Rental properties can be a profitable investment but only when managed properly. This is particularly true in areas with higher property values where it is even more important to maximize rental income by reducing expenses, increasing your property’s appeal, and limiting turnover.
Whether you have just purchased your first investment property or are an experienced landlord with a full portfolio, there is almost always something you can do to increase your profit margins.
Here are seven tips to get you started:
1. Replace carpet with LVT.
There are two reasons to replace the carpet in your rental with luxury vinyl tile (LVT) or a similar product.
The first is that people just do not like carpet anymore. Having carpet in your rental automatically shrinks your pool of potential renters. The more folks interested in renting your house, the more likely you are to find a great, long-term renter at your asking price.
The second reason is that LVT is an easy-care, durable option that holds up well to traffic, pets, and kids and is far less likely to need to be replaced between tenants.
2. Complete simple updates.
You may not have the budget for major renovations, but there are plenty of simple updates you can do to increase your rental’s appeal and function. If cabinet hardware, sink faucets, ceiling fans, switch plate covers, doorknobs, or light fixtures are dated or have just seen better days, consider replacing them with modestly priced upgrades.
3. Improve outdoor living areas.
Good outdoor living areas are appealing to renters and will make your property stand out, particularly in areas like Ojai and Oak View where the weather allows for year-round outdoor entertaining. If a paving stone or stamped concrete patio is not in the budget, create a more affordable option with gravel.
You should also consider paying for ongoing landscape maintenance. Paying for maintenance allows you to select the gardeners and helps ensure that your investment is properly maintained. You can offset this expense by considering it when setting the monthly rent.
4. Install low-maintenance, drought-resistant landscaping.
While we are on the topic of landscaping, you should also consider replacing high-water or high-maintenance plants, natural grass, and other features with low-maintenance, drought-resistant options that will lower your maintenance costs and your water bill.
You can also help protect your investment by choosing fire-resistant plants, hardscapes, and other landscaping features.
5. Maximize tax deductions.
Work with your accountant or tax preparation professional to make sure you are maximizing your possible deductions, including travel and home office expenses, depreciation, repair costs, and your mortgage interest.
6. Vet your applicants.
If you are not using a property management company to do this for you, do not forgo this important part of the tenant selection process. It is well worth the money and time to run credit and background checks and to call previous landlords to inquire about their experience with the applicants. While there is no guarantee that this is going to result in amazing renters, it is going to improve your chances. Avoiding lost rent and eviction expenses is an important part of maximizing rental income.
7. Be a good landlord.
When you get good renters, you want to keep them. Reducing turnover reduces the cost of marketing and vetting applicants and results in fewer vacancies. One way to reduce turnover is to be a good landlord. For some, the best way to do this is to hire a property manager who will handle everything for you. If you choose to manage your property yourself, respond quickly to maintenance requests, make sure you are easy to reach when issues arise, and stay updated on local and state laws.
AimeeJo Davis-Varela is a freelance writer specializing in real estate, sustainable home improvement, eco-friendly landscaping, green living and travel writing. She is also the owner of Mind Your Manors, which provides second home management services.
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