If you plan to maximize your income through rental property investment in the present times, things could not have been better.
The rental property market is on the upswing. In 2018, the largest cities in the US witnessed a rent increase of 91%. The rental rates are on 50-year high, with household renting accounting for 37%.
Before you leap into investing in property, keep some critical factors in mind. These key areas will help you in getting maximum profits from your rental property. Let’s see what these are:
Buy property after thorough analysis
To get the maximum benefit from your property, invest in one that is most profitable. And to find the most profitable one, conduct an investment property analysis. Using real estate matrices, such as capitalization rate and cash on-cash-return, will help you determine the return on investment and the profit margins. Taking the services of a good realtor is a good move. Even better is to take the services of real estate companies, such as UpNest. Such companies allow you to compare agents and select the best one who will cater to your needs.
Invest in property maintenance
It is not enough to own a property that gives maximum returns. Its chances of getting rented out depend upon the condition in which it is being offered. So, before you put it up for listing, perform preventive maintenance, such as professional deep-cleaning, fresh painting, repairing what needs to be repaired, and suchlike things. The idea is to make your property ‘rent ready’. Do this maintenance part as a matter of regular routine. Such measures will help attract quality tenants.
Set realistic rent
Your house may be in the most sought-after area commanding the best rents, but you cannot be unrealistic in demanding rent. If you overprice your property, it is likely to remain vacant for a long time. Thus, it is essential to establish fair pricing, to make your property attractive to your potential tenants as also to make renting out profitable for you. You can get competitive pricing for your property by researching rental listings online, knowing what is being offered in terms of condition and amenities by similar properties in your neighborhood. However, these amenities do not include utilities, such as electricity, water, gas and sewage. The tenant is responsible for the utility bills.
Screening tenants is important
You aim to look for maximum rent for your property, so it is important to look for tenants who can pay monthly or annual rents on time to avoid any disputes. For this, a background check of your tenant’s renting history is a must. And its not only the tenants renting history that you should access but also their household income (should be three times the monthly rent), employment history, criminal convictions and a good credit score.
Make rent-paying easy for the tenant
Sometimes rents are delayed due to the time-consuming methods adopted both by the house owners and tenants, such as payment by cheque that needs to be collected in person or mailed and then encashed by the bank. The best way is to accept rent payment online. One good result of online transaction is it helps in credit reporting that builds the tenant’s credit score. In case of non-receipt of online payment, you can straightway remind the tenant of it, thereby protecting your profit.
Investing in rental properties help you reap numerous tax benefits that, in turn, boost your rental income. The lesser the tax, more will be your rental income. So, be sure to check out what all tax deductions apply to your rental property. In case your property incurs any losses, you are eligible to receive further tax benefits. To this end, it is vital to keep records of your rental property, since carefully maintained records can maximize your deductions at the time of filing taxes and provide protection in case of an audit.
Your aim to boost your income through rental property investment will be successful if you approach it with a practical mindset by adopting digital tools for screening and rent collection, and take measures for minimizing rental risks.