Few people become landlords without making a profit in mind. They aim to generate rental income and retain a profit after their expenditures. This profit might form part of their retirement nest egg or go toward financing their next property purchase.
However, as a landlord, ask yourself whether you are maximizing the potential profits on your rental property. There is every possibility that you could be making more money from it than you already are. As a wise investor, you are unlikely to turn down a chance to increase your rental property’s profit margins. Here are some ideas to get the most out of owning a rental home:
Monitoring market conditions
Hiring experienced property managers in Denver, Englewood or in any other US city, such as Evernest, Evolve Real Estate Property Management, or Great Heights Properties, have their ears to the ground and can set realistic rental prices based on market conditions. Evernest has an established presence in Colorado, Boulder, Denver, Fort Collins, and Colorado Springs offices. Its professional team is always ready to assist clients in various matters, including advertising and marketing, tenant vetting and screening, repairs and maintenance, and rent collection. Evernest’s experts can help you determine a fair rental price for your home. As a landlord, your alternative is working with large property management companies operating across America, such as the Lincoln Property Co. and Pinnacle Property Management Services.
Determining a fair rental price is challenging for private landlords who know little about the local rental market. Many of them choose to work with local companies where agents have the relevant information and contacts to monitor rental property trends in an area. You might be charging too little for your rental home, thereby cutting into your bottom line. Having an experienced agent assess what landlords charge for comparative rental properties in the area and evaluate yours could ensure you get the best possible rental price.
Repairs and maintenance
A rental home in a state of disrepair will not attract tenants prepared to pay the same price for a well-maintained property. Ongoing maintenance ensures that minor problems do not become massive emergencies that cost a fortune to repair. For instance, regular gutter cleaning costs less than replacing them because they incurred significant damage over time due to a failure to clear them.
A regular maintenance program and prompt response to repair requests help keep your home in shipshape condition. Work with a network of local contractors who provide quality service and workmanship at reasonable rates. Budget part of your rental income for repairs and maintenance and take out rental homeowner’s insurance to cover the costs of unforeseen damages. When your home is looked after, you can charge tenants a few hundred dollars extra.
Tenant vetting and screening
Choosing tenants is easy but getting the right ones to rent your property is somewhat more challenging. If you are too hasty when selecting people to rent your property, you expose yourself to the risk of choosing tenants who will turn into your worst nightmare. They will pay their rent, not pay it at all, cause undue property damage, and become a neighborhood nuisance. Getting rid of them is a time-consuming process that eats into your profit margin.
Give yourself sufficient time to speak to an applicant’s references, including previous landlords and employers. You can determine what type of people they are, how much money they earn, and whether others regard them as responsible and reliable. Run a credit check and examine their credit history to look for irresponsible financial behavior, as it indicates how well they manage their finances and honor debts.
A home’s kitchen and bathrooms are often determining factors in someone’s decision to rent or buy it. Therefore, undertaking renovations in these areas can yield a greater rental profit. People are prepared to pay a higher rental price for an attractive, functional kitchen and bathroom.
Landlords should keep these rooms well-maintained and undertake renovations to make them appealing. However, avoid overcapitalizing when revamping a kitchen or bathroom. Renovations are meant to pay for themselves by earning you increased rental income. Look for cost-effective ways to remodel. For example, you could renovate a kitchen by replacing cupboard doors and countertops without discarding the interiors.
Stick to your guns
As a landlord, you set the rules for tenants and include them in the rental agreement. Do not compromise on these rules, as this is a slippery slope. Once you give in to a tenant request that contradicts the contract, they will expect more from you. For example, if you decide that you do not want pets on your property, do not change your mind afterward and then be perturbed when the animals cause additional wear and tear on your home.
Enforce your rules, including those about late payment fees, without fear or favor, treating all tenants equally. Do not discriminate against some tenants as this could result in a costly contravention of the Fair Housing Act.