Home Business Top 15 Ways to Profit More From Buying Property

Top 15 Ways to Profit More From Buying Property

Simi November 19, 2018

For most people, real estate will be the biggest purchase they make in their lifetime. It is for this reason that people don’t take such a purchase lightly. They spend weeks or even months scouring the market for the perfect home. Homebuyers meet with agents, inspect countless houses, and finally, they find a house that is just right.

Their house has to have the right number of bedrooms. It needs a kitchen to die for and a beautiful garden packed with potential. In short, it needs to be perfect. Provided the sale goes through without any major hiccups, these people are now the proud owners of a new house. Now the question comes up, what are they to do with it?

Generally, there are two types of buyers. Some people buy for investment purposes while others buy to live in their new home. The latter of these may have plans to renovate and resell, but the distinction here is that they don’t have passive income in mind. It is the former, people who buy for investment, that is of interest here.

Buying property with the aim being to rent it out is quite a different ballgame from buying a residence. The passive income you can gain from such a venture is a big advantage, but the managing a property can be a stressful, tiresome task. If you plan to rent, here are 15 property management tips you should know.

1. Put Some of the Rent Back into Your Property

People only look after things they own and this also applies to houses. The owner of a property would never dare wreck their own place. They probably have been lumped with enormous mortgage repayments. They have utility bills to meet every month. They have spent their time, effort and hard-earned money on turning that house into a home.

Therefore, property owners look after and value their asset. Renters, on the other hand, have no such emotional or financial attachment to the house. They may have a deposit tied up in it, but it is not theirs. They have not shackled themselves to the house for the foreseeable future, so they probably will not take as much care of it as an owner would.

This is not to accuse all renters of being horrible tenants. Of course, there are people who will do their utmost to maintain the property they are renting, but they will not go the extra mile. After all, it is not their property. For this reason, you should put a portion of the monthly rent back into your property. It doesn’t have to be a crippling amount, as 10 percent will suffice.

Use this money to reinvigorate the home. Most homes can look tired if it has renters there for a long time. This level of lived-in will decrease the overall value and appeal of the home, which will make it harder to find good tenants.

The money that you have put aside can go towards a fresh coat of paint, new carpeting or even hiring a handyman to tighten up the cupboards and realign the shelves. You can also use it for whatever the house needs to look fresh and bright.

2. Consult an Experienced Real Estate Agent

Real estate agents have a bad reputation. People often view them as crooked salespeople who will do anything to make a sale. And as with any industry, there are the bad eggs. This is true for real estate, too. There will be agents who don’t value their clients or their reputation.

These people may not care how or who they sell the property to, so you should avoid such property dealers at all costs. A reputable real estate agent, on the other hand, cares about their clients and the area where they work in. They want to see the areas flourish because the more valuable the houses, the more money they make via commission during sales.

These agents will want to find the best possible buyers to invest in the area by investing in their houses. A good agent wants their buyers to be happy with their purchase. After all, happy customers are customers who will return in the future. An agent such as this also knows the local market. They know the rental trends and the best place to buy if you’re looking for a rental property.

The insight of these professionals can be invaluable throughout the purchasing and rental process. In the beginning, they can make sure that the house you purchase can provide a decent rental income. No one wants a house that is undesirable to renters. Once you purchase the property, a real estate agent can help you with renting and property management.

These people make it their business to know how to maintain a home. Real estate professionals don’t want to see the houses they sell fall into disrepair.

3. Give Tenants Simple, Straightforward Instructions

A person who is renting their property may have both long-term tenants and short-term vacationers. However, all tenants need instructions on how the house works. These people don’t know the house like you do. So, you need to instruct them on how everything works, where everything should go in simple terms.

Providing information is not an insult to the intelligence of other people. Rather, it is stating the fact that people don’t like complicated things. People on vacation don’t want to spend the first few hours of their holiday figuring out how the TV works or how to operate the music system. They want the shortest possible rundown so that they can get on with their leisure time.

