ROI is also known as return on investment. In the property management world, this means that your rental property is making you money as opposed to costing money or breaking even. The best way to increase ROI on your rental property is through proper maintenance procedures. Read on to learn how to get the highest ROI with regular maintenance and other tips to maintain your property!
How to Calculate ROI on Your Harrisburg Investment Property
As previously mentioned, ROI means that you get more out of an investment than you put in. When it comes to rental properties, this means your rental income is a decent increase from your mortgage payments on that property. Purchasing the property as well as other expenses for maintenance, upgrades, and marketing are all taken into consideration for ROI. So, how do we calculate ROI on a rental property? The most common formula to use for rental property ROI according to Home Union is:
- Annual rental income
- Subtract property expenses from the rental income (this gives you your cash flow)
- Add equity to cash flow to get your net income
- Then, divide the net income by your total investment on the rental property
Use this formula to determine your properties current ROI and also to figure out how to save money and/or make more money to increase the ROI. Always recalculate after making budget chances or property upgrades.
Maximize ROI with Proper Maintenance
- Regular inspections: Inspect the property thoroughly at least every 6 months. This will ensure the property stays in good shape and maintenance issues are addressed as they come up. A well-maintained property is key for ROI.
- Keeping clean: Keep the property clean and always get deep cleans between tenants. Additionally, freshen carpets and wall paint as needed to keep the property looking new while keeping up with design trends.
- Solid turnover process: The cleaning, painting, and flooring options are all part of a solid turnover process. Also, having vendors on deck to help with any maintenance and design needs between turnovers is helpful as well.
- Check-in with tenants: Keep in touch with tenants and their maintenance requests. Always respond to maintenance requests in a timely manner for both the sake of your tenant and your property upkeep.
More Tips to Increase ROI on your Rental Property
Attract quality tenants and screen them: Advertise to qualified tenants the best you can. In addition to that, have a good screening process in place to be sure tenants moving in have good credit standing and no history of evictions. The worst thing for ROI is having to evict tenants. The chances of tenants that will pay and pay on time are higher with a screening process in place.
- Collect rent on time: Collect rent on time every month. Allowing late payments without consequence is a bad landlord habit that will lead to less monthly income and less ROI as a result.
- Find a good property in a good location: Before even purchasing a property to rent, find a high-quality property in a good location where property value is trending upwards.
- Upgrade appliances: Upgrading appliances can add more value to the property. Even subtle and inexpensive changes can cause the property value to increase allowing for greater rent and higher ROI as a result.
Are you a Harrisburg landlord and need help figuring out the ROI of your property? Do you want to learn how to get the maximum ROI on your rental property with regular maintenance? Let the experts at Bay Property Management Group Harrisburg help you get the most out of your Harrisburg investment property. Our experienced team can help with everything from routine maintenance to complete renovations and then place quality tenants to maximize your return!
