The purpose of owning an investment property is to earn rental income while the asset appreciates in value. The best way to make the most money from renting out your home is by paying attention to two things: pricing and maintenance. It also helps to work with a professional property management company. Smart investors know that having an expert protecting and promoting your property is a great way to increase its value.
Pricing Your Property
The rental price you attach to your property will have a huge impact on how it performs and how much you earn. You want to price the home aggressively so you earn as much rental income as possible, but you also want to be competitive. A price that’s too high will leave your rental property vacant, and vacancy is expensive. Get to know the local market and do a comprehensive comparable market analysis so you know what similar properties are renting for in the area. A fair price will attract excellent tenants and it will ensure you don’t miss out on several months of rent because you’re determined to get a higher rent.
Maintaining Your Home
Many landlords are hesitant to spend a lot of money on repairs and maintenance because they worry about how it will affect their cash flow. It’s important to think long term. You want your property to grow in value, and it will only do that if you’re keeping up with the home’s maintenance. Put together a preventative maintenance schedule that will ensure the systems and structure are inspected regularly. Train the tenants to change air filters, look for slow leaks and report problems immediately. If you do regular inspections of your property, you’ll be able to look for small problems that can be taken care of inexpensively.
If you’re willing to properly price your rental home and take maintenance issues seriously, you’ll have no problem earning a healthy return on your investment. Contact us today to talk about how we can maximize the potential of your rental property.
4 Common Mistakes Landlords Make
Some of the most common mistakes landlords make are due to a lack of experience or knowledge. Successful rental property owners need to screen and maintain the home in order to manage it effectively. They’re also required to know and understand the laws and pay attention to the local rental market so they can price the property correctly and have a grasp of what tenants are looking for when they rent. These are the four most common mistakes landlords make, and how you can avoid them.
Inadequate Tenant Screening
If you don’t screen your tenants properly, you have no idea who you’re letting into your property and what they’re capable of. Make sure you take the time and invest the resources into thorough tenant screening. At the minimum, you need to conduct a background check, look at the credit report, verify employment and income and talk to current and former landlords. Good property managers will go even further by pre-screening tenants before they even take the time to show the property. If you aren’t able to complete full national criminal background checks and you don’t have access to national eviction records, work with a property manager or a leasing company that can help you gather this information. Inadequate screening can be a very expensive mistake.
Lack of Legal Knowledge
Another potentially expensive mistake is not knowing or understanding the national, state and federal laws that govern your rental property and your relationship with tenants. These laws change and evolve all the time, and if you don’t know what they are – you put yourself in legal jeopardy and financial liability. Fair housing laws are especially complex, and many landlords violate them without intending to. You need to make sure you educate yourself on the legal requirements of being a landlord, and you need to keep all your systems and procedures consistent and compliant.
If you don’t keep up with maintenance on your rental property, you run the risk of upsetting your tenants. You’ll also see your property decrease in value if the condition deteriorates. When a repair need is reported, take care of it right away so your tenants know you are responsive and accessible. Take care of preventative maintenance issues so small problems do not become expensive problems. Ignoring maintenance requests and putting off repairs are mistakes you cannot afford to make.
Improper Rental Prices
Pricing your home correctly depends on the market and your competition. If you have had the same tenant in the property for five years and you haven’t raised the rent, you’re probably losing money. If you insist on earning a certain dollar amount in rent every month and you refuse to budget, you’ll probably have a longer vacancy, which is also a huge expense. Know your market and how your property fits into it so that you’re earning the maximum rent you can while keeping your price competitive.
These are just four of the mistakes we see landlords making all the time. If you’d like to learn more about how to be a more successful landlord, please contact us at firstname.lastname@example.org or call us at 651-964-3812!