leaving money on the table in several ways. These are some of the top ways to maximize income from your rental properties.
Reduce Energy Expenses
Many landlords pay energy expenses on behalf of tenants. If you do so, you may have realized that you have no control over how much energy your tenants waste. When they are not paying for electricity themselves, they may be less inclined to conserve it. There are a few ways to reduce or eliminate this expense. You could write future leases so that tenants pay for this service on their own. You could also make the property more energy efficient. Tuning up the HVAC system or even upgrading to a more energy efficient model could reduce energy costs. Sealing doors and windows and adding more insulation to the walls and attic could also reduce energy expenses.
Keep Your Tenants Happy
When a tenant vacates the property, you inevitably have downtime when your unit is not making money. However, you continue to have regular operating expenses. More than that, you also have make-ready and advertising expenses. The bottom line is that turnover costs you money. Tenants may leave for many reasons, and not all of these are related to property management or rental rates. For example, a renter may decide that they are ready to buy a home, or he may have to relocate for business. However, many tenants will leave because their rent was increased, their property is not properly maintained or for other reasons. Do your best to make your tenants happy and to encourage renewals. If you do raise rents at renewal, ensure that the rate is fair and is in line with market rental rates.
Choose the Right Tenants
Screening potential tenants thoroughly is a smart idea if you want to maximize revenue from your property. The wrong tenants may cost you money in the form of extra repairs, eviction proceedings and more. Furthermore, when you choose to lease your unit to someone who only plans to be in the home for six months as opposed to someone who may consistently pay rent on time for the next two years, you may be leaving money on the table. A thorough screening process will guide in the right direction when selecting tenants. In addition, ask leading questions to determine what their future living plans may be, and choose tenants who plan to remain in place for a longer period of time.
Make Some Repairs Yourself
If you are in the habit of regularly calling a handyman or a licensed contractor to make repairs as needed, you may be losing money. Many repair requests from tenants can be properly addressed by you with a little elbow grease and sweat. Gather as much information about the repair needs up-front. Research repair steps if you are unsure how to proceed. If you are not comfortable with the scope of the work that needs to be done, hire a professional. However, shop around for the best rates.
Enforce Fees Strictly
In an effort to make your tenants happy or because you want to be compassionate when tenants fall on hard times, you may not strictly enforce fees. This may be a late payment fee, a fee related to property damage or something else. Your rental property is an investment, and it should be run as a business if you want it to be as profitable as possible. Regardless of the circumstances, enforce fees that your tenants are contractually obligated to pay.
Your ability to properly manage your property will play a major role in how profitable the investment can be. In some cases, your poor management decision may be costing you thousands of dollars per year or more. If you lack the time or skills necessary to maximize revenue in each of these ways, consider hiring a property management company. While there is a fee associated with hiring a property manager, you may actually improve your bottom line overall if these and other related losses are costing you a substantial amount of money each year.