And the same is true for long-term renters. These people don’t want to spend huge amounts of time and effort to learn about their rental. To maintain your tenant’s peace of mind, provide instructions for everything, but in the simplest possible way. This does not have to be an arduous task.

In fact, a proficient property manager will be aware of what to do in this regard. If you consult a professional before renting, they can tell you what to do. Property managers understand what renters need to know. They can help you decide what to convey to renters and how to deliver this information. Sorting it all out prior to renting your property will minimize damage to your property, too.

4. Know When to Rent Your Property

When people have jobs, they often go on vacation. When people go on vacation, they need a place to stay. A savvy real estate investor will be aware of this and will take advantage of it. Of course, there are hotels and resorts to accommodate the massive amounts of tourists during the peak seasons. But, not all these people want to stay in hotels.

Some prefer to rent a home or an apartment for their friends and family. And these people are a landlord’s target market. When it comes to holiday home rentals, there are two different seasons to consider. These are the peak season and the off season. During the peak season, everyone is on vacation, so they are looking for a place to stay.

This is the time to generate the most amount of income because rents go up due to the overwhelming demand. Rentals for vacation homes be three times higher during the peak season. So, this is the perfect time to drum up some extra cash. Also, it is not the time for owners to stay in the house themselves. It might be tempting to spend the holiday season in a holiday home that you own.

After all, who wants to pay for an exorbitant hotel when they can stay in a house they own free of charge? While you can do this sometimes, don’t do it every peak season. By renting out at the best possible times, you can increase your earning potential. Visit your vacation home during the off season and rent it out during the peak season to make the most out of your property.

5. Price Your Property Right

Expectation management is key in the real estate industry. Owners are often far too quick to overprice their property. This is because they don’t know the current housing market or they have an elevated view of their property. This is completely excusable. First, not everyone is a real estate agent and second, who doesn’t love their home?

Obviously, a person who has spent years pouring effort and money into a property will think their house is worth more than it is. While it is completely understandable that homeowners will have a slanted view, it doesn’t guarantee their property will fetch the price they set. But owners don’t set the value of the property; the market does. It is the market that determines the rental price of your property. An owner looking to rent their home to vacationers should do their research.

So, look at the prices that other places are going for, as well as the rate for hotels and resorts in your area. Once you find this information, set a reasonable price for your property. There will always be demand for houses during the vacation season, but this may not always guarantee your place will find customers at the price you want. So try opting for a fair price to maximize the renting potential of your property.

The same principle is true for owners renting their houses to long-term tenants. An overpriced property will generally not find renters, no matter how much demand there is in the market. So, remember, it’s better to set a fair, market-relevant price if you want to rent in a timely manner.

6. Have Someone Else Do a Property Inspection

Two sets of eyes are always better than one. And property inspections are not exempt from this rule. These signal a time of the year when homeowners reacquaint themselves with their property. Homeowners have to go through the entire house, taking notes at each step. There will be things they will need to update, fix or replace.

Any homeowner knows their property inside and out. They know every nook and cranny, so when they inspect the property, they do it more than once. Most people inspect at least a couple of times as they go through the house. However, most people’s brains autocorrect certain things because homeowners are used to them.

There is also human error. No matter how many times you may check things, there will almost always be something you miss. After all, no one is perfect. So, it is advisable to have someone else double check your property inspections. A fresh set of eyes may be able to spot something you overlooked.

This may sound pedantic, but you may be surprised what a new perspective can provide. When renting a place to new people, you want everything to be in tip-top shape. This way, if the tenants damage something, you are not liable because you know it was intact before renting.

7. Remember, Maintenance Costs Less Than Repairs

Prevention is better than a cure. This may apply to medical situations, but it is applicable everywhere. It is less expensive to prevent an accident than it is to fix something once it has broken. Granted, there may be more effort involved in a maintenance plan, but it is well worth it.

In terms of property management, maintenance should be a priority for every property owner. Consider the following circumstance. It is peak season at a popular summer vacation spot. You have found the perfect people to stay in your property for a couple of weeks, and they have agreed to the price that you set. Money is in your bank account, and you have dutifully handed over the keys.

