A good rental property can be an immensely profitable long-term investment. In fact, some rentals are so profitable that they remain in the same families for generations. Of course, this isn’t to say that profitability should be taken for granted, regardless of how desirable you think your rental is. Fortunately, provided you’re willing to put your best foot forward, you can help ensure that your rental property stays profitable for years to come.
Learn More About Rental Property Investments
If you’ve never owned or managed a rental property, you’re liable to find that being in charge of one involves a lot more work than you anticipated. Furthermore, many first-time investors fail to familiarize themselves with the tenets of profitable rental properties. Suffice it to say, inexperience and a general lack of knowledge about rental property ownership are not going to serve you well in this endeavor.
So, before diving headlong into your first property purchase, take some time to learn about the various responsibilities and financial commitments that come with owning a rental property. For instance, if there are any seasoned rental property owners among your usual circle of friends, family members and general acquaintances, don’t hesitate to reach out to them for advice. Alternatively, you can find a plethora of helpful answers by getting in touch with a dedicated real estate investment company. Not only will experienced investors be able to teach you about favorable locations and profitable properties, they should be happy to answer any questions you may have regarding how rental property depreciation works.
Make Sure Maintenance is a Priority
Failing to treat property maintenance with due importance can have a number of negative impacts on long-term profitability. For starters, ignoring necessary repairs and/or renovations stands to compromise a property’s overall livability, which can draw the ire of tenants and result in withheld rent payments. Furthermore, depending on the scope of the problems you refuse to address, you may find yourself faced with steep fines, costly lawsuits and other serious legal consequences.
To get out ahead of such problems, make sure to hire knowledgeable, reliable maintenance personnel to care for any rental properties you own. In the case of larger properties – like apartment complexes – full-time maintenance personnel are often needed to ensure that various issues are addressed in a timely and professional manner. Additionally, on the subject of timeliness, you should respond to every maintenance request you receive in an expedient manner. The longer a request is ignored, the more serious the issue is likely to become – and the less satisfied the tenant(s) experiencing said issue are likely to be with your management.
Be Mindful of High-Risk Tenants
Taking on tenants who are unable to comfortably afford rent or pose a danger to the safety of the property can prove disastrous for a landlord. While the desire to see every unit occupied at any given time is perfectly understandable, this doesn’t mean you should relax your guard and take a chance on high-risk tenants. After all, depending on where you’re based, evicting problematic tenants can be a stressful and arduous process.
In the interest of preemptively identifying high-risk tenants, make sure to put every rental applicant through a robust screening process. A good screening process entails taking a close look at an applicant’s credit, income situation, criminal background and eviction history, as well as contacting any references they provide. No matter how impressed you are by the way an applicant presents themselves over the phone, via email or in-person, forgoing the screening process can cost you big.
If you’re too pressed for time to carry out the screening process on your own, consider outsourcing this task to a dedicated property manager (provided, of course, you work with one) or other office space. Entrusting it to a dependable screening service is another good option – especially for landlords who value thoroughness.
When it comes to long-term investments, few pay off better than good rental properties in desirable areas. However, this shouldn’t be taken to mean that success is a given with any rental property investment. Even properties that have all the makings of long-time money-makers can have their profitability hindered by poor management. As such, landlords looking to ensure the sustained profitability of their respective properties would do well to educate themselves and heed the pointers discussed above.