When it comes to rental properties, most landlords want to increase their cash flow and maximize their return on investment (ROI). This is why you invest in real estate; to make money. How can you be sure your rental property is making as much money as possible?
As professional property managers in Myrtle Beach, Conway, Murrell’s Inlet, Socastee, and Surfside Beach, we work with new investors and experienced investors to bring in more income while spending less on their properties. We can provide the tips that we know will help you increase the ROI on your rental properties individually and your portfolio as a whole.
Here are some of the things that we recommend.
Make Sure Your Rental Value is Competitive
One of the most important things to consider when trying to increase your ROI is setting a rental price that’s accurate, competitive, and profitable. You need to charge enough rent to make your property profitable, without chasing away good tenants with a rental value that’s too high for the current market.
Rents have risen pretty dramatically in the last couple of years. Make sure you’re keeping pace. If you have not conducted a thorough market analysis recently, do one now. Access the best data you can find so you know what similar properties in your area are renting for. Local property management companies like J&P Unlimited can be helpful here. We are constantly tracking rental rates, and we know how a price can impact vacancy, tenant selection, and long term ROI.
Prioritize Preventative Maintenance
Keeping maintenance costs manageable is an excellent way to increase ROI. This doesn’t mean you’re going to ignore those minor repairs; routine and preventative maintenance will protect the condition of your investment, and will actually add to its value.
Those emergency repairs are expensive. Preventative maintenance also reduces the risk of emergencies.
So, when you want to ensure a high ROI for your rental property, stay on top of maintenance. Regular maintenance and inspections will help keep your residents happy, which will lead to lower turnover and more consistent income from month to month. Additionally, regular maintenance can help prevent costly repairs down the line and make sure that you’re getting the most out of your rental property investments.
You’ll need a team of great vendors if you want to leverage good maintenance practices. Not sure where to find those vendors? Consider working with a quality property manager. At J & P Unlimited, we have our own in-house maintenance team. This helps us control costs and it leads to more ROI for our owners. Several members of our team also own investment properties, so we know first hand what cost make it worth spending your hard earned money on.
Make Upgrades and Renovations
Consistently improving your rental property will increase its value.
When your property grows in value, you increase your ROI naturally.
This may sound expensive, and while renovations and improvements do require an initial investment from you, the updates and upgrades we’re talking about are cost-effective, not terribly time consuming, and they’re likely to increase your ROI by attracting well-qualified tenants and high rental prices. Here are some of the things to try:
- Energy-efficient appliances. When those appliances have begun breaking down or look old and weathered, consider replacing them with modern, well-matched appliances that use less water and energy. Tenants will appreciate this, and you’ll be able to increase what you charge in rent.
- Hard surface flooring. Carpet has slowly been falling out of favor with homeowners and tenants. It’s dirty and it’s difficult to maintain. Hard surface flooring provides fewer opportunities for dust and allergens to get trapped. It’s easier to maintain and more attractive. Look for high-quality, low-cost laminates and faux woods.
- New hardware. Shiny faucets, nickel drawer pulls and cabinet handles can all make a difference in how things look in kitchens and bathrooms.
- Better lighting. Improve your lighting inside and out. You’ll find that your ROI increases.
These minor updates will increase the value of your property and drive up your ROI.
Take Advantage of All Your Rental Property Tax Deductions
Are you getting all the tax benefits you deserve? This can be a blind spot for landlords, sometimes, especially those who are not working with property managers or professional accountants. When you rent out a property, you have to declare the income you receive on that property (i.e. rent). However, you are also entitled to a number of deductions, and many of them are pretty generous. You should prepare to deduct:
- Repairs and maintenance
- Mortgage interest payments
- Insurance premiums
- Travel expenses when you visit your property
- Marketing and advertising costs
- Accounting fees
- Licensing fees
- Property management fees
Basically, you are running a small business when you rent out a property, and you’re able to deduct many of the costs of doing business. If you’re working with a local property manager, those fees are also tax deductible (this allows property management to essentially pay for itself).
Always consult with an accountant or tax preparer who is familiar with filing taxes on rental properties in order to get the most out of these opportunities for deductions. Saving money at tax time translates into higher ROI.
Work with Property Managers in Myrtle Beach, Conway, and Surrounding Areas
Partnering with a local property manager allows you to keep expenses low and income up.
It’s an immediate boost to your ROI, especially when you can leverage professional resources around marketing, maintenance, and tenant relationships.
You have to choose the right property manager, however, and you have to make sure it’s a team you can trust. Spend some time exploring what companies have to offer and talk about the results they’ve achieved for their current clients.
Earning more money on your investment property is possible. While most people see real estate as a passive investment, you have to take action to ensure your property is earning everything it can. You have to make sure you end up earning more than you spent.
These are some general ideas, and we’d be happy to share some suggestions for your specific property or your entire portfolio. Please contact us at J & P Unlimited. We manage investment properties in Myrtle Beach, Conway, Surfside Beach, Murrells Inlet, Socastee and all along the Grand Strand.