How to Get the Highest ROI for Your Property
Your Rate of Return, or ROI, is the amount of profit you receive from a property over time. Expressed as a percentage, the ROI is calculated by dividing your Net Operating Income by the Cost of Investment and then multiplying it by 100. Of course, a number of variables will affect these figures, including the cost of repair and maintenance on the property, tax fees and the interest you are paying on the amount you borrowed. Fortunately, there are several steps that you can take to increase your ROI, effectively putting more money in your bank account.
Properly Maintain and Prepare Your Property
Properly maintaining and preparing your property will make it more attractive to potential renters, thereby allowing you to maximize how much you charge for rent while also ensuring you have very little tenant turnover. If you have purchased a new property, make sure it has clean carpets, functioning appliances, and fresh paint before putting it on the market. Get these items completed in a timely fashion so you can reduce the amount of time the property is off of the market.
Invest in Effective Marketing Strategies
Effective marketing strategies will help to get your property off the market as quickly as possible while also helping you to attract the best potential renters. List your property on more than one website and take steps to target those renters who are the most likely to be interested in the type of property you have available. If your property is located near a university, for example, you will want to focus your marketing strategy on university students or university employees in order to enjoy the greatest results.
Implement a Thorough Screening Process
Increasing your ROI takes more than just finding a body to inhabit your property. Rather, your goal is to find quality tenants who will take proper care of your property, who will make rent payments on time and who are likely to stay in your property for a long period of time. After all, every time your property sits empty, you are losing money. When screening tenants, the process should include a credit check, a criminal check, verification of income and employment, a reference check and a check on the applicant’s rental and eviction history.
Complete Routine Inspections
To ensure your property is being properly cared for, you should make regular inspections of the property throughout the year. After all, you don’t want to have to make costly repairs after a tenant has moved out. Not only will this hurt your pocketbook upfront, but it will also result in keeping your property off the market as you make these repairs. Every day the property is off the market, you are losing out on potential income.
Of course, performing routing inspections also gives you an opportunity to meet with your tenants and make sure everything is working properly. If conducted properly, these regular inspections can result in happier and more satisfied tenants who are then more likely to continue renting for the long-term.