15 Tips for Increasing Rental Property ROI
In this article you will learn 15 different ways you can increase your rental property ROI.
1. Reassess Market Rental Rates
Rental Rates that push outside of the market will lead to higher tenant turnover and rental rates below the market will result in missed income. Continuously evaluate the market rental rates to ensure rates don’t push outside the market to improve tenant retention rates. Check out this guide on how to evaluate market rental rates for more information.
2. Don't Cut Rates In Lieu of Upgrading
Cutting individual unit rental rates below market instead of fixing or updating units can have a negative impact on the market rental rates for the area. It is more cost effective to fix and/or upgrade the unit and charge market price than impacting the property rental rates.
3. Utilize Local Resources
If you are managing rentals in a different area from which you live, it is important to hire someone who knows the community. Whether that is local management or local advisors, they will be instrumental in developing a management strategy that is tailored to that area. This will help you make more informed decisions about property upgrade investments, setting market rental rates, and vacancy marketing.
4. Cross Promote Property Listings
An effective marketing strategy can have a huge impact on your vacancy rates. After listing your properties on popular listing sites (Zillow, Trulia, Realtor.com, etc.), don’t forget to cross promote your listings on your website, social media accounts, and in social media groups. This will vastly extend your listing exposure at no additional cost.
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5. Invest in Flooring
When updating flooring for a rental, it may seem cost effective to install the cheapest available. As the floor is the most used surface, investing in durable flooring that will withstand years of tenant wear and tear will save money in the long run. Flooring that continues look good as tenants turnover will help in pushing and maintaining market rental rates.
6. Implement a Green Strategy
A great way to increase rental property ROI is to implement a green strategy, that will reduce monthly water and electricity bills. Green strategies include switching to LED light bulbs, installing energy efficient appliances, and water saving fixtures. For more information on different green strategies, check out MASHVISOR’s Blog.
7. Require Tenant References
Previous landlords give insight to if a tenant has a history of property damage or not paying bills. If you are able to screen out tenants who have a history of causing problems, the more you can prevent financial losses from unpaid rent, property damage, and tenant turnover.
8. Install Keyless Entry Locks
Installing keyless entry locks will reduce costs and hours associated with creating keys, replacing locks, managing/storing keys, and retrieving keys from tenants. The Architect’s Guide provides a great review of keyless lock options and their features.
9. Collect Automated Rent
Set up a rent collection system that allows tenants to set up recurring rent payments. This will decrease late rent payments, increase amount of rent collected, and reduce hours contacting delinquent tenants. If you are experiencing a decrease in rental income due to covid-19, check out 3 ways you can protect your rental income during the pandemic.
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10. Offer Additional Paid Services
Create additional revenue streams by offering extra services to tenants for a fee. These services could include laundry, upgraded WiFi, cleaning services, or household item replenishment. These services will not only increase tenant satisfctation but also create new revenue opportunities, increasing rental property ROI.
11. Provide Prompt Communication
Communication breakdowns between tenants and management are common due to delayed responses, no defined communication method, or too many methods to choose from. Provide and share one communication method, directory, or portal with tenants regularly, and respond promptly. This will lead to higher tenant retention rates, increasing overall rental property ROI in the long run.
12. Invest in Technology
Invest in management technology and innovations in the real estate industry to simplify and standardize traditionally manual process’s. There are many new tools and platforms that will create workflow efficiencies, enabling you to reduce the amount of staff needed to manage the property.
13. Bid Out Maintenance Jobs
Property maintenance is one of the largest recurring expenses property managers have, so it is important to shop around maintenance jobs to make sure you are getting quality work at the lowest rate possible. Lula Life is a great resource for connecting with you with vetted maintenance professionals while reducing overall spend.
14. Perform Routine Inspections
Routinely inspect the property for drafts, leaks, smells, and mold. This will help catch problems at the start, lessening the damage done to the property and preventing costly maintenance. If staff cannot always be onsite to monitor inspect the property, check out the 3 different ways you can monitor your property remotely.
15. Create a Tenant Referral Program
Incentivize current tenants to refer friends or family to live at your property. This will help save time and money spent marketing rental properties. Check out Schneider Property Management’s referral program to see how other management companies are currently doing this.