How Landlords Maximize Their Their Profits
Whether you view real estate investing as a way to diversify your portfolio, as a smart long-term strategic move or as a means to provide income for your retirement, being a landlord can be great. Unfortunately, many property owners fail to take full advantage of the business opportunities they have, squandering their profits on needless expenses and losing a significant amount of income along the way. If you want to be a more successful real estate investor, you need to view your property ownership as what it is — a business. Too many owners of rental properties, especially those who are new to the game, see their apartment buildings or single-family dwellings as a sideline, something to be taken care of after work and on the weekends. That approach is counterproductive in the extreme, and one of the biggest reasons real estate investors fail to make the most of their businesses. By viewing your investments as a real business, you can give it the seriousness it deserves. As a businessperson, you want to maximize your earnings and increase your return on investment. There are some important considerations in this regard, each one tailored to the unique world of real estate.
Be Picky About the Neighborhood
Many new real estate investors make the mistake of choosing their properties based on price alone. They scan the local real estate listings until they find a super-cheap apartment building with a steady rent roll, not realizing that the deal comes courtesy of a terrible neighborhood. These newcomers to the real estate game will quickly realize their mistake when they show up to collect the rent, and they will see why the previous owner was so anxious to get out at a bargain price.
If you want to maximize your profits and improve your business, you need to choose your neighborhoods with care. Because a low price is no bargain if property values are falling, you should look for investments in up-and-coming neighborhoods. By taking this approach, you can benefit from a steady stream of rental income now and a significant capital gain later.
Know the Going Rate
If you want to be a successful landlord, one with a low vacancy rate, you need to do your homework. You will not have much success charging $1,500 a month in an area where $1,000 rents are the norm. Just as importantly, you may be flooded with applications if you set your rent at $800 in a $1,200 area. There are plenty of ways to research the local rental situation before you jump in. You can start with the real estate section of your local newspaper, or with a local real estate website. You can also research vacancy rates, average rental prices, and other information online or with the help of a real estate agent.
Make Your Spaces Beautiful
When you are a landlord, you are responsible for the condition of your properties, and that does not just mean chasing away mice and killing roaches. If you want to attract the kind of tenant who pays on time and treats the property with respect, you need to provide an attractive space where they will be proud to live. Making strategic upgrades and decorating the properties in a timeless style are both great ways to attract the type of tenant you want and need. Upgrading the appliances can reduce the ongoing energy bills, a big bonus if you are picking up the tab for utilities. Replacing those ratty old carpets with stylish new hardwood floors can make the property more attractive to would-be tenants, and justify higher rents down the line.
You will have a golden opportunity to renovate and recondition your rental properties each time a tenant leaves. You will need to clean the apartment thoroughly anyway, so why not take the time to pull those old carpets and replace the flooring. You will need to check the appliances to make sure they are still in working order, so why not replace that old inefficient fridge with a new model. Adding a fresh coat of paint is always a great idea. If you are looking to diversify your investments and make more money, a career in real estate could be a great solution. By treating your real estate venture as a real business and treating tenants with respect, you can grow your earnings over time. As you build your rental income, you will create real wealth for the future.