Property management tips to improve return on rental property
Lower the costs of vacancies and boost return on rental property by carefully choosing tenants, keeping them, and setting up preventative maintenance schedules.
According to the US Census Bureau’s housing vacancy survey, the national rental vacancy rate shows that vacant units mean landlords are in the middle of tenant turnover. The longer this takes, the higher the costs per unit. Bad turnover could easily eat into 5-25% of a unit’s entire annual income purely through inefficient management of the transition process.
With a well-optimized rental portfolio, the risk of extended and expensive vacancies is much lower. When you have committed 10-20 years, you have a much more consistent and reliable return on rental property.
Strategic Tenant Screening to Optimize Rental Profits
One of the best ways you can minimize high turnover costs is to do extensive tenant screening before renting out your properties. By screening tenants, you reveal potential points of friction involving factors like:
- Criminal history
- Financial track record
- Previous rental experiences
Often, turnover is because of problematic tenants who can’t pay the rent on time or who cause problems at the property requiring eviction.
According to iPropertyManagement, evictions cost landlords an average of $3,500 per eviction, and often the problems that lead to eviction can be prevented by running an extensive background check. Those likely to cause damage or otherwise disrespect the property tend not to start behaving this way without warning.
Background checks work best when you work with local experts. For example, in Cypress, CA, a Cypress property management company is more reliable than a company based out of town.
Why Tenant Retention Matters for Your Investment Property
Retaining tenants is a winning strategy for maximizing return on rental property, particularly when you have tenants who respect the property and pay on time. Tenant retention comes from having an attractive, well-maintained property. The less satisfied your tenants are, the more likely they’ll look for other options.
The following factors tend to play a role:
- Poor condition of the property.
- Lack of response and engagement from maintenance requests.
- Poor communication in general.
Remember, properties allowing pets tend to be much more attractive to tenants, as pet-friendly apartments are not always common.
Preventive Maintenance for Rental Property Efficiency
Preventive maintenance is almost always better for your finances than taking a reactive approach. Reactive maintenance is stressful, for example, dealing with a burst pipe or a malfunctioning HVAC system. By building a proactive seasonal maintenance calendar, you can eliminate a huge proportion of maintenance emergencies.
Preventive maintenance requires a robust contractor network. Ideally, you should maintain relationships with 2 or 3 tradespeople per specialty, so you’re never dependent on one person’s availability. You can also position yourself to negotiate far more favorable pricing.
Smart Property Management Can Increase Return on Rental Property
Maximizing your return on rental property is about attracting and keeping the best tenants. You should use a robust and comprehensive tenant screening system to make sure you attract respectful tenants who will pay rent on time and consistently. You should also maintain a network of contractors to keep a tight preventive maintenance schedule to fix small problems before they become big ones.
If you’re interested in learning about any similar topics related to real estate, check out the rest of our blog posts.
