Investing in residential rental property is common in the United States. According to IRS records, about 11 million taxpayers are landlords.
Speaking of landlord income, are yours earning where you want them to be? Whether you’re a mom-and-pop landlord with one rental property or a seasoned investor with a thousand units, your primary goal is to increase your net rental income (income after taxes and other expenses).
The more money you pocket from your property investment, the more likely you’ll achieve your financial goals. Come with us as we unpack a few tips that can help you put more money in your pocket.
1. Keep Vacancy Rates Low
There are fewer things a landlord hates than a vacant rental. When you don’t have a tenant, you’re not making any money from the unit. This also means that if you have a mortgage and other bills to pay, you’ll need to find the funds elsewhere. Not ideal!
The most straightforward way to increase your net income from your rental is to keep it occupied throughout the year. Although, inevitably, tenants will always come and go, having an effective property marketing strategy and building a pool of potential renters can help keep occupancy rates high.
2. Reduce Your Property Expenses
A steady property rental income is great, but after a while, you’ll start wanting more of it. A good place to start is to cut some of the property’s expenses.
The mortgage is the biggest expense for most landlords. The only way to reduce your monthly mortgage is to refinance the loan and get a lower interest rate. Consult your lender and know your options.
Another major expense is property management fees. If you have hired a full-service property management company, it’s taking about 10% of your monthly rental collection.
Of course, their services are worth the cost, but you can always negotiate for a lower percentage, especially if you’ve been a client for a long time. Even a 1% reduction can make a big impact over several years.
Property taxes also eat into your rental income. Landlords must report their rental income, but they’re allowed a raft of deductions, such as mortgage interest and property depreciation. It’s advisable to engage a tax accountant to help you make the most of the deductions.
3. Increase Rent Prices
On paper, increasing the rent is a straightforward way to increase your net rental income, as long as property expenses remain constant. In practice, though, it’s easier said than done.
You don’t just wake up one morning and slap your tenants with a rental increase. If you’re not strategic with the move, you could end up losing tenants or make it more difficult to attract new tenants.
Consult a local property management firm and they’ll advise you on how to go about the increase. You can even get a free rental analysis. Check out property management in Gastonia to see an example of how it works.
Earn a Higher Net Rental Income
As a real estate investor, you’re all about making more money. You must find ways to increase your net rental income to achieve this goal. These tips will get you going!
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