Many real estate investors are attracted to rental income properties believing it will generate passive income for them. But ask any landlord and he will tell you that the notion of passive income is really a misnomer as they must make lots of efforts in making sure that their rental income is consistent throughout the year. They need to be involved with the affairs of their rental properties as well as their tenants to get consistent returns on investment. Here are some tips to make sure you can receive expected returns on investment from a rental income property all round the year.
Keep your monthly rents aggressive and variable
Most landlords are seen lamenting about high vacancy rates. This happens when the rents are not priced accurately, and they do not reflect the actual housing market conditions. If monthly rents are accurate, your property will show up in all relevant searches made by renters. It will also receive high numbers of inquiries and enjoy very low vacancy rates as renters will line up to get a chance to live inside your property. You need to look at your monthly rents from the point of view of renters to be able to set them right. Remember, greed is the number one killer of low vacancy rates. Calculate your expenses and then set the rent, considering the rents set by your competitors.
Allow entry to good quality tenants
It goes without saying that a lot depends upon the quality of tenants you have inside your property. Two of the biggest killers of positive cash flow are tenant turnover and high vacancy rates. Many landlords also spend a lot of time and money on evictions. You can avoid all these problems if you remain alert at the time of deciding on the applications of your renters. Seasoned landlords know that they should consider a loss of one month’s rent annually on account of vacancy, turnover, and evictions as they are inevitable. Blessed are the landlords that are able to find good quality tenants who pay their rents on time, are well behaved, and also take good care of the property. They also live in the property for a long time to give total peace of mind to their landlords. To make sure you get good quality tenants, deploy a robust tenant screening system. Punish violators of lease terms and encourage tenants to sign long term leases. Try to become a good landlord and get constant feedback from your tenants to serve their needs in a better manner.
Find ways to save on taxes
Your annual rental income is subject to taxes charged by the government. You can earn more income by thinking of ways to spend less and save more. But you also need to think of ways to avoid paying high amount of taxes. Learn about all the deductions allowed by the government and make full use of these deductions to earn higher profits from your rental income property.
Maintenance and repairs are aspects of rental income property that can easily eat up a huge part of your income. If you do not have the skills of carrying out repairs quickly and cheaply, you cannot become a successful landlord. Thankfully, these are the skills that can be learned to keep the expenses incurred on upkeep and repairs down to a minimum. You must make sure that you never overspend on repairs. Also, you must carry out frequent inspections of your property to identify small issues so that they are fixed without snowballing into major repairs.