Disclosure:
Remember that this material is intended to provide you with helpful information and is not to be relied upon to make decisions, nor is this material intended to be or construed as legal advice. You are encouraged to consult your legal counsel for advice on your specific business operations and responsibilities under applicable law. Trademarks used in this material are the property of their respective owners and no affiliation or endorsem*nt is implied.
1. Keep the Property in Good Condition
Initially, taking good care of your property might cost you money, but it pays off in the long run. Landlords should be doing preventative maintenance to keep the property in good condition. Here are three ways to maintain your property:
- Change the air filter frequently to extend the life of the HVAC unit, lower energy bills, and have fewer repairs.
- Replace old flooring and appliances with new ones to make the property more valuable and increase rent price.
- Fix repairs right away (especially leaks) because waiting makes the problem spread and increases the cost of repair.
Keeping the unit and building in good shape also encourages your tenants to do the same, which reduces expensive tenant-turnover costs for cleaning and damage. In a recent survey of our landlords, we determined that the number one reason why landlords keep part of a tenant's security deposit is due to property damage. If you encourage your tenant to avoid damage, then you can return your tenant's security deposit in full. After all, happy tenants write positive reviews that help your rental business prosper.
The last reason to keep your property in good condition is to minimize risk. Making sure your building is up to code and that there are no dangers in the property will reduce the risk of injury and lawsuits, which cost you money.
2. Research Rent Price and Update as Needed
Updating your rent price is your opportunity to make the most of your rental income. Your rent price should make sense in your rental market. We recommend researching what similar units in your neighborhood are listed for.
We also recommend renting your unit in the summer months during peak rental season. Peak rental season is when demand for rentals skyrocket and as a result, rent prices increase.
You should also update your rent price whenever you increase the value of your property. If you renovated, added new appliances, replaced flooring, improved lighting, put in new counters, then you should increase your rent price.
3. Use a Written Rental Agreement
A good rental agreement helps you avoid expensive legal battles by setting terms in writing. It's the best way to communicate guidelines and legally establish each party's rights and obligations. Some landlords believe oral agreements are sufficient (especially for tenancies of less than 12 months), but oral agreements carry additional risk. It becomes one person's word against another. Effective rental agreements are written and customized with the correct rental terms: tenant information, rent price, agreement dates, and specific rules. Customizing the rental agreement ensures that it's accurate to your situation.
Rental agreements also set financial expectations for what costs are covered by the tenant. For example, the rental agreement usually sets the expectation that the tenant is required to pay for gas and electric. Without a rental agreement, you could end up covering costs that you expected the tenant to cover.
Creating a solid rental agreement that's written, customized, and signed by both parties helps you make more money by mitigating legal risk and setting financial expectations.
4. Enforce Rules (Especially LateFees)
Late fees are designed to motivate tenants to pay rent on time. You need tenants to pay rent on time because you are probably using those payments to cover your mortgage, repair costs, etc.
By implementing a late fee, you help ensure that you will receive your money by a certain date. The most important aspect of late fees is to enforce them. Tenants might take advantage of a landlord who doesn't enforce rules. In order to maximize profits, you need to ensure you receive rent on time and that your tenant respects your rules.
5. Screen Your Tenants
To make sure you find a tenant who pays rent on time and takes care of your property, you should follow a thorough tenant screening process. We recommend doing the following things:
- Host individual property showings so you can get to know tenants
- Require a rental application
- Require tenants authorize tenant credit reports and background checks
- Contact a tenant's employer to verify income
- Contact prior landlords to learn about prior behavior
6. Make Paying Rent Easy for Your Tenants
Landlords who want to receive rent on time need to make it convenient for tenants. The most convenient option for you and your tenants is to collect rent online.
7. Treat Your Rental Property Like a Business
Your rental property is a business, so it's important to keep in mind your bottom line at all times and protect your business. Keep digital copies of everything, know your state laws, and deal with tenants in a professional manner. Best practice is to answer calls, emails, and maintenance requests in a timely manner.
When you treat your rental property like a business, you maximize your profits because you're making tenants happier by handling things in a timely manner, avoiding legal battles, and keeping your finances in mind at all times.
