Become More Profitable With Your Rentals

The reason why most people purchase real estate investment properties is not because they have a longing desire to become a Landlord, but rather because they want to achieve financial freedom and real estate allows the average person to more easily achieve this goal.

In fact, when most people think of a Landlord, images of a wealthy, greedy, shrewd, and cut-throat property owner come to mind. However, generally speaking, this is not the case. Most rental properties are owned by people that only own one or two rental properties and are not full-time Landlords. They’re everyday, hard-working individuals that have the foresight and stomach to take a risk on an extremely expensive investment.

So how can you become more profitable with your rentals? In short, by reducing expenses and increasing rents.

Reducing expenses is something that should be addressed at lease twice a year. So how can you reduce expenses? First, think of your highest expense: your mortgage. Do you have a high interest rate? Are rates and/or programs currently available that will allow you to keep more of your money on a monthly basis? If so, this is a way to increase your bottom line. However, make sure you consider all factors such as the cost to refinance compared to your break-even point. This break-even point will be at some point in the future when you’ve saved as much money from your refinance as you actually spent on refinancing. If you plan to own the property for at least a few years and your break-even point will occur in less time than you plan to own the property, then refinancing, if an option, should strongly be considered.

The next expense which should be considered is your property taxes. The majority of property taxes today are actually overvalued. In fact, it’s estimated that over 60% of properties are overvalued for their tax assessment. If you get a property tax reduction your profits are sure to increase.

Third, consider shopping around for lower insurance. Let’s be clear, you shouldn’t skimp on your insurance as this could have a devastating affect. Rather, you should shop around for the same level of coverage, but at a cheaper price.

Lastly, consider all other expenses such as garbage removal, repair fees, advertising costs, heating costs, electric costs, maintenance, etc. Get creative. Think through ways that you can reduce your expenditures on any of these items. Doing so will ultimately lead to more profits and a greater bottom line.

So how can you increase rents? Well, that’s the beautiful thing about real estate. Legally, you’re allowed to increase the rent every year. The amount in which you can increase the rent will vary based on municipality and state; however, by even the slightest increase in monthly rent you can increase your bottom line profit, as well as the value of the rental property.

Other ways that you can increase rent immediately are to make improvements on the property. Does the rental property need a new roof or siding? Has your tenant asked for new flooring or kitchen cabinets? Any of these improvements will actually increase the value of your rental property, while simultaneously giving you a reason to increase your tenant’s monthly rent – and with their approval.

As you can see, by thinking through how you’re spending your money and how you’re receiving your money, you should be able to find ways to increase your bottom line profits for all of your rental properties. Make sure to address this topic at least twice a year and you’ll maximize your results.

 

For more information please visit us online at www.LandlordTenantDocuments.com

 

We are not attorneys, are not providing any individuals with direct advice, and all articles are written for entertainment purposes only and are only to be used as such.