There’s no doubt that the real estate market has faced some unprecedented challenges in the last few years. For single-family rental property owners, those challenges have brought about many changes, as well. Volatile markets, economic concerns, and a societal shift in personal and professional priorities have all demanded resilience from rental property investors and their tenants. In fact, most spent quite a lot of time wondering if they would be able to keep their properties at all, much less profit from them.
But with the new year comes a new sense of optimism and new opportunities to refocus on optimizing your investment’s ROI. In a very real sense, that same resilience that carried many rental property owners through the worst of it now encourages many to read positive signs and a favorable outlook in the rental market for the coming year. Perhaps the time has come to seize on this opportunity by implementing some of the ROI optimization strategies recommended by the pros. Here are a few things you can do to enhance profits and keep your investments on solid ground this year.
Social distancing and other challenges resulted in new ways of doing business in a lot of industries, including real estate. Today’s renters are looking for digital services and convenient communication. They use tech to search for rental listings, communicate with property owners, tour potential rentals, exchange information, sign documents, pay rent, and more. With all of the technological tools at your disposal – and with so many renter demographics accustomed to the efficiencies of that tech – you are really missing out on potential savings if you don’t use those tools. Real Property Management taps into new, innovative technologies to manage your investment properties efficiently and professionally, staying in touch with industry trends and exploring new technologies.
Upgrades to Optimize ROI
Another way to optimize your rental income is to offer strategic upgrades. Depending on who your ideal tenant is, they may be attracted to rentals offering a few of today’s convenient smart home upgrades. For example, simply adding a smart doorbell, a smart thermostat, or smart lock on the front door can both draw in more potential tenants and enhance your property’s safety and efficiency. While you may have some upfront costs from the installation, many renters will happily pay a slightly higher rent for a home that is modern and tech-friendly. Over time, this will help you improve your returns by ensuring that your rental property continues to attract and retain quality tenants with ease.
Upgrading your property to stay in line with current trends also involves boosting your property’s energy efficiency. More renters today are choosing to contract with landlords who can offer “green,” energy-efficient rental homes. In fact, a 2013 Strata Research survey revealed that 65% of renters considered the energy efficiency of their rental home before signing the lease. In that same survey, 64% said that they would be willing to pay more rent per month for a “green” rental home.
The good news for investors is that “going green” doesn’t have to be expensive or difficult. Simply switching to LED light bulbs, for example, or installing a smart thermostat can save a lot of energy over time. Also, opting for energy-star rated appliances when you upgrade is a smart move, as well as performing an energy audit on your property at least once a year. By optimizing your property’s energy efficiency, you can also optimize your ROI and appeal to today’s environmentally conscious renters at the same time.
New Opportunities, New Markets
If you have plans to expand your real estate portfolio this year, another way to optimize your returns is to explore opportunities in new markets. Another big shift in the rental market in the past few years has been a renewed interest in living outside of urban centers. More people than ever are still working from home, which has placed a new emphasis on quality of life, more space, and healthier communities. In turn, this search for more space prompted a shift outward and into the suburbs (and exurbs), creating new opportunities for rental property owners in previously unprofitable markets. While things may be easing off now, there are few signs that people will be returning to the cities anytime soon. This has many real estate investors adopting a positive outlook for the upcoming year and, for those looking to expand, offers new renter demographics and new markets to explore.
Effective Property Management
Along with the strategies we’ve listed here, the single best way to optimize your investment’s return is through effective property management. Whether you need to assess your local market and adjust your rental rates, offer strategic upgrades that will allow you to increase the rent, more effectively find and keep quality tenants, or use smart technologies to reduce costs, the right property management company can help with it all. At Real Property Management, we’ve been helping investors like you optimize your returns for decades. We work with rental real estate investors of all sizes to ensure that your properties become and remain profitable over the entire life of your investment.