Whether you own a commercial building that you rent out to different tenants or you put your own home on the market for rent, the rental industry is a great place to earn extra cash and increase cash flow. But if you don’t take care of your property and lower the expenses it incurs, you will find yourself on the losing end. The best thing about owning rental properties is the possibility of getting tax exemptions based on 1031 exchange properties. By investing in real estate properties, selling them, and using the money from the sales to purchase another investment property, you can defer payments on capital gains taxes.
Decrease Vacancy
Keep your properties always occupied by advertising immediately once they are ready for occupancy. The moment that your current tenants say that they have to end the rental contract, advertise through different mediums that there is a space available for rent in your property. This will reduce the chances of you being left with an empty room that does not earn.
Also, you can decrease vacancies if your property has a characteristic that sets it apart from the others. If your property has no to-die-for kitchen or landscape views, you can make your price point its main advantage. Lower it down but demand a longer contract.
Provide Customer Service
One of the many ways you can minimize the turnover of your property is to provide customer service to your tenants. While it is okay for tenants to leave because they will move to another state or another country, what’s not okay is to lose them to a landlord down the road. That means that they are not happy with the service they get from you. Simple things such as fostering a good landlord-tenant relationship, sending a postcard for birthdays, asking for feedback, and addressing issues promptly will get you to your tenant’s good side. The cost of turnover is usually high on the part of the landlord. You will have to freshen up the space, clean it from top to bottom, and even patch holes caused by mounting appliances to the wall.
Increase Rent Strategically
It is okay to increase rent every year, just don’t do it too much. Increasing rent by 1% to 3% is generally acceptable, but anything more than that is just greedy on your part. You can coincide the increase in rent with improvements that you plan on having in your property anyway. For example, you have a plan to paint the exterior of the building. Tell your tenant that the increase in rent is for that purpose. This way, you’ve justified the rent increase and improved the value of your property. Make sure that the increase in rent is in your contract and that your tenants understand what it is for.
When renting out a property, you need to screen your tenants so that you can avoid troublesome ones. Run a credit check to see how financially responsible your future tenants are. Driving around their current place of residence or business will also give you an idea of how they take care of the property they rent.
