There’s never been a better time to be an entrepreneur in property management. Technology lays the world at your fingertips and provides endless opportunities to make money.
The real estate industry, particularly the rental property market, is booming. So it only makes sense that so many people are trying to cash in on it.
Maybe you’re a beginner in the world of property management, or maybe you’ve been involved in the field for a while. Either way, real estate changes fast, and if you don’t keep up, you’ll get lost in the dust.
But in order to make money as a property owner, you have to know what you’re doing.
These seven tips will help you maximize your earnings:
1. Know The Area
It doesn’t matter if you’re using your own money or you are the third party handling someone else’s investment. In order to know the type of people your property will attract, you need to understand the neighborhood.
No matter the size, any business will flop if it’s in the wrong location.
For instance, a company may offer products that are wildly successful with younger people. But if that business opens shop in an area populated mostly by senior citizens, it will probably fail.
The same idea applies to rental properties. As a property manager, you have to research the locale to find out if what you are offering is in demand.
Many factors will determine the popularity of your property and the price you can expect to get for rent. Look into the following before you invest your time and money:
- The median income of the county
- Property values around your rental home
- The average age of the area
- The county’s population density
- Competitive rental properties near yours
- The going rental rate
List your properties at too high of a price and they’ll sit empty. List them too low and you’ll lose out on potential income.
Researching the neighborhood will help you determine a reasonable rate.
2. Learn Everything About The Property
Once you know the area, take some time to learn the ins and outs of your property. Miss anything and it could end up costing you big down the road.
Find out the basic info on your property’s history. Ask questions like:
- When was the last HVAC inspection?
- How old is the roof? When was it last inspected?
- When was the drain field last pumped?
This investigation will make you aware of potential problems. It will let you know what is up to date and what needs fixing.
It’s also good to have answers if your rental applicants ask you these same questions.
3. Know What Amenities Your Tenants Want
As you get to know your rental property and the population you’re targeting, you’ll identify some potential upgrades.
Amenities attract tenants. But you can waste a lot of money on high-end gadgets that no one uses.
This is where knowing the area comes into play again.
If you can only add one, would your tenants rather have added security measures or a fitness center? Are they focused on safety or style? Both?
When you offer amenities that other rentals don’t, you can ask for a higher monthly rent. But investing in amenities is expensive, and there’s no guarantee you’ll make your money back.
Obviously, it’d be nice to be able to offer your tenants everything. But for most property managers on a limited budget, that’s not in the cards. So, you’ll have to figure out the best ways to use your money.
4. Invest Your Time In Learning Basic Maintenance
Rental properties must be maintained. As the manager, that’s your primary job.
If it’s an older building, that upkeep can put a serious dent in your profits. Unless, of course, you do the work yourself.
You know your abilities best. Take stock of your current knowledge and how much you think you can learn.
List the types up upkeep you’d be okay with doing if you knew how. Then seek out avenues to teach yourself.
Some jobs should always go to a professional. Most electrical work, for example, should be contracted out. There are always going to be jobs that aren’t feasible for you to fix, no matter how knowledgeable and experienced you are.
Make a list of these possible problem areas, then find a pro who can do them for you. The Chamber of Commerce in your city may be able to recommend a contractor. If you have a lot of rental properties, you might get a discounted rate.
5. Build Brand Recognition
The best way to reduce vacancies is to keep your property in demand. Word of mouth is important, especially when social media and Yelp are where most people go to research a company’s reputation.
As you’re starting out, make sure to advertise year-round, not just when a unit is empty. Anyone looking for a rental will think of your brand because they’ve seen it repeatedly.
Eventually, you may generate so much interest that you’ll have a waiting list. This is the ideal situation for any property manager.
When that waiting list becomes long enough, you can increase your asking price.
6. Allow Pets
Many properties don’t allow pets. Others set strict limitations on the types of pets they accept.
Check with your insurance company to see what your options are. Some providers restrict a property’s coverage if they house certain breeds of dogs.
Sticking with the provider’s requirements is the way to go. It limits your liability without you having to set the rules yourself (in which case you’d end up looking like the bad guy).
Pet-friendly apartment complexes are generally quite popular. By allowing your tenants to have pets, you’ll attract far more interest.
You can charge an extra monthly fee or a pet deposit, too, so you’ll make more money.
Be sure to have a legal expert draw up your property contract if you allow pets to live on the property. You want to make sure that you’re not liable for any damage or injuries that occur.
7. Keep Up With The Tax Laws
Property management tax laws change fast. If you don’t keep up with them, you can suffer financially. You could miss out on a tax break and end up responsible for more taxes than you expected.
Every businessperson, including property managers, should learn basic bookkeeping skills.
It’s also important to hire an on-call accountant. They’ll charge you a small monthly rate for their services, but it’s worth the money.
When they get busy during tax season, you won’t have to wait to get them on the phone.
Property management has been a popular career for centuries. But learning how to maximize your earnings is a game-changer.
So as you jump into your next real estate project, be sure to follow these tips. They’ll help get every dollar you can.
Ryan Sundling is a Group Marketing Manager at Cardinal Group Management. He has over ten years of experience in the student housing industry and works with Sakara to grow their online presence.