Real estate is a powerful way to build wealth. When you purchase a real estate property, you gain two potential sources of profit: you could sell it for more money later on, or you could profit off of the space by renting it out. Or, of course, you could do both.
This isn’t news to owners of income properties, of course. But knowing that you can make money in this way is different from knowing how to maximize profits for your rental property. Here are a few tips and reminders for getting the absolute most out of your real estate investment.
Improving your real estate property
When you buy a rental property, you inherit certain realities. You can’t do much to change the rental property’s location, for instance, and certain other basic traits are difficult or impossible to change.
But you can change a lot of things with the right improvements and investments. Take a close look at your property, and pay particular attention to things on your property that might be damaged or in disrepair. Basic building improvement projects can make a big difference in how your property looks to potential tenants, experts say. New flooring, for instance, can transform a space. We don’t always think of how ubiquitous flooring is, explain experts at a flooring store in Portland, OR, but it covers a lot of square footage in each room and can have a shockingly huge effect on how rooms feel as a whole.
Target high-leverage changes like this so that you can get the maximum return on your investments. Other places to eye in an overhaul include kitchens and bathrooms, which date quickly and can be dramatically improved by simple changes such as replacing and regrouting tile.
Improvements like these can increase the value of your property for a potential sale. In the meantime, they will attract a higher class of tenant.
Target the right tenants
Speaking of tenants, nothing is more important to the value of your rental property than your ability to attract high-paying tenants to your space. So how can you do that?
You’ll need the right property and will need to have it well-maintained, of course. But you also need to track down those potential tenants wherever they are. And, these days, they’re online. More than 90 percent of tenants look for their next home online, so you’ll want to be sure that your rental property is listed wherever they look.
That’s not tough to do. Fortunately for landlords, reliable online apps and websites make it a breeze to advertise rental properties online. You can even set up an online rental application to make it quick and easy for potential tenants to vie for the right to pay you rent.
Lower costs, but do so wisely
Improving your gross income by attracting higher-paying tenants is one great way to improve the profitability of your rental property. But since profit is income minus expenses, income is only half the equation. You can also increase profits by lowering your costs.
Of course, you can’t slash costs indiscriminately. Some types of expenses will actually save you money in the long term. So spend smart.
You should invest in preventative maintenance and immediate repairs to small issues. This will prevent larger costs later on. Neglecting your property is an expensive mistake.
One place where you can easily save is in advertising costs. Use online tools to post your property where tenants will see it. Online tools are affordable and save you time and effort.
Protecting and profiting from your investment
Simple, common-sense real estate management will get you far when you own an income property. Just be sure to protect your space, too. You should invest in insurance, and use online tools to perform background checks and avoid renting to problem tenants.
Owning a rental property comes with a lot of responsibilities, but it can also come with a lot of profits. Good luck!