26 Feb Maximizing Rental Income: The Process, Success, and Pitfalls
How do you maximize rental income and improve your overall success in the rental property business? If you choose to grow your rental property portfolio, you need to make sure that you can invest in new properties while maintaining your existing tenants and managing your current properties. Is there an easier way to simplify rental property management for your Seattle rentals, avoid pitfalls, and build success?
Achieving Continuous Growth
To grow, you need to have an ongoing income from your rental properties. According to Property Hawk, diversity and scale are key to a successful rental portfolio: “Investing in a large portfolio with a multiple selection of houses and flats is the key to maximizing a landlords potential property profit.” If you own three units and one of them is empty, a third of your units are empty. If you own a hundred units and one is empty, that’s a much smaller percentage.
What can you do when you’re first starting out? The snowball approach to investing works well for rental properties. After you’ve invested in your first property and you’ve saved some money for ongoing repairs, take any extra income and save it for a new investment. Each time you purchase a property, this pool of income will grow a little larger, and you’ll be able to decrease the time it takes to purchase a new rental property.
Building a Rental Property Management Portfolio
One tip to acquiring a larger number of rental properties at one time is to invest in multi-family rentals. While these come at a higher cost, you get many more units for that cost. According to Vertical Rent, “You cannot possibly get this type of return with a house and you also can’t possibly acquire so many rental properties so quickly unless you go with this type of a strategy.” Another benefit of investing in multi-family properties is that you have a number of similar properties in the same location, with the same landscaping and the same needs for exterior renovation.
You also need to consider what kind of properties you’d like to invest in as you move further into the rental market. Vertical Rent discusses the benefits of purchasing older properties that need a facelift, well-maintained but basic properties, and well-maintained and attractive properties. Those older properties can give you a fantastic return on your investment, but you’ll need to ensure that you have enough income to manage a large renovation. With the eager Seattle rental market, if you invest in multifamily or older rental properties, you know that you are very likely to have a market for your rentals once you’ve invested.
Establishing Key Performance Indicators for Your Seattle Rentals
To make sure that you’re constantly improving your rental property portfolio, you need to establish key performance indicators. According to Landlord Journal, you should measure these metrics:
- Losses from lack of rental income. You need to know who’s not paying, what units are vacant, and what percentage of your properties suffer from these problems each month.
- Turnover. How often in a year will your rental units turn over? Each new tenant comes with a cost, and you need to keep this low.
- Time spent finding new tenants and getting ready for those tenants. How much down time do you have in your rental units? This is time that you may not be getting rent.
- Cost to maintain each unit.
By examining these metrics, you can see the true cost of each of your units and also note any problem areas. For instance, if one particular multi-family unit takes a long time to rent, you can either factor that into your rent, take action to decrease this time, or decide to invest in a different building that is easier to rent.
Property Management Seattle: Easier Ways to Manage Your Properties
Of course, you aren’t going to get to a hundred properties right away, and it’s difficult to manage that many properties without help. By working with a management company, you can focus on your investment portfolio and leave a lot of the details to your property managers. They can help you find new tenants, conduct background checks, collect rent, and maintain your properties. They can also deal with all of the details that bother you in the middle of the night, such as a broken water pipe in one of your apartments.
At Lori Gill and Associates, we want to help you grow your property business. From managing your initial investment to maintaining and finding tenants for your growing list of properties, we can help you make property management simpler for your Seattle rentals. Connect with us today.