Did you recently inherit a house from a family member or purchase a second home?
Becoming a landlord is an appealing option for entrepreneurial-minded property owners like yourself.
One rental unit alone can command an average of $1,500 a month or more. However, expenses can cost upward of $11,000 annually, leaving you with little profit left over.
You need a rental leasing plan that maximizes profit so that you can grow and scale a lucrative real estate portfolio.
Start with these helpful landlord tips!
Be Mindful Of the Location
Everything starts with location. However, you can't discover the perfect location without a rental goal.
You should start with an "ideal tenant" profile.
Market research can help you curate a demographic profile with the highest purchasing potential, maximizing rental income. First, you must understand consumer bases before you can select the right one.
Your tenant profile should include the target's problems, starting with the highest priority. Ask yourself how your property can help solve those problems.
For example, if available parking is a top concern, then you'll want to purchase a property with a driveway, available street parking, and proximity to public transportation.
Are you exploring the family demographic?
Parents want their children to go to the best schools. Thus, you should consider buying property near the best school districts in the city.
The business professional tenant would likely prefer a rental unit located in or near a financial district. The college tenant would need a rental home near university campuses, which means you could market to college professors and campus staff, as well.
Next, you'll need to understand the purchasing power of these tenant profiles. Discover which profiles are less of a risk; you need tenants who are responsible with rent and make enough income to cover monthly expenses without issue.
Create an Airtight Tenant Placement Strategy
At this point, you should start thinking about expense control strategies.
Where can you cut costs in your portfolio? What areas are cutting into your revenue?
One of the biggest money-wasters is tenant placement tasks like applications, unit showings, tenant screening, marketing, and new leasing contracts. Capturing the ideal tenant will help you cut down on these expenses annually.
This point speaks to the importance of capturing long-term tenants, as well. Tenant retention should also be reflected in your ideal tenant profile.
This time, think about the long-term goals of your ideal consumer base. For example, renters with families are likely looking to live in a home for a few years before they save enough money to buy their own dream home.
Thus, you'll need to stage and market your home so that it speaks to this goal. Invest in necessary upgrades that encourage renters to renew contracts. Lease agreement tips should also include a 24/7 maintenance protocol; tenants should have the ability to submit service requests and track the status of those requests.
Create a Rental Leasing Strategy That's Built For Profit
Check your expenses to see where you can save money in your rental leasing model. Think more about the profit potential of location and cost-effective tenant placement.
Are you ready to discover the true potential of your property?
Collectively, the team at Residential Equity Management has over 20 years of experience in property management, including accounting, investor relations, and contracting. Check out our owner resources section and blog to find even more tips.
Let us develop your portfolio in California with our expert rental property management services!
