Here are a few simple New Year’s resolutions for the residential landlord looking to increase profits in 2016 and beyond. Try one or all and see if they improve the performance of your real estate investments.
Residential Landlord Resolution #1 – Business Plan
Write A Business Plan. Writing a plan and tracking performance of the rental against it is the only way to know if the asset is providing a good return on investment. The plan could be a simple, one page budget or include detailed descriptions of standard operating procedures. Read “Writing A Residential Rental Property Business Plan” for pointers.
Resolution #2 – Inspections
Inspect Regularly. Even good tenants may not let you know when there is a problem with the property. Conducting periodic inspections can expose little problems before they grow. If you don’t have time or are a long-distance landlord, consider sending in a professional property manager to conduct the inspections.
Resolution #3 – Cost Control
Look For Value. Controlling costs doesn’t always mean paying less. Inexpensive plumbing fixtures that wear out every few years cost landlords more in repair and replacement expenses than sturdy fixtures that cost more but last longer. Adjust your purchasing strategy to look for products and services that have an overall lower life-cycle cost.
Resolution #4 – Market Rent
Be Competitive and Profitable. Rent amounts should 1) be competitive in the neighborhood, 2) minimize vacancies, and 3) maximize profits. The best time to evaluate a rental market is during the most active leasing season – typically in the Spring or Fall depending on the property’s location. Plan to conduct a Market Rent Analysis when the highest volume of rental advertising is taking place.
Resolution #5 – Improvements
Improve the property to benefit the tenant and the landlord. Periodic re-investment in the property should:
- Motivate current tenants to remain – even if the rent is raised
- Make the property more competitive in the neighborhood
- Provide long term operational and financial benefits to the owner (e.g. justify future rent increases or decrease maintenance costs)
Hope you found these residential landlord New Year’s resolutions helpful. Drop me a line if you have questions or need help with residential property management.