The goal of any rental property business is to generate sustainable income and profit. However, even as the profits begin to roll in, it is important to plan for every contingency. Most rental markets experience some ebb and flow throughout the year. So, careful financial planning will ensure you save exactly what you need to achieve your goals. No matter how successful your rental property business is, every landlord can benefit from money-saving tips. Check out our list below for simple ways you can save on expenses and boost profit potential.
Money-Saving Tips for Landlords
As a general rule, landlords should budget around 1% of the property’s purchase price in annual maintenance costs. So, if you purchase a property for $150,000, you can expect to spend around $1,500 in maintenance. However, rental property costs go beyond repairs and upkeep. So, with that in mind, every dollar counts. Check out these money-saving tips below –
- Take Advantage of Tax Write-offs
- Perform Regular Maintenance
- Shop Around for Your Mortgage
- Get a Good Deal on Landlord Insurance
- Thoroughly Screen Tenants
- Treat Your Tenants Well
- Adhere to All Applicable Laws
- Regularly Evaluate Rental Rates
- Hire a Professional Property Manager
Take Advantage of Tax Write-offs
One of the best money-saving tips for landlords is to maximize every tax deduction available to them. Taxes can drastically cut into your profits, but thankfully owners can deduct items like these below –
- Professional or Legal Services
- Employees and Contractors
- Personal Property
- Pass-Through Tax Deduction
- Travel Expenses
- Home Office Allowances
For a more detailed explanation of what you can write off as a landlord, check out this page. Furthermore, it is worth partnering with a licensed tax professional to ensure you maximize every available deduction.
Perform Regular Maintenance
For landlords, maintenance and repairs are a necessary part of rental ownership. However, regular maintenance not only keeps tenants happy, which aids in tenant retention, but it also protects your valuable investment. In fact, regular preventative maintenance goes a long way to reduce the chance of experiencing more costly problems. So, here are a few things you should do as part of your regular maintenance routine –
- Ensure all emergency alert equipment (smoke detectors and carbon monoxide alarms) functions properly.
- Check for evidence of water leaks or faulty pipes.
- Schedule regular pest control to avoid infestations and potential pest damage.
- Change out all air filters regularly to ensure optimal HVAC performance.
Depending on your property’s features, you may need to perform other regular maintenance tasks. So, use your best judgment and coordinate with your tenants to complete maintenance with as little interruption for them as possible.
Shop Around for Your Mortgage
Mortgage interest rates are a concern for investors in rental property. Typically, rates and down payments are higher when buying an investment property as opposed to owner-occupied homes. So, even if you got a pretty good deal on your mortgage, shop around to see if you can find a better one. In some cases, landlords can refinance to take advantage of today’s low rates. After all, the mortgage is likely an owner’s biggest expense, so any savings is huge savings.
Get a Good Deal on Landlord Insurance
Landlord insurance is not cheap – in fact, it costs more than regular homeowner’s insurance. However, it is worth it to know that your property and interests are protected. Before you purchase the first policy, you come across, reach out to a qualified insurance professional. They can guide you through finding the best coverage for your budget and individual needs. Furthermore, consider these tips for saving money on landlord insurance below –
- See if they offer a new customer discount for your first policy.
- Ask about discounts for having home security systems and smoke detectors.
- Inquire with your homeowner’s insurance provider to see if they can bundle a landlord insurance policy with them as well.
- Check if membership in any organization qualifies you for a discount.
These are not the only ways you can save, so it is best to ask your insurance provider what discounts may be available. After all, it may surprise you to learn just how much savings are out there.
Thoroughly Screen Tenants
As an experienced landlord, you know that troublesome tenants can be costly. That said, owners must take their time and review every application carefully. The first step is to create a standard list of qualifications to judge each application against to comply with Fair Housing Laws.
In general, screening involves checking for creditworthiness, prior rental history, criminal background, and income verification. Additionally, it is a good idea to request previous landlord references as they provide a wealth of insight into your applicants. Taking the time upfront to complete this due diligence can save innumerable headaches down the road.
Treat Your Tenants Well
No landlord wants to deal with a difficult, rude, or unresponsive tenant. Well, a tenant does not want to deal with those qualities in a terrible landlord either. So, strive to make your tenants feel welcome in your property from the moment they move in.
Furthermore, be proactive in preventing problems with the property and responding to any requests as quickly as possible. After all, all of these gestures help secure lease renewals and avoid costly vacancies.
Adhere to All Applicable Laws
While this might seem out of place in a list of money-saving tips for landlords, adhering to local and federal laws can save you some serious cash. However, even experienced landlords can face an unexpected lawsuit as a result of accidentally breaking the law. Therefore, owners need to study all applicable federal, state, and local laws regarding rentals.
It is important to remember that some local laws will vary by city. For example, if your property is located in a Prince George’s County city like Bowie or Laurel, you must give tenants a 24-hour notice before entering the property. However, in other Maryland counties, the landlord has a right of reasonable entry for certain purposes. Although, it is advised that the tenant and landlord agree about a day/time the landlord can enter the property.
So, be sure to look up landlord-tenant specific laws for your country, state, and city.
Regularly Evaluate Rental Rates
How do your rental rate and amenities compare with the local competition? If you do not know the answer, you could be missing out on revenue. Fortunately, you can avoid under and overcharging by checking the current market rates in your area, often for similar properties. From there, landlords can decide when and if they need to adjust the rental rate to balance tenant retention and profit potential. Just make sure you do not overcharge – doing so could cause drive tenants away, only costing you more in the end.
Pro Tip: Check out this blog post to learn how you can painlessly (and legally) raise the rent.
Hire a Professional Property Manager
Hiring a property manager does require a financial investment; doing so can save you time and money in the long run. Also, some property management fees and operating expenses can be a tax write-off for your rental property.
That said, an obvious benefit of professional property management is that it relieves you of unwanted responsibilities. For example, the expert staff at Bay Property Management Group can handle all aspects of your rental business, such as rent collection, tenant screening, maintenance, and more. If you are interested in how full-service property management can maximize your profit potential, contact Bay Management Group today.