The conventional real estate investment strategy is to buy and hold. However, rather than continually acquiring more and more properties, it is time for you to take a step back and think about smarter ways to make more money.
Often, this is by focusing on what you already have in your investment portfolio.
By making the most of what you have, you are maximizing returns for all the investments you own, using them to work to their full potential.
1. Decrease Vacancy
In the rental market, such as house for rent in Seremban, it is ideal if you have a long-term tenant to minimize turnover. Not only does this help you build a good rapport with your tenant, it also helps decrease the stress you will face when having to deal and screen new prospective tenants.
In any event of a vacancy in your rental property, be proactive and look for new tenants. As long as there is demand in your area, there will usually be immediate interest in your property. You can thus line up a new tenant to move in on the coattails of the old one.
Post new advertisements the minute you learn that your tenant does not wish to continue the lease. There is usually a 1-month clause where your tenant needs inform you of their intention to continue the lease. This gives you at least a month’s timeframe to find a replacement tenant.
You might think that an area with lower demand will face a shortage of tenants. That may be true, but every property in any area will have a solid demand as long as it is appropriate for the price.
If your rental property has consistently high vacancies, you might be the cause of it yourself, in which case you will need to rethink your price points.
Each month of vacancy will cost you potential revenue, so in essence you will be better off renting at a lower price point, rather than waiting for a tenant to pay for your original price point.
If the property itself does not possess any characteristic or trait that sets it apart from everything else in the area, such as a prime location or a state-of- the-art kitchen, you can only give it more appeal by providing the best value in terms of price point for the property.
2. Minimize Turnover
Tenant turnover will cost money, period. Costs associated with turnover include advertising costs, repair and maintenance costs, and vacancy. One of your goals should thus be to keep quality tenants when you find them. Tenants that take care of your property and pay consistently are hard to find.
Do what you can to keep these tenants when you find them. It may be a bit counterintuitive, but sometimes lowering the rent maybe your trump card in keeping quality tenants happy and increasing revenue.
Nothing is worse than losing your best tenant to a landlord in the surrounding area and having to deal with the expenses of acquiring a new tenant, not to mention the lost revenue caused by the vacancy.
Of course, rental price is not the only factor that plays a part in tenant retention. Other aspects matter too. Things such as customer service also play a key role. It doesn’t matter if you manage your properties personally or have a property manager to do it for you, make sure you have a good personal rapport with your tenant.
Make sure their matters and concerns are heard and dealt with urgently with the interest of both parties in mind. Sometimes, a good tenant/landlord relationship is the key factor that keeps tenants staying where they are.
If you have a property manager, make sure to assess whether they are performing with good tenant/landlord relationships in mind. You can utilize a number of sneaky methods, such as sending holiday cards soliciting feedback from your tenants.
This way, you assure them that their opinion is valued and that they can contact you directly if any dissatisfaction with the property manager arises.
3. Increase rent strategically
While it is true that lowering rental prices can lead to higher returns and revenue, you are advised to increase the amount of rent you collect from your long-term tenants. This is really not a contradiction of ideas at all.
Tenants may be more loyal if your rental property offers the best price, but this is not a reason you should never raise the rents, especially if there is sound reasoning behind raised rent prices.
If you intend to increase rent prices, make sure to survey rents of comparables in the area. As long as the rental price you offer is competitive, and tenants can’t find lower rent elsewhere, factoring in the cost of moving, you will still have the upper hand.
Many and tactics can be employed to increase rents strategically. For example, communicate an offset to new costs, such as increased maintenance fees which cover facilities and amenities they enjoy.
Have this information coincide with an upgrade to the rental. Also, you can plan on carrying out upgrades to the property but schedule the work to coincide with lease renewal. This way, the tenant will feel that they are getting something in return for the increase rental fees.
You can even go the extra mile and ask your tenants if there is anything that would appreciated in terms of upgrades and select items from their list. This will not only help justify raises in rental prices, but it will add value to your property.
In short, make due improvements to your home that will give your home added value, but remember to play this card to your favor.
What you need is a delicate balance in execution that properly exploits knowledge of your property’s value relative to your competitors and relative to your tenant’s conception of value and worth.
4. Be diligent on late rental
While it is important to build a good rapport and relationship with your tenants, this does not mean you need to be a pushover when it comes to timely rent collection. A house for rent in seremban is still a house for rent in seremban, regardless of the relationship between tenants and landlords.
Make sure that your tenants know that you are treating this as a business, that they have signed a contract and are liable to complete the transaction. This is essential for your rental property to be a profitable business.
If you often give tenants leeway in paying late without any extra late fee charges, you are losing money. While this may be fine once or twice, your tenants may try to get away with it and take advantage of your kindness and respect.
Steel yourself firmly and politely and respectfully explain to your tenants that fees must be paid on time, otherwise late fees will be charged pursuant to your lease and contract. Be firm with them that a late payment without the late fees is not considered paid in full, and that you will not accept this payment until all fees are paid.
If you are firm with your stance, they will know that you cannot be easily taken advantage of, will most likely comply in the end.
5. Add revenue streams
The rental fee does not have to be your only source of revenue from the rental property. Always keep an eye out for opportunities to add services, such as extra house cleaning and landscaping services to single-family homes, and coin-operated laundry and dryers to multi-family properties.
Offer these extra services when they sign the ease and they may be happy to pay you extra to avoid responsibilities that they would otherwise be forced to take on.
In conclusion, you can reach your goals of long-term wealth not just through buying and holding multiple properties, but by putting your properties to work more intelligently.