Renting out property is an excellent way to generate additional extra income. But as an owner, are you fully maximizing the income from your properties or are you potentially losing money?
Here are some top tips from professional Property Managers in Central Florida - 5 ways you may be losing money as a Property Manager, owner, or landlord - and how to fix it.
1. You Have the Wrong Tenants
The right tenant is one of the most important elements of a successful rental property. Quality tenants offer a number of key advantages, including timely rent payments and care with the property. Things to look for when choosing a great tenant include proof of income, a comprehensive background check, and positive testimonials from references and past landlords.
Also, potential tenants looking to lease long-term rather than for just one lease period can help decrease turnover on a property and maintain ROI. You should also set criteria for pets and other property specifics to help ensure that you get the best tenants for your particular rental.
2. You Aren't Keeping Up with Maintenance
It's important to keep up with basic maintenance and inspections on a rental property - doing so can help save money down the road. Making sure appliances are properly cared for allows them to last as long as possible, and general inspections can help catch potential problems early.
Keeping up with basic maintenance around your rental property means having the heating and air unit checked annually, making sure the gutters are cleaned out and properly maintained, servicing the septic system if needed, and making sure features such as the chimney and fireplace are well-maintained.
You should also keep an eye on the roof so that you know when it needs to be replaced. A relationship with your tenants will also make it easier to find out about potential problems before they escalate.
3. You Don't Know the Laws
The last thing you need to go with your rental property is legal trouble. It's important that you know the laws in your area, including the answers to questions like:
- Who's responsible for any damages to your property?
- What are the state laws concerning security deposits? This can include everything from how the money is held to what you're allowed to use it on.
- What does the eviction process look like in your state?
By clearly understanding landlord/tenant laws in your state, you can decrease the chances of an expensive legal battle that could negatively affect your ROI.
4. The Property Isn't Priced Correctly
Generally, rent is based on market value. It's important to note, however, that pricing your property correctly will be based on a number of factors, including both the cost of living in your area and the average rent in your neighborhood.
Factor in what you're paying on the mortgage, insurance, and repairs for the home to ensure that you're setting a fair rate that will encourage tenants to choose your property while allowing you to pay necessary bills.
You should also take care not to price the home too high, which can lead to it sitting empty. Working with a Property Manager to ensure your rental is priced properly could be the key to getting it rented in a timely manner and ensuring long-term ROI.
5. You Chose the Wrong Property
Choosing the right rental property can be a difficult decision, especially if this is your first rental. The basic structure of the house should be good, even if you have to make some initial repairs. See "How to Choose a Rental Property."
You should also keep location in mind when choosing an investment property. Ideally, you want a property in an area where rentals are popular and don't remain on the market long. Your budget must also come into play, making sure that you can afford both the property and any needed repairs and maintenance while still making a positive return on your investment.
If your rental property is failing to earn the kind of money you were expecting, these five key mistakes could be to blame. If you're able to prevent these mistakes, you may find a higher ROI on your investment property.
Working with a professional Property Manager can help with each of these common income losses, from placing the right tenant to incorrectly pricing the rent, choosing the right property, rental laws, and much more.
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