Five tips to increase your return on investment from property
Today I will discuss various tips regarding maximising a property investment return on investment (ROI). ROI refers to how much value can grow from investing in an asset.
For example, investing in real estate property can produce growth, income or yield or perhaps all three. The low volatility for ROI in good property investments is a big contributor to positive cash flow, financial freedom, and wealth accumulation.
This can be best achieved by finding long-term tenants to minimize the probability of dealing with a turnover. In case of non-availability of a long-term tenant, the next thing that can be done is to minimize the vacancy time by keeping the turnover time to a minimum.
Turnover costs money in a number of ways. There are the costs of advertising, repair costs, managing agent’s costs and so on. This might sound counter intuitive however this is a factor where a relatively lower rent may have the probability to increase the revenue.
One of your aims should be to look for tenants who will take care of your property and pay on a consistent basis.
Among the key factors involved in tenant retention is not only rent but also customer service. Ensure that your tenants get professional treatment since they are the paying customer. It is a good tenant/landlord relationship that helps in retaining tenants. Get in contact with your tenants and ask them for feedback.
Strategically increase rent
Try to increase the rent gradually on your long-term tenants. Tenants tend to be loyal, but may be tempted away if they can find lower rent on comparable property elsewhere.
Raise the rent keeping in mind the value of your property in that area. Coincide the increase in rent with some upgrade work like paint or refurbishing so that the tenant feels that they are getting something extra for their money.
Be diligent regarding late fees
Do not be a pushover and ensure that you get your due on time to maintain the profits coming in. If you allow it once, it will keep happening.
Add revenue streams
In case of multi-family properties, look for opportunities to add services like vending machines, ATM’s, public telephones, kiosks, telephone tower space and coin-operated laundry. These will not only provide revenue but will add to the resale value by raising the property’s ROI.