A profitable rental property can be a boon to your finances for decades – as well as a boon to your family’s finances for generations. So, if you currently own a rental that’s failing to generate the desired returns, there’s no time like the present to tackle the issue head-on. While increasing the profitability of a rental can take a bit of work, getting things on the right track is much easier than you may think. Landlords looking to boost the profitability of their first rental will be well-served by the following pointers.
Make Sure the Location is Profitable
If you’ve ever wondered why so many real estate professionals are obsessed with the mantra “Location, location, location,” you needn’t wonder any longer. As many experienced investors will tell you, the location of your first rental property is, in many respects, more important than the property itself. In short, properties in locations with high demand for housing are more likely to generate healthy returns than properties found in areas with little to no demand. This means that even if a property has a lot to offer in terms of roominess and amenities, it may fail to generate the desired returns if it’s located in an unprofitable area.
You can form a clearer picture of how profitable a location is by doing a little bit of research in advance of making a serious offer. Said research entails doing a deep dive into the size of an area’s population, rate of population growth, local economy, median income, property values and rental rates. All this information should give you a solid understanding of how much demand exists within the area, how much you should offer for the property and how much you’ll be able to charge in rent.
If you’re having a difficult time determining a locale’s profitability, reach out to a highly-rated real estate investment company. In addition to educating you on the tenets of proper location research, the right company will be able to provide you with tips regarding the best suburbs to invest in.
Stay on Top of Maintenance
A refusal to stay on top of maintenance can have a host of undesirable consequences for both yourself and your first rental property. For one thing, adopting a lackadaisical approach to maintenance is practically guaranteed to draw the ire of your renters. Unsurprisingly, most people aren’t keen on residing in properties that are poorly maintained. So, if maintenance isn’t among your top priorities, don’t be surprised to see your renter retention numbers plummet. Placing maintenance on the backburner also stands to land you in legal trouble, particularly if the issues being ignored compromise tenant safety or the overall livability of the property.
Furthermore, the longer certain issues are ignored, the more serious they’re liable to become. So, if you consistently regard maintenance as an afterthought, you’re likely to have trouble retaining your current renters and attracting new ones. Additionally, should you ever decide to sell the property, you may have a difficult time finding buyers who are willing to pay your desired asking price. If you’re curious about when to sell real estate investments, the answer is not “after the property has fallen into disrepair and become completely unprofitable.”
Make Necessary Renovations
Depending on the age and general condition of the property, certain renovations may be required to attract interest from prospective tenants. While you may be hesitant to commit to renovations due to the cost, going through with them may result in heightened interest and enable you to charge more in rent than you otherwise would have. Getting a feel for what kinds of repairs/renovations a property needs is among the reasons it’s important to insist on pre-purchase inspections for every rental that strikes your interest.
It should never be assumed that a rental property is a guaranteed moneymaker. While it’s true that properties that offer ample amenities and are found in profitable areas can produce incredible returns, this shouldn’t be taken to mean that there’s no such thing as an unwise rental property investment. Furthermore, for a rental property to reach its true potential profit-wise, a fair amount of effort will be required on your part. So, if you’re looking to give your first rental a considerable boost in profitability, consider implementing the measures discussed above.