Then, one night you get a phone call from a couple of upset tenants. The air conditioning system has quit without any warning, and your guests are left in the sweltering heat. They are demanding you fix it promptly. Also, they expect you to compensate them for the inconvenience you caused. So, not only do you have to pay someone to fix the AC, you also may need to refund your guest’s money.

The expense may end up blowing through all the money you made on the rental. Although, this is the worst-case scenario, it illustrates the importance of regular maintenance. So never skimp on maintaining your property. Maintenance can prevent things from breaking down entirely.

Fixing a broken item will always cost you more than keeping it in working order. Not to mention, you will save yourself from any stress or complications in the future.

8. Know Your Property

You have just received the keys to your latest real estate purchase. So what do you do? Do you hop online to see how much you can set the rent? The answer is no. Step away from the computer and put the phone down.

Use those keys to unlock the front door. It is time to get to know the property you have bought. This may sound like a wild personification, but every house is different. You need to acquaint yourself fully with every single property you buy before you rent it out to others. If this concept is entirely foreign to you, seek the advice of a property manager.

These people will be able to tell you exactly what you need to find out about your new house. This includes finding out everything you can about the house and all the systems, too. No one is saying you need to become a plumber and electrician overnight. But you need to know what is going on in these areas.

Systems like these are not eternal. Each of them has elements with set lifespans. They have parts to replace and maintain, too. A property owner needs to know what they need to replace and when. By doing this, you can stay ahead of the curve. Chances are, you won’t be blindsided by things breaking down in the coming months.

Property management can be a time-consuming task. So if you don’t have the hours to spare, hire people to deal with such things. There are countless services that deal specifically with property maintenance, so utilize them if you can.

9. Plan Your Finances

If you are heading into the world of property acquisition and management, you probably are aware of the need for a financial plan. A financial plan is paramount when it comes to property, so you should prepare one using all the information available. This includes doing ample amounts of research on the local property market, too.

When you buy a new property with rentals in mind, there are three things to consider when it comes to the pricing of the property:

  • Location: Different locations get different prices. Although you may be able to get this information online, it may not be accurate. So make sure you check reliable information.
  • Size and Amenities: The size and amenities of a property affect the going rates, so you need to value them correctly.
  • Overall Luxury: Consider the overall luxury the property has to put it in the proper price bracket.

Once you have considered these factors, include the predicted rental prices in your financial plan. The correct information will help you manage your finances, make maintenance easier and maximize your passive income.

10. Find a Great Property Manager

Unless you plan on making property management your full-time job, you will probably need the help of a property manager. These people do everything from maintaining your property to finding suitable tenants. But because they will handle such a valuable asset, you must pick a reputable property manager. They are not all equal, so it matters which you decide to hire.

Hiring a property manager is a business transaction, so treat it as one. This is not about how much you like the person. It is about whether they are the best person to manage your property. So interview multiple companies and people.

Consider factors such as their search engine ranking, their visibility and presence in the neighborhood and the reputation they hold. During the interview process, here are three things to ask them:

  • What is your plan to generate as much income as possible on my property such as advertising and marketing?
  • How will you stay informed on the goings on regarding the property with frequent, honest communication?
  • How do you care for properties you manage? For example, where do you find people to clean and maintain for you?

Your property manager is working for you, not the other way around. They need to impress you if you are going to hire them. If they don’t give you acceptable answers to the questions, they are not right for the job.

11. Prepare Your Property Properly

Although you don’t have to worry about an unfurnished, long-term rental, if you rent to vacationers, you’ll need to prepare the property for them. Remember, vacations are often group activities. They generally include friends and family enjoying experiences together. And this is where your property comes in.

