Are you a property owner who is seriously interested in maximizing your rental income and improving your financial portfolio? You probably are. And you’re probably reading this because you want to learn how to maximize your rental income. All property owners go into this business in order to grow their rental property portfolio and improve their overall success in the rental property business. While there is no clear cut manual or guaranteed guidelines to follow that can promise you a sure win, you can increase your chances by growing your business portfolio. A quick tip is to start off by investing in new properties while managing and maintaining your existing tenants and properties. How do you build success? Read on for some quick tips to simplify rental property management and maximizing your rental income.
How do you keep growing?
In order to grow your rental portfolio, you must be able to generate ongoing income from your rental properties. In this case, diversity and scale are the keys for driving continuous growth. Property Hawk advises that “Investing in a large portfolio with multiple selections of houses and flats is the key to maximizing a landlords potential property profit.” To put that into perspective, if you have 2 rental units and one of them is empty, that means half of your portfolio is not generating income. Whereas, if you have one hundred rental units and one of them is empty, a very small percentage of your rental units is not earning income.
When you are starting to grow your rental property portfolio, it is best to take the snowball approach where, like a snowball, you start off small and snowball into something bigger as you gain momentum. What you do is to take any income and savings (like tax deductions, savings on repairs, etc.) from your first rental property investment and then put that towards getting a new rental property investment. Keep repeating this process until you achieve your goal. Each time you get a new rental property, your income grows a bit more and buying the next new rental property would be easier.
A tip for building a rental property management portfolio
A good way to be able to be able to acquire a larger number of rental properties in one go is to invest in multi-family rentals. Of course, this will be a more expensive investment right off the bat. But if you have the resources to pull this off, you will get more rental units to start with. In an article from Vertical Rent, they explain that “You cannot possibly get this type of return with a house and you also can’t possibly acquire so many rental properties so quickly unless you go with this type of a strategy.” After all, if you start with this strategy, you already start off having all your rental properties in the same location, having the same landscaping and maintenance needs, and with the same needs for exterior renovation.
Another tip from them is to invest in older properties that just need a facelift as they have a huge potential to give you the best return on your investment. Go for well maintained but basic properties or well maintained, attractive properties.
Over the past couple of years, the rental property market has enjoyed success and rental prices have increased quickly, with players enjoying a healthy return on investment. According to the 2016 US Census, the number of renters has increased by more than 23 million, and that of homeowners by less than 700K. Right now, the growth of renters outpaces the growth homeownership, which has remained virtually unchanged. The rental property market is booming right now, with more and more people deciding to rent instead of buy. If you plan on this course, you are sure to have an eager market.
Key performance indicators for your rental property portfolio
In order to measure your progress and know that you’re improving, you have to define your key performance indicators. Here’s a good KPI guideline from Landlord Journal. You can create your customized set of key performance indicators from these:
● Losses from lack of rental income. You need to know who’s not paying, what units are vacant, and what percentage of your properties suffer from these problems each month.
● Turnover. How often in a year will your rental units turn over? Each new tenant comes with a cost, and you need to keep this low.
● Time spent finding new tenants and getting ready for those tenants. How much downtime do you have in your rental units? This is the time that you may not be getting rent.
● Cost to maintain each unit.
Take a close look at these KPIs to determine the true cost of each of your rental units and also to determine any areas that should be of concern. For example, a rental unit that proves difficult to rent out may need a closer examination. You can factor the vacancy cost into your rent, advertise aggressively, or decide to invest in a different property that would be easier to rent.
Get help from a property management company
Buying multiple investment properties right away isn’t an option that is available to everyone. First off, you would need to have the funds to pull that off. Most people start small and snowball from there. Then they get to a point where they have enough rental properties to ensure their financial success.
You’re probably here because you’re serious about maximizing your rental income and growing your financial investment. You’re here to learn the tips and tricks of the trade. Aside from reading property management articles that are available on the web, you also have the option to enlist the help of property management companies. By working with a trusted and competent company, you can leave the persnickety details of management to your preferred property management company. Details, like finding new tenants, doing background checks, progressing applications, collecting rent, and maintaining your rental properties, can be left to your property management team. In the meantime, you can concentrate on building a strong investment portfolio.
At Davis Property Management, we can help you grow your rental property business and maximize your rental income. We also have a wide range of services to fit your needs and make building your investment portfolio simple and enjoyable, too. Call us today.