How to make more from rental prop­er­ties

Lesotho Times - - Property -

IF you own rental prop­erty, be sure to max­i­mize your prof­its on your cur­rent in­vest­ments be­fore rush­ing out to buy new ones.rather than just ac­quir­ing as many prop­er­ties as pos­si­ble, think about whether the best way to make more money is to fo­cus on your cur­rent port­fo­lio.

1. De­crease va­cancy The best way to min­imise va­can­cies is to find a long-term ten­ant so that you don’t have to deal with turnover. This is cov­ered sep­a­rately by my next point be­cause it is not the only way to keep your prop­erty oc­cu­pied.

In the event that your ten­ant must move, va­cancy can also be min­imised by keep­ing turn­around time to a min­i­mum. The thing is, nearly ev­ery prop­erty in ev­ery neigh­bor­hood has solid de­mand at a price. If your va­can­cies are con­sis­tently high, you may be do­ing it to your­self and need to think about your price point.

An­other way to think about va­cancy is this. If a prop­erty does not have some char­ac­ter­is­tic that sets it apart from the rest and sells it­self such as a prime lo­ca­tion or a to-die-for kitchen, you can give it one by pro­vid­ing the best value in town.

2. Min­imise turnover Turnover costs money in mul­ti­ple ways. There are ad­ver­tis­ing costs, the cost of patch­ing and paint­ing walls and re­plac­ing floor­ing that your pre­vi­ous ten­ant would have lived with, and, of course, va­cancy.

It’s a lit­tle coun­ter­in­tu­itive, but this is an­other area where rel­a­tively lower rent may have the ten­dency to in­crease rev­enue.

One of your goals should be to find qual­ity ten­ants that take care of your prop­erty and pay con­sis­tently. When you find th­ese peo­ple, do what you can to keep them!some peo­ple will inevitably leave be­cause they are mov­ing across the coun­try or buy­ing a home, but the last thing that you want is to lose your best ten­ants to the land­lord down the street, deal­ing with the ex­pense of ac­quir­ing a new ten­ant and lost rev­enue in the va­cancy.

The price of rent is not the only fac­tor in­volved in ten­ant re­ten­tion. The other key is cus­tomer ser­vice. Whether you per­son­ally man­age your prop­er­ties or have a prop­erty man­ager, make sure your ten­ants are treated with re­spect and pro­fes­sion­al­ism, their con­cerns are val­ued, and mat­ters are dealt with ur­gently and to their sat­is­fac­tion. A good ten- ant/land­lord re­la­tion­ship keeps ten­ants from think­ing about mov­ing.

To as­sess whether your prop­erty man­ager is per­form­ing in a way that fos­ters good ten­ant/land­lord re­la­tion­ships, send a post­card so­lic­it­ing feed­back from your ten­ants, let­ting them know their opin­ion is val­ued and they can con­tact you di­rectly if they are dis­sat­is­fied with their man­ager.

3. In­crease rent strate­gi­cally Now, af­ter telling you that lower rents can lead to higher rev­enue, I will pro­ceed to ad­vise in­creas­ing your rents on your longert­erm ten­ants. This is re­ally not a con­tra­dic­tion at all. Rather, it is a del­i­cate bal­ance that re­quires knowl­edge of your prop­erty’s value rel­a­tive to your com­pe­ti­tion.

Ten­ants may be more loyal if they can’t find lower rent else­where. But this doesn’t mean that you should never raise rents when you have good rea­son to do so. Mov­ing costs ten- ants money too. If the value of their cur­rent rental is sig­nif­i­cantly bet­ter than the value of a new rental plus the cost of mov­ing, you still have the up­per hand.

Com­mu­ni­cate an off­set to new costs such as in­creased fees for util­i­ties and ameni­ties that they en­joy, and have them co­in­cide with an upgrade to the rental. For in­stance, you may plan to paint the ex­te­rior of the home or upgrade old win­dows from sin­gle to dual pane any­way, and sched­ule the work to co­in­cide with a lease re­newal and the ten­ant feels they are get­ting some­thing out of the deal.

4. Be Dili­gent on late fees Show­ing kind­ness and re­spect to your ten­ants does not mean be­ing a pushover when it comes to rent col­lec­tion and late fees. Col­lec­tions are not the most en­joy­able part of be­ing a land­lord, but are es­sen­tial to run­ning a prof­itable busi­ness.

Make sure your ten­ants un­der­stand that this is a busi­ness, they have signed a con­tract, and it is your job to com­plete this trans­ac­tion, fol­low­ing the con­tract and all ap­pli­ca­ble laws (in­clud­ing evic­tion pro­ceed­ings if nec­es­sary).

If you al­low ten­ants to get away with pay­ing late with­out the ap­pro­pri­ate fees, you are leav­ing money on the ta­ble. And, your ten­ants may try to get away with late pay­ments sev­eral more times, caus­ing you ex­tra work and stress.

If your ten­ant sends you a late check with­out in­clud­ing the late fees, po­litely ex­plain that rent is not con­sid­ered paid un­til all fees are col­lected, and that un­for­tu­nately you can­not ac­cept this pay­ment un­til all fees are paid.

If you hold firm, they will quickly learn that you can­not be taken ad­van­tage of and will most likely com­ply.

— Time

One of your goals should be to find qual­ity ten­ants that take care of your prop­erty and pay con­sis­tently.

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