Prepare for fluctuating fiscal changes by adding value to properties, and by decreasing the expense budget each and every year. We’ll explain how and why, but first let’s discuss why the rental market is solid at this time:
Gen Y is entering the prime rental market. Also, unlike generations of the past, a good portion of Gen Y like to stick around at their parent’s home. This has increased the demand for multi-family rentals and affordable housing. We made mention of the soaring student loans, which keep graduates in the rental market longer. Soaring foreclosures are another reason former homeowners now face the prospect of renting.
For investors who have taken advantage of this lucrative rental market, management is key to keeping tenants happy and cash flow positive – for the long term.
If you can’t sell an income property, or you’ve had a hard time marketing your property, check out Jason Hartman’s tips below.
Being resourceful can really help with investing, even if you’re not planning to flip the home. Renovating basic equipment or appliances, or by upgrading a plumbing system, for example – can save property owners in the long run.
Other typical ways to reduce property expenses include the following:
Price compare the rates for home insurance
Negotiate with the city, as it relates to property taxes and exemptions
Upgrade your property management system, or look for ways to improve
These actions accumulate significant savings and wealth over time.
It could be as simple as changing the light bulbs into more eco-friendly options for the tenant.
Here are some other ideas:
- Laundry facilities or places of entertainment
- Negotiate with service providers (e.g. buy bulk cable, internet – and resell for a lower price, but also make a profit)
- Create a playground to cater to families with children
- Reinstall shower heads, toiletries and more
A key note is that even though you may be spending a decent sum on these repairs at the beginning, in the end, investors can significantly increase rental each month – which tenants will gladly pay. These new amenities increase the quality of living for tenants, and can create higher amounts of revenue each month. For investors who are unsure of what to do, Jason Hartman suggests taking a survey of current tenants to find out what they prefer. The take home message is this basic equation:
Increase the rental income and/or decrease the property expenses.
This a proven method to keep your property, increase the property value, and increase the property income. (Top image: Flickr |JPS246)
The Commercial Investing Center Team