Maximize Your Rental Property ROI
With the recovery of the economy comes an opportunity for landlords and property managers to get caught up on their business goals.
And profitability or at least break even are important goals. To successfully earn higher rental yields, we are better to adopt a profitable state of mind. This prioritization of profitability will force you to align your operations and business practices so you become profitable.
There is sufficient evidence that what you visualize will come true — the self-fulfilling prophecy. That’s why optimism and clear, achievable goals are the foundation of successful business.
To whet your appetite, here’s a list provided by Construction Coverage on the best cities to buy rental property.
If you’re not clear about the rental yields you need to be earning, check out this post on rental yields in California. There’s a new list of cities creating the best yields today, but there are plenty of options for you to increase your equity and income.
Rent prices are a little flat in some regions, but no need to be pessimistic or conservative in 2021 and the years ahead. Given the prices of homes, high consumer wealth, job growth, and mobility today, Americans, Brits and Aussies are all hoping to rent and be happy as renters.
Prices and yields have to head upward.
Whether it’s in Florida, Spain, Sydney, California or the US heartland, renters are focused on lifestyle, personal and career growth, freedom, and happiness (post pandemic euphoria).
A world of lifestyle renters means greater profit opportunities for property investors. Yet profitability isn’t guaranteed. A weak, unfocused business model could lead to financial hardship for small business landlords like yourself. Sometimes the route to higher yields is simple and can be summarized into a few easy steps. Let’s check that out below.
Rent Yield Calculator
Aren’t sure of your rent yields? Try this calculation in your calculator:
Annual Rental Income ÷ Cost of Your Property x 100
Now you know your rent yield number clear and concise. The question now becomes how to grow those yields. Review each of these tips which might help you grow your rental income and ROI.
8 Key Rental Yield Growth Tips:
- Hire the Right Property Management Company – qualified, professional managers have property management down to an art and easily worth their expense if you have thousands of properties. If they have specific strengths where you’re weak, then all the better.
- Go with Virtual Management. From leasing to rent payment to tenant communications – virtual property management software and apps are how landlords vaporize administration and face to face time wasters. Efficiency means things get accomplished when needed (contractor visits), rent is paid consistently on time, virtual tours attract high quality, well targeted tenants, and communications are improved. Online property management creates a well-oiled profitable business.
- Provide new Income Generating Services. New services such as Wifi, storage, suite upgrades, repairs, and more add value to tenant’s comfort and experience. Collectively you can create a premium price increase and ensure tenant lease extensions.
- Find the best Property Management Platform. For you it means it’s easy to use, trouble-free, helps optimize your rent collection, accounting, and keeps you on top of everything happening all in one dashboard. Apps by themselves are a difficult way to go, and instead an integrated platform automates and streamlines all of your landlord work. Property management software is all about meeting compliance, raising efficiency and profits, and respecting your precious time. Ensure your property management provider is using a next generation software platform so you stay ahead of the curve.
- Focus on Attracting the Right Tenants. Using good marketing/advertising, tenant screening and loyalty building incentives – finding and leasing to the best tenants is critical to long term profitability. Good tenants always pay, never damage, and they keep a respectful relationship with you. They appreciate the good things you do for them and they’re willing to pay a good rent price.
- Keep Tenants Happy. Offer the right features and amenities and services they value and few other properties offer – outdoor amenities and tech upgrades are hot features that can put your property in the elite class where you can charge much higher rents for much higher yields. Focus on tenants experience.
- Stay Current with Maintenance – maintenance has been let go for over a year now during the pandemic. Making repairs, cleaning, and inspecting makes tenants feel more secure, wanted, and happier. You’re in the business of making tenants happy and when you do that well, rent prices can be raised.
- Price Well but Price for You – given the demand for rentals, growth of consumer spending, rising employment, rising rents and scarcity of properties that renters want, you don’t have to be conservative in pricing. If you’ve completed all the above points, you may have one of the most rentable and valuable rental units available in your area. The price you can charge depends on the neighborhood, number of bedrooms, type of unit, features, amenities, and local comps. Your own efforts at promotion and marketing go a long way to establishing the value of your rental unit in renter’s minds and getting your price.
Is Profitability a Priority?
Ask most successful business people, and they will tell you that profitability is a state of mind. They have their profit goals in mind and they will accept nothing less than success. It begins with strong marketing which creates significant demand from the right target audience. Of course value must be created, and unit quality, amenities, service, and good communications are the value modern tenants seek.
There’s a lot of advice going around about lowering rents and being conservative about pricing. Instead, landlords need to visualize their required price and ROI and then do what’s needed to accomplish that return.
A clear and persistent focus on profitability is how successful businesses thrive.
Read more on property management business success here on the ManageCasa blog. You’ll find the spirit, ideas, and systems for making your profit goals a reality. Good luck in 2022 in rental management. It’s a year of booming growth in the property rental markets.
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