The goal of any rental property business is to generate enough profit to make the venture a full-time gig. However, most rental companies experience a lot of ebb and flow in their margins, so you’ll need careful financial planning to ensure you save enough to achieve your goals.
The following money-saving tips will help you expand your business and make a sustainable income.
Get Home & Contents Insurance
It’s tempting to avoid paying into insurance because there’s an assumption that you’ll save more money that way. However, comparing home insurance at iSelect is one of the biggest money-saving techniques you could ever use when renting out to tenants. If you own a rental property, you should have Texas landlord insurance coverage.
Landlord insurance covers damage from weather, fire, theft, and damage, potentially saving you thousands.
Tax Advantage of Tax Write-Offs
A money-saving tip that comes at the end of the year comes in the form of tax deductions. Not utilizing these tax write-offs could be a big mistake because you could save significantly on:
- Repairs and Maintenance
- Professional or Legal Services
- All Insurance Types
- Property Depreciation
- Interest Percentages
- Employees and Contractors
- Pass-Through Tax Deductions
- Personal Property
- Home Office Allowances
- Travel Expenses
The included tax deductions don’t even scratch the surface of what you could potentially write off, but you should hire an accountant that can ensure you maximize your deductions.
Shop Around for the Right Mortgage
The right mortgage can make a huge difference in how much you spend over the course of the property’s term. Typically, interest rates are higher in an investment company as opposed to a personal home, so you need to shop for the best deal possible.
If you’re in a fixed-term mortgage with a high rate, consider refinancing to lower your monthly payments significantly.
Regularly Schedule and Perform Maintenance
Performing maintenance and repairs is a necessary part of owning a rental building. Never wait until a part of your building breaks down, or you’ll have to shell out hundreds or even thousands of dollars to replace parts or an entire unit.
If your tenants are constantly contacting you over maintenance issues, you’ll eventually have a most costly problem on your hands: empty units.
As part of your regular maintenance routine, make sure you do the following:
- Check for faulty pipes, water leaks, or a lack of water pressure
- Regularly schedule a pest control company like Saela to avoid rapid infestation
- Ensure all emergency equipment is operational
- Change your air filters and maintain your HVAC equipment
If your building offers other amenities, like a pool or exercise room, you’ll also need to perform regular maintenance on them, as well. Use your best judgment for what types of maintenance you need to complete daily, weekly, and monthly to keep you and your tenants happy.
Screen Tenants Thoroughly
The wrong tenant could cost you an arm and a leg in rental fees or unit destruction, so it’s essential to keep troublesome tenants at bay. At the same time, owners can’t dismiss or judge people based on the laws outlined in the Fair Housing Act, as that could be an especially costly move.
Always be careful with what you say or how you act around all of your potential tenants.
To be safe, keep screening limited to raw data and references because those are what truly determine who will be a good tenant. Things like creditworthiness, criminal background, prior rental history, and income verification can expertly determine who will pay their bills on time.
However, it always helps to get a previous landlord reference for tenants you’re unsure of.
Treat Your Tenants Respectfully
Landlords have a bad reputation for being money-grubbing, lazy, and ungrateful. At the same time, many landlords feel the same way about tenants, and neither group has this bias without reason.
There are a lot of bad tenants and landlords out there, but if the landlord goes into the relationship with positivity, your tenants will follow. Plus, they’re less likely to rent elsewhere.
A bad first impression is hard to shake, so do the following to keep your tenants happy:
- Listen to their complaints and try to form a solution
- Always adhere to rental laws within your state
- Regularly evaluate rental rates to ensure they’re fair
- Hire a professional property manager that oversees the unit
- Offer incentives for early payments, like rent off
- Be transparent, professional, and respond quickly
- Express your appreciation frequently
Your tenants want to be respected, just like you. A tenant that respects you is less likely to damage your property or skip a rental payment as they won’t see you as a priority.