Real estate can be an incredible investment. With the real estate market beating the stock market, now is a happy time for investors who own real estate properties. The value of those properties is rising, and that means they can later be sold at a profit.
And for owners of rental properties, the benefits can be even greater. Rental properties can increase in value in the same way that other real estate properties can, but they are also “income properties” — they make money for their owners month to month.
Or, at least, they’re supposed to. Here are a few ways to limit your expenses and maximize your profits.
Profits and expenses on your rental property
A rental property generates income through — you guessed it — tenants who pay rent. But rent isn’t pure profit, of course. Your profits as a landlord will be however much you take in through rent, minus the operating costs of your property.
If you spend more maintaining your property than you gain in rent, then your income property will not generate income; it’ll be just the opposite. And if you do turn a profit with your rental property, you can increase that profit by becoming more efficient in your management expenses. All of this means that landlords are wise to find ways to save money and manage their expenses carefully.
Use landlord software
Landlords have a lot of responsibilities. As a landlord, you have to create a listing for your rental space, post ads, create and accept rental applications, background-check potential tenants, create legal leases, accept deposits, and more. Surely you’re aware of how much work that is.
Fortunately, there are computer programs out there that make many of these processes a whole lot easier. Log onto a great landlord website, and you’ll find tools at your fingertips that will help you create your listing and rental application. You can perform background and credit checks at the touch of a button, and everything is organized neatly. All of this saves you time and therefore money. And speaking of saving money, you can’t beat the price of great modern landlord software: you can get landlord software free, so why not use it?
Know when to outsource
You can save money as a landlord by doing more yourself. But be careful: you only have so much time and so much expertise to spread around. Sometimes, it’s smarter to pay for quality outsourced help.
Take taxes, for instance. Tax laws are full of excellent deductions and loopholes that help landlords. In fact, landlord-friendly tax laws are a part of what makes owning real estate so profitable. But if you try to do your own taxes, you might not find every way to save. And if you get audited, you’ll be on your own. A better move might be to hire a tax pro who can save you money on your tax bill and help you out if you are audited.
Don’t nickel-and-dime your property
Every dollar that you don’t spend on your building increases your profits by one dollar. So it’s tempting for landlords to try and squeeze more money out of their property by neglecting repairs, maintenance, and other basic expenses.
But that’s not a good idea. Being careful about your spending doesn’t just mean avoiding spending where you shouldn’t. It also means being sure to spend wisely where you should. And you should absolutely spend money on maintenance and repairs.
When you neglect maintenance and repair needs on your property, you allow new problems to emerge and small problems to get worse. You risk much larger and costlier problems down the line. Paradoxically, being cheap now is actually the most expensive thing that you can do.
So spend wisely on maintenance. Deal with experts and sign maintenance contracts. Consider smart maintenance spending to be an insurance policy taken out against the future disasters that would otherwise befall your property.