Making a profit in real estate investing is getting more and more difficult. As real estate prices increase and rents flatten, landlords need to be creative in looking for ways to increase their bottom line income. These five proven but lesser-known strategies will help you maximize your rental property income and ensure a solid return on your investment.
1. Ditch the Carpet
While it may not sound groundbreaking, eliminating carpet from your rental properties can be a game-changer. Carpets are expensive and wear out much faster than alternatives like wood plank or high-end vinyl flooring. Opting for these durable alternatives during turnover can save you money in the long run, providing a cost-effective solution with a much extended lifespan.
2. Install Durable Components
Cutting costs on components like paint, appliances, window coverings, and landscaping may seem tempting, but it often leads to higher expenses in the long term. Choose high-quality, durable materials, even if they come with a higher upfront cost. Quality paint, reliable appliances, and low-maintenance landscaping will significantly reduce your property's ongoing maintenance expenses.
3. Say No to Ice Makers
Appliances with ice makers can be a costly headache for landlords. When these features malfunction, the repairs can be expensive, and leaks can damage the flooring. To avoid this, consider opting for appliances without ice makers. This small decision can save you significant expenses and headaches in the future.
4. Sell Older Properties, Buy New Construction
If you own an older property and find yourself constantly dealing with maintenance and upkeep issues, it may be time to upgrade to a newer property. Transitioning to new construction can provide a period of zero maintenance costs, offering a substantial improvement to your cash flow. Evaluate the long-term benefits of selling older properties and reinvesting in newer, low-maintenance alternatives. This also restarts the property tax depreciation schedule.
5. Avoid Turnover
Property turnover is the largest expense a landlord incurs because it has the double negative impact of no income during the vacancy periode, and often substantial costs to bring the property back to full rent-ready condition. In today's softening rental market, avoiding turnover is crucial. Vacancies, repairs, and upgrades during turnover will significantly impact the profitability of the property. The best way to minimize turnover is to simply take care of your residents during the lease term so that they will want to renew their lease year after year. You can measure the success of your lease renewal efforts with a goal of renewing at least 60% of your overall property portfolio. At Grace Property Management, we successfully renewed 77% of our residents in 2023.
We believe that when property management is performed with integrity, both tenants and landlords benefit. Property Management is not just our business - it is a relationship between us, our owner-clients, and our tenant-residents. If these are important to you, we may be a good fit to provide you, your property, and your tenant residence with our award-winning property management service. Feel free to reach out to us for assistance.
Serving real estate investors & residents since 1978