Every real estate investor enters the market with one goal in mind: to make a profit. Luckily, purchasing and managing rental properties is a highly lucrative endeavor — if you do it right. Due to a recent influx of buyers and a dip in inventory, getting the most return on investment from your rental can be tricky.
However, these clever tips should help you beat the competition and enjoy a significant return.
1. Use a Heatmap Analysis Tool
When it comes to getting the best ROI from your rental property, location is everything. You read market reports to determine which cities are most lucrative, but how do you analyze neighborhoods?
Narrow down your investment options by using a real estate heatmap. This tool will help you compare different neighborhoods to spot high and low-performing areas. Locate neighborhoods based on rental income, cash on cash return and real estate prices to find the best bang for your buck.
2. Increase Visibility
If you have lakeside property or little cottages on a coast, you can easily boost ROI by giving your tenants a clear view of the water. Increase visibility by cutting down trees and shrubs between your unit and the beach.
Remove boulders, stumps, and other large objects as well to ensure a clear view and thoroughly impress potential tenants. In some cases, it might even be the deciding factor in whether or not applicants choose your or your competitors.
3. Maintain the Pool
Most landlords know that a pool will fill vacancies and potentially increase rent. However, many forget that maintaining the swimming pool is the real secret to keeping occupants happy and attracting more tenants.
Keep your pool clean and clear by testing the pH levels and shocking the pool about once per week. Hire a maintenance team to brush, vacuum and refill the pool, so it’s always ready for sunbathers and swimmers.
4. Install Garages or Carports
Replacing an upscale garage door can yield an astounding 97.5% ROI on a residential home. While you might not be renovating or selling entire houses, installing garages or carports on your rental property is another effective method for increasing rental ROI.
In fact, if you spend $1,000 on a carport and charge a $25 monthly fee, it’ll pay for itself in a little over three years. After that, you’ll make a full profit.
5. Advertise Effectively
An effective marketing strategy can go a long way in earning more ROI. Determine what kind of person would like to live in your rental property by analyzing local demographics. Then, craft advertisements that speak directly to them.
Describe your property in detail and highlight any recent upgrades. Include shared amenities, a 3D tour and high-quality photos. List your property or a specific unit on multiple rental websites and various platforms to attract more renters and quickly boost cash flow.
6. Screen for Better Tenants
Professional tenants are a landlord’s worst nightmare. These renters have learned the system and how to live in apartments as long as they can without paying. Since the eviction process is often long and arduous, you may be stuck with these renters for weeks, which can take a serious toll on your cash flow and ROI.
Make sure these scammers never take advantage of you by thoroughly screening all tenants. Contact all references, conduct a background check and interview each potential renter. Taking the extra time to get to know applicants can save you thousands — and a massive headache — in the long run.
7. Landscape and Hardscape
Most landlords only ever consider interior renovations and remodels. However, most renters will pass up a property if it looks bad on the outside. The last thinking you want is to lose potential tenants because of dead grass and chipped paint jobs. Therefore, it’s wise to invest in landscaping and hardscaping to beautify your property’s exterior.
Hire a landscaping service or build your own in-house maintenance team to cut the grass, salt sidewalks and repair exterior features like porch lights, shoddy paint jobs and weathering. Even a fresh coat of paint can be enough to catch the eyes of passersby and attract more tenants.
Increasing Rental ROI Can Be Easy
If you’re looking for rental property to invest in, give yourself a jump start on earning a great ROI by using the 1% rule. Only consider investments if the gross monthly rent equals at least 1% of the purchase price before expenses.
Under this rule, you’d collect 12% of the purchase price each year. After expenses, you may bring in a net revenue of 6% to 8%, which is a decent ROI and worth looking into. With the tips above, increasing rental ROI can be easy, or at least, easier.
Oscar Collins is the managing editor at Modded. He writes about cars, fitness, the outdoors and more. Follow @TModded on Twitter for more articles from the Modded team.
