Buying a property is a substantial investment and all property owners are looking for ways to maximize the return on investment (or ROI) from their real estate investment. One of the ways to do that is by renovating your properties so that it looks good; these updated properties are in great demand in Memphis. However, that is not the only way to maximize the ROI from your Memphis rental property. Here are five more.
1. Find a long-term tenant
One of the first ways to unlock value from your rental property is to find a long-term tenant. Long-term tenants offer consistent income and hence, greater financial stability. In addition, tenants who are looking for a long-term lease are more likely to think of your property as a home and will take care of it, resulting in less property damage. Get help from professional Memphis property managers to find good, long-term tenants, as they have screening processes in place and can help you find quality tenants faster.
2. Reduce recurring costs
When you own a property, there are some recurring costs that you have to bear, such as mortgage expenses, repairs and maintenance, and property taxes. If you can limit these costs, you can greatly increase your ROI from the rental property.
Mortgage expenses can be reduced by getting your mortgage refinanced at a lesser rate of interest. Maintenance expenses and periods of vacancy can be kept low by hiring a trusted property management firm who can help you maintain your property and find good tenants as early as possible.
3. Increase rent gradually and strategically
Inflation increases year over year in a healthy functioning ecosystem. That is why you should keep increasing your rent gradually, in line with the inflation rate and the standard rental rates of your neighborhood. Raising the rent drastically is usually not advisable, unless you have made major renovations to your property, and it now fits in a higher rental fees bracket.
4. Don’t be lenient with late rental payments
As a rule of thumb, being lenient with delayed rental payments is not a good idea. If you excuse rental payment delays very often, tenants may start being casual with their rental payments and may prioritize other non-necessary expenses, defaulting on the rent payment for a few months. Don’t let that happen – be diligent while charging your rental fees.
Having said that, it is worth noting that we are currently in an unprecedented situation. The pandemic has caused a mass upheaval in the global economy, resulting in a lot of unemployment. If you have a tenant who is struggling financially, you may consider giving a slight reprieve when it comes to paying rent. However, make sure that you check their payment history and ensure that they aren’t taking advantage of the situation.
5. Create multiple sources of revenue
Do not depend on just one tenant for monetizing your real estate property. Create additional sources of revenue by purchasing multiple properties or adding a couple of new floors and renting them out to other occupants. You can also think of purchasing commercial properties which you can lease for events or for business use.
Maximizing the ROI from your rental property requires strategic planning and a multi-faceted approach. In such a scenario, the guidance of professional Memphis property managers like RiverTown Realty can be invaluable. Please contact us with any specific questions about your rental properties.