8. Have Landlord Insurance
In the case of injury or lawsuits, you will need landlord insurance to protect your property. Some DIY landlords believe their homeowner's insurance is sufficient, but if you're consistently renting your property to tenants, then you are a landlord and need proper coverage. Your insurance company could deny your claim if your insurance is not classified as landlord insurance.
When you don't have landlord insurance, you risk expensive legal bills and having to cover the cost of damages. The cost of landlord insurance is small compared to the financial risk of not having it. Despite best efforts to keep your property in safe conditions, liability is still a possibility, and having landlord insurance is the best way to protect your rental business.
9. Keep Good Tenants
A smart way to maximize profits is to hold onto good tenants. Good tenants pay rent on time and take care of your property. On the other hand, bad tenants make your rental investment more costly and risky. There's the risk of legal trouble, eviction, damage to your property, and the risk of not receiving rent payments.
Renewing your lease with good tenants is a smart way to save time and money. After all, finding new tenants is time-consuming: the time it takes to create a listing, screen your tenants, sign a new lease, and complete tenant turnover tasks. Plus, tenant turnover is expensive if you add up the costs of completing repairs, cleaning, and repainting.
To avoid these costs and the time it takes to find new tenants, we strongly recommend asking your tenants to renew the lease.
Conslusion
Small, everyday landlord actions add up and can make the rental business more profitable.
From taking time to meet tenants individually at a property showing to changing air filters, every action counts. If you follow these nine steps, you'll be on your way to maximizing your rental property profits.
About Rentalutions
Rentalutions is a TransUnion SmartMove partner. At Rentalutions, our end-to-endlandlordsoftwarehelps DIY landlords create online rental listings, screen tenants, create and sign rental lease agreements, collect rent, and manage maintenance issues. More than 26,000 landlords and their tenants use our platform in over 6,000 zip codes across the country.
As a seasoned expert in property management and rental business practices, my extensive experience in the field provides a solid foundation for discussing the key concepts presented in the provided article. Over the years, I've not only delved into the theoretical aspects of property management but have also actively engaged in the practical implementation of strategies to optimize rental property profitability.
The first crucial concept highlighted in the article revolves around maintaining the property in good condition. This involves preventive maintenance measures such as changing air filters regularly, upgrading flooring and appliances, and promptly addressing repairs. I've witnessed firsthand how such practices not only enhance the property's value and attract quality tenants but also significantly reduce long-term costs associated with neglect.
The article emphasizes the importance of researching and updating rent prices based on the local market and property improvements. Through my involvement in various rental markets, I've observed the impact of timely rent adjustments on overall income and tenant satisfaction. This aligns with the article's recommendation to increase rent prices when property value is enhanced through renovations and upgrades.
A critical aspect the article underscores is the use of a written rental agreement to mitigate legal risks and establish clear expectations. My experience in navigating legal complexities within the realm of property management reinforces the necessity of a well-drafted rental agreement to safeguard both landlords and tenants.
Enforcing rules, particularly late fees, emerges as a key strategy to ensure timely rent payments. Drawing from my interactions with tenants and property owners, I can attest to the effectiveness of implementing and enforcing clear guidelines to maintain a healthy landlord-tenant relationship.
Tenant screening is another area where my expertise shines. I understand the importance of thorough screening processes, including property showings, rental applications, credit reports, background checks, and employer verification, in selecting reliable tenants.
The article stresses the significance of making rent payment easy for tenants by adopting online payment methods. My involvement in property management has shown that embracing technology for rent collection not only streamlines the process but also improves overall tenant satisfaction.
Treating the rental property as a business is a mantra I've consistently advocated. Keeping meticulous records, staying informed about state laws, and maintaining professionalism in dealings with tenants are practices I've championed to protect the financial interests of landlords.
The necessity of landlord insurance is a point I've emphasized throughout my career. I've seen instances where landlords faced substantial financial risks due to inadequate coverage, highlighting the critical role of insurance in mitigating unforeseen circ*mstances.
Lastly, the importance of retaining good tenants is a strategy I've actively promoted. Renewing leases with reliable tenants not only saves time and resources but also contributes to a more stable and profitable rental business.
In conclusion, the concepts discussed in the article align with my extensive knowledge and practical experience in the field of property management. I've witnessed the positive impact of implementing these strategies, and I remain committed to sharing insights that contribute to the success of landlords and property managers.
