It’s no stretch of the imagination to say that every landlord seeks to generate healthy returns. However, as many first-timers come to discover, not all rentals are created equal, and some properties are substantially more profitable than others. Fortunately, maximizing your chances of success with your first rental is far from difficult – provided, of course, you’re working with the right playbook. So, if a profitable rental property is what you seek, put the following advice to good use.
Seek Out Properties in High-Demand Areas
Unsurprisingly, you stand to make a lot more with rentals in areas in high-demand areas than in areas where demand for housing is on the wane. The more demand there is for rentals within a locale, the more robust your monthly rental is likely to be. With this in mind, make a point of seeking out rental properties in areas where demand is abundant.
To help ascertain how profitable an area is likely to be, you’ll need to do a little bit of location research. For starters, take some time to research local home prices and rental rates, as this will give you a solid understanding of how much landlords can expect to make in this locale. You can also benefit from doing a deep dive into the local economy, rate of population growth and median income. Once you’ve determined how desirable a location is, you’ll have the info you need to make an informed investment decision. SoCal-based investors who are thinking about investing in real estate in Los Angeles will be well-served by some good location research.
Screen All Rental Applicants
Tenants who are unable or unwilling to pay rent can be a thorn in the side of any landlord. Additionally, depending on where you’re based, evicting tenants who don’t keep up with rent can be a lengthy and arduous process. So, in the interest of saving yourself a lot of headaches, make sure to screen every prospective tenant who submits a rental application.
When screening rental applicants, it’s important to take a careful look at income situations, credit scores and criminal backgrounds – among other things. Furthermore, make a point of contacting any references that applicants provide. If you lack the bandwidth or patience to personally screen every rental applicant, consider working with a dependable screening service.
Don’t Neglect Property Maintenance
Staying on top of property maintenance is important for a number of reasons. To start with, neglecting maintenance is practically guaranteed to reduce the value of your rental property. Even problems that start out as minor can become quite serious if left alone long enough – and the longer a problem goes unaddressed, the more expensive fixing it will ultimately prove. Secondly, a laid-back approach to property maintenance can result in displeased renters and low renter retention – and renter-less units aren’t going to make you any money. Thirdly, regarding property maintenance as an afterthought can lead to fines, lawsuits and other legal consequences. It’s also important to be covered if you own a rental property in Toronto by going out to get landlord insurance in Toronto. The last thing you want is to not be covered insurance wise.
The level of maintenance a rental requires depends largely on its size. For instance, a small single-family property may not often find itself in need of maintenance. Furthermore, depending on the age and condition of the property, you may be capable of tackling most of the maintenance tasks on your own. Conversely, if you’re dealing with a large multi-family rental – like an apartment building – full-time maintenance personnel may be needed to ensure proper upkeep.
In addition to having enough personnel on hand to stay on top of property maintenance, you should make a point of addressing all maintenance requests in an expedient manner – especially when the problem at hand stands to compromise the livability of a unit. Not only will this help ensure that your rental remains in prime condition, it will help keep tenants happy and prove conducive to favorable retention rates.
The desire to generate as much income as possible with your first rental is perfectly understandable. After all, given what an enormous investment a good rental property represents, it’s only natural that you’d want to see the highest possible returns. Of course, if this is the type of outcome you’re hoping to see, you’d best be prepared to put in some work. In the interest of maximizing the profitability of your first rental, take care to effectively utilize the pointers discussed above.
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