It will be the place of memories they will cherish for years to come. So, to give your guests, the best possible experience, equip your property with everything they will need to enjoy their holiday. This means stocking every room in the house, including the:

  • Kitchen: People should have a fully stocked kitchen when they arrive. Although you don’t have to stock the fridge, be sure there is cutlery, crockery and cooking equipment. Have some basic spices and cooking oils in place, too. Offer some bottled water or coffee, too.
  • Bedroom: Add some fresh bedding and a bedside lamp. A box of tissues and a vase with flowers is a nice idea, as well.
  • Bathroom: Hang towels and stock the bath tissue. Have hand soap there, too.
  • Living Room: Place instructions for the television and any other items. Leave a local newspaper and some menus from local eateries, as well.

How much you stock your rental depends on you and what experience you want to offer to renters. If you don’t know what to stock, ask a property manager. They keep extensive lists of what to have for your guests. Also, some items all have different times of perishability, so consider that when purchasing, too. Keep a running checklist so you know exactly what is in the house at any given time.

12. You are Now in the Hospitality Business

People who rent their properties out to vacationers and tourists are officially part of the hospitality industry. They are offering a service; not simply selling a product. This is a transaction that takes place between two people, so treat it as such. People who rent a place for vacation are looking for an experience.

They are parting with their money, so they can enjoy themselves. Remember, it’s up to you to determine how nice their experience. After all, you want them to return year after year. In the hospitality industry, customers are valuable. Treat them with respect and go out of your way to make sure they are happy and comfortable.

This is what property owners should do when they rent to vacationers, as well as long-term tenants. They need to pay attention to the small things when preparing the house. Obviously, they need to stock up on things for the short-term renters, like pots and pans in the kitchen. But this also means trying to turn an experience from good to great. This could be a vase of fresh flowers in the living room, chocolates on the bed or a bottle of wine in the fridge.

People who go the extra mile in this industry are the ones who are successful. They are the ones who have loyal, happy customers. Because this is technically a service industry, if you are not a people person, hire a property management company to do such things. A person who is heading into this field needs to want to help others. They must be able to offer the best possible experience.

13. Know Your Housekeepers and Service Providers

Housekeepers and other workers are an integral part of property maintenance. They are the ones who keep the place looking clean and presentable. Their level of involvement varies according to the needs of the owners. Maybe they are there year-round and you include them when you rent the place. Or they could only be there after every group of guests has left.

The frequency of their services is important. However, you also need to know these people well and have a good relationship with them. You are entrusting them to maintain the presentability of your property, so you need to be sure you can trust them and their level of work. Even if you are going to hire a service, you still need to know and trust the service.

These people need to be reliable and trustworthy. They also must provide the same service to your guests that you do. If these people interact with your guests, then they are an extension of yourself. This is your image and your reputation at stake, therefore you should give it the proper attention. The process can be time-consuming, so if it’s too much, hire a local property manager to help.

14. Develop a Marketing Strategy

Having a prime piece of real estate ready to go on the market is great, but how do you let people know about it? So to avoid this kind of invisibility, you need a good marketing plan. You must create a way to wave your flag to potential customers. They need to know who and where you are and what you have to offer them.

Thankfully this is not the 80’s, so the internet is here to help. Although you don’t need to pass out flyers on the street corner, you must make yourself visible online. Start by listing your property on sights like Airbnb or Zillow. This is a smart preliminary move to make, but it should not be your only move.

Your listing needs to be in at least a few places, as well as up to date. There is software that is available to help you like myvr.com. This will ensure that your property has a prime position on the web and that the information is correct.

15. Set a Market Relevant Rental Price

The hospitality industry has countless ins and outs many people don’t know about. And one of these is dynamic pricing. This simply means you should adjust prices in accordance with the prevailing demand and supply in the market. And you can do the same when renting a vacation property

Be sure to vary your rental prices throughout the year. Remember, to maximize your passive income, you need to market your place at the local market-relevant price. So do some research on the rental climate in the area. One way to do that is to look at the various property listing sites. These sites will inform you on the trends in the rental market during the peak and off season.

Doing so will help you set a price for your place that competes with other accommodations. If you are managing your own property, think of it as managing your own business. There are countless factors you need to consider. So don’t just sit back waiting for renters to find you. Rentals are one way you can make your money work for you, but you need to put in the work first.