In order to maximize the rate of return on your rental property, you basically have to get as much rent as you can while managing and reducing your expenses. It sounds simple, doesn’t it? It’s not rocket science, but it’s not as simplistic as it sounds either. There are many factors involved, the most important being: knowing your market; getting extensive marketing of your vacancies; leasing to quality tenants; and, managing repairs while keeping up the condition of your property.
Knowing your Market
To know your market, you have to know how much money you can get for your property and understanding which rent level will allow you to lease it quickly. This involves knowing what properties in your area have leased for and how much competition is in the market. You also want to know the absorption rate, or how quickly they are renting. Remember that if it takes too long to find a suitable tenant, you would have been better off asking for a lower amount of rent from the beginning.
Extensive marketing of your vacancy means getting your property out on as many different sources of advertising as possible. The goal is to ensure there are a lot of potential renters viewing your property details so you can select the best tenant. You’d be surprised at how many property managers use only one or two advertising sources. At Sarasota Management and Leasing, we advertise on over 50 different rental websites. We want maximum the exposure your property gets so you can choose between multiple applicants and get the best one in your property.
Leasing to quality tenants is the most important thing any landlord can do. When you get the best tenant you possibly can, it will make a huge difference in your rental experience. If you get a high quality tenant who pays rent on time and takes care of the property, you’ll have a successful rental experience. If you don’t get that high quality tenant, you’re setting yourself up for a disaster.
Managing repairs may sound simple, but it’s not. There is more involved than simply calling a plumber when the toilet backs up. Nothing cuts into your rate of return more than excessive repair expenses. Triage is required. Try to see if a service call can be avoided by troubleshooting any problems. Make sure the vendors you use are giving you the best deal. You need to determine if a problem is caused by a tenant issue or a legitimate landlord responsibility. Measure your maintenance and repair costs against what it would cost you to have a professional property manager handle these issues.
Remember that owning a rental property is similar to owning a small business. Your profitability comes down to increasing your revenues and limiting your expenses. If you have any questions, please contact us at Sarasota Management and Leasing.