If you own rental property, then you want to make sure that your investment is solid – and that means getting the best return on investment and earning the maximum. With an average ROI of 6% to 10%, there is potential for doing well. So, whether this is your full-time job or a method of passive income, you want to take steps to have a healthy ROI.
Tip: If you need to calculate your rate of return, use this formula:
1. Monitor Rental Rates
The rental market fluctuates. If you have long-term tenants and fail to increase your rental rates to match that of the local market, then you could be missing out on funds. Even if you don’t have long-term tenants and you put your property up for rent, always do your research to make sure your rental rate is comparable to others in the area.
Cheating yourself out of money by not taking the time to do this is an easy way to decrease your ROI.
2. Test Your Tenant Screening Process
The idea is to find high-quality, long-term tenants. This reduces the risk of damage to your property and decreases the frequency of having to clean and repair the place for new tenants. It also saves you time and money both of which will positively impact your ROI.
3. Help Future Tenants See the Value
If you want to keep your vacancy rates low, you need to know how to market your property. In addition, you need to help these future tenants see the value by the way you market it. They need to feel like they are getting a rental with great value if your rental fee is on the higher end. For instance, if your rental has a tiny bedroom, rather than calling it an extra bedroom, market it as a home office. In the world of COVID when so many people are working remotely, this home office is going to be valuable.
4. Maintain Your Property
Care for your property so that it always looks its best. Do some landscaping, perform small upgrades, add a new coat of paint or new flooring. These little steps can increase the marketability of your property and give your ROI a boost.
5. Hire a Property Manager
All of these things we talked about above that will increase your ROI are things that a property manager does regularly. They are up-to-date on the local markets, know just how to entice renters with your property, have a top-notch (and tested) tenant screening process, and have a team that regularly cares for your property keeping it in great shape.
If you have a property manager handling your property then you can focus on even more investments – and this is a great way to expand your portfolio and earn more money.
Make smart decisions with your rental property investment and monitor your ROI. If you find it is not where you’d like it to be, perhaps it is time to make some changes.
