Maximizing the return you earn on your rental property investment depends on keeping your rental income high and your costs low. When it comes to managing expenses, there are a few things you can do to contain what you’re spending on your rental home. We’re sharing those with you today, and our number one piece of advice is this: don’t be short-sighted. The most successful and profitable real estate investors understand that this is a marathon, not a sprint. You’ll need to be patient and stay focused on the long term.
Buy Investment Properties Strategically
When you’re looking for the right opportunity, remember that you’re not buying a home that you plan to live in yourself. You don’t have to fall in love with the property. In fact, it’s better if you don’t feel any emotional attachment to it at all. Maybe you insist on granite counters and garden bath tubs in your own home. Those things are not necessarily in the rental property you’re buying.
When you’re looking for an investment home, look for the type of property that tenants in your area will be attracted to. You need to shop with potential renters in mind if you want to keep your vacancy expenses low.
Another thing to be careful of is the fixer upper that comes with such a low price. Sure, you won’t have to spend as much to buy the home, but fixing it up will always cost you more than you expect. It will also take you longer than you anticipate, which means it will be a while before you have any rent coming in. Find a home in good condition that requires only cosmetic upgrades.
Run the Numbers and Do Your Math
When you buy a rental property, you want to rely on some cash coming in right away. Even if long-term appreciation is your ultimate goal, make sure your rental property produces income right away. Otherwise, you’ll have a lot of catching up to do, and the ultimate profits will be uncertain.
There is no way to get rich quick when you’re buying and renting out property. It’s going to take time. But, you don’t want to find yourself losing money right out of the gate. Buy an affordable home that the average tenant will want to rent. Stay away from anything outside of the norm, no matter how interesting it is or how great its potential might be. Make decisions based on estimated rental value, vacancy periods, tax benefits, and other factors that can be measured and evaluated.
Focus on Tenant Retention
Vacancy and turnover will increase your expenses in dramatic ways. Look for stable, long-term tenants, and then keep them. When you have high tenant turnover, your costs go up. You will lose rent while you’re looking for another tenant, you’ll have to take care of maintenance and repairs before a new renter moves in, and you’ll have to spend time and money on marketing, showings, and tenant screening. Tenant retention is a good strategy for keeping costs low and revenues up.
Think Professionally, Not Emotionally
The most important thing you can do to save money as a real estate investor is to think of your rental property as a business. That’s what it is – an income producing business. Don’t get emotionally involved with your tenants or your property. If your tenant stops paying rent, follow the process that’s in place to evict. When rent is late, charge the late fee every time. Be consistent. You want to be professional with your tenants, but you don’t want to be their friends.
These are a few tips on how to save money with your investment property. We’d love to tell you more, so contact us at Rosenbaum Realty Group.