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It’s true that there’s a lot of money to be made in the world of real estate. But it’s also true that success is far from guaranteed, and that, in any case, the running costs involved can be substantial. There is a way you can get more money from your real estate investments, however, and that is finding ways to boost your profit margins. This can be done in myriad ways, as we’ll see below.
Stay in Line With Market Rates
One way to get more money from your investments is to simply raise the price of rent. Now of course, there are etiquette rules when it comes to this sort of thing. You can’t just spring a hike in prices on your tenants just because you want some extra cash in your back pocket, especially if they’ve been there a long time and haven’t given you any troubles. It is acceptable to raise the costs, however, if the market moves upwards. It is has been some time since you raised the prices, then you may be able to bump the price up in order to stay in line with market rates.
Outline the Tenant Responsibilities
As a landlord, you’ll be responsible for many of the major maintenance issues that a property can typically have. However, that doesn’t mean that you just have to sit there with an open checkbook, waiting for the next thing to break. You can make the gap between big expenses longer by outlining the responsibilities of the tenant. If they fail to live up to their side of the agreement, then they’ll be responsible for the costs, or part of the costs, anyway.
Work With Trusted Professionals
Of course, for the most part, you’ll be the person who’s responsible for upgrades and the like. But just as with everything else, there can be a big disparity between the costs involved. If you’ve got several properties and regularly need the work of tradespeople, then look at establishing a relationship with just one company. You’ll be able to negotiate more favorable rates if they know that you’ll be the first people you call when you have an issue. This will work for in another way, too – there’ll be no more guesswork about the quality of work you’ll receive.
More Bang for your Buck
There’s a way to get much more bang for your buck, though there will be some work involved. Rather than renting an entire property, you can take a look at slicing it up into multiple rental properties. Before you get too deep into the project, you’ll want to learn how to subdivide land. From there, it’ll be about figuring about the best use of space, how to design the properties, and also how to reduce any convenience for your current tenants. Keep in mind that, although it can be an excellent way to boost profits, projects like these do take time, and will eat into your profits in the short-term.
Learn how to do Things Cost-Effectively
It’s understandable that you spend more money than necessary when you first get into the property game. You don’t have the experience needed; you overspend on certain things, and underspend on others. However, over time, you’ll learn how to do things cost-effectively. If you cut the amount you’re spending on getting your property up to scratch by, say, 25%, then that’ll be a lot more money in your back pocket. You can accelerate this learning curve by talking with fellow property investors and reading blogs on the subject.
Keep An Eye on the Value
Your property is an investment. And as such, you need to keep an eye on it. If the value has increased considerably, then you’ll want to figure out whether it’s going to continue to rise, or if it’s hitting a peak before it begins to dip again. More broadly, you should also keep an eye on the neighborhood as a whole. If it seems like things are building up, then it’ll likely be a sound long-term investment. If things are beginning to become a little run down, then it might be time to sell.
Don’t Be Too Ambitious
You want your properties to be as good as possible, but you’re not trying to win any awards. So don’t be too ambitious when it comes to your properties: you’re striving for ‘good enough,’ not ‘everything is perfect.’ Some property owners spend money on things that tenants don’t even notice, for no reason. Save your cash!