3 Landlords tips for Low Stress and High Profits!
Not everyone chooses to be a landlord, sometimes life circumstances for that hand. But either group have the same desire. To make a profit. Here are a few tips on how to improve your quality of life, and increase your return on investment.
Tip 1: Set yourself up for success by putting in maximum amount of effort first.
Taking a lump sum amount of something, and turning it into a larger amount is the very definition of investment. Just like 401ks, Mutual funds, and stocks. There will always be ongoing effort and cost, but setting the foundation up right, and willing to put in as much effort as possible can help set you up for success.
A few initial choices to be made require a lot of due diligence, information, research, education, and training, as well as seeking out the advice of successful investors, your mentors, and those who have successfully done what you are trying to. Some of those choices are going to include:
- Which area you want to buy an investment property in
- The average vacancy time for that area
- How to market the property
- Getting a lease template ready as well as a process for screening potential tenants
Error in any of those categories could really increase your stress, and further effort required to manage the investment property. Take time upfront to have a proper policy and procedure for the aspects of renting out a property. It’ll save on time, money, and energy… as well as not send your blood pressure into overdrive!
Tip 2: Round up, a lot, on expected expenses.
If you are not careful, your expenses can creep up on you and eat into any profit you have. Make sure you round up, and over estimate those expenses leaving you a great cushion, and higher profit if you end up not needing it! Potential expenses can include, initial repairs and cleaning, marketing, background checks, insurance policy (by the way, make sure you have the property insurance policy for being a landlord to reduce hassle and stress down the road if something happens!), taxes, and any legal assistance you may need. A safe bet is to estimate those expenses times 110%. Get comfortable with having extra funds in the bank to handle any unexpected changes, as well as building an opportunity to take on new investments to build your portfolio! This will make for some great habits, the ease of emergencies a lot less stressful when you know you can take care of it right away, and the end goal always being able to invest in more properties and build a portfolio for your future!
Tip 3: Have a bullet proof vacancy plan!
Rarely anyone will tell you upfront how much vacancy can cost you! It is by far your number one expense. Not necessarily in the way of outgoing expenses, but depletion of revenue coming in. You have all of your normal expenses, but the income halts. Make sure your savings plan accounts for at least 30 days of vacancy. Have great communication with your tenant, and allow for extra notice required if that helps ease the stress. Most tenants are happy to give as much notice as possible.
The moment you get notice from your tenant of their intent to vacate:
- Especially if it’s prime time, schedule cleaning and carpets right away! They will be booked out so far ahead that if you plan 30 days out, you will be in great shape and can cut the turnover time down drastically. The same for any other vendor you may need to utilize. It’s better to cancel requests, than try to find someone willing to squeeze you in during the busiest time of year!
- Determine if you are going to need new marketing photos. Have you learned more about the neighborhood and amenities? Make sure your marketing ad is up to date, and current. Don’t forget to perform a market analysis to determine what the re-renting price should be!
- Have a move out packet ready to send to the tenant ASAP of notice received. Make sure you lay out all expectations about cleaning, key drop off, forwarding information, and potential showings while they are still occupying the property.
- Block out time in your calendar for the day after the tenant turns in their keys to get the inspection done so you can assess what additional items are needed that you were not able to pre-schedule!
- Set up your utility interim billing for the day the tenant moves out to take effect.
The day after the tenant vacates:
- Put a lockbox on the door.
- Take new pictures if that is needed and the property is in good condition. If not, wait until it is cleaned.
- Update your marketing for it being available now if you do not already new tenants lined up to move in!
Vacancy time is one the highest stress times of owning a rental property – so doing all you can to pre schedule, and have a support system, and a very detailed plan will make sure your stress is reduced as much as possible!
Do all you can to minimize stress of owning a rental property while having high profits! Remember, your time is money. Just because your bank account may not be decreasing, consider the time and energy you are expending and how to reduce that to make your return on investment as high as possible!
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