7 Ways To Keep Your Rental Properties Profitable

One of the most commonly underestimated aspects of owning property as a landlord is just how razor-thin those margins can be. If you’re still working while maintaining just one or two properties, and you use the services of a rental management company, you can end up paying the lion’s share to them, your mortgage, and your taxes, often leaving you not much better off than you were before renting.

However, there is are several ways to improve your earnings, to build a steady passive revenue stream, and to make your properties more profitable. Let’s explore a few of them.

Manage Them Yourself

The first step that you should consider taking is handling your rental properties without the help of a property management company. Self-management can allow you to keep the money that would go to management fees, which can often be as much as a tenth of the rent, or more. It does involve more hands-on involvement, so you will need to be ready to handle tenant complaints directly, perhaps doing some DIY, and to collect rent and maintain clear communications.

However, there are a host of digital tools that can make it a lot easier to stay organized without getting overwhelmed. It can also help you more directly manage your relationship with tenants and the costs associated with property upkeep.

Minimize Your Vacancies

One of the biggest sources of lost profits for any rental property is when it’s left vacant for any period of time. Doing what you can to minimize downtime between tenants is crucial, so you should start marketing your property before a lease ends, or as soon as you know that a tenant doesn’t plan to return.

Attracting new tenants is all about creating attractive property listing pages on widely used platforms, using high-quality photos and clear descriptions to attract the kind of applicants that you want. If you work on fixed leases, try to align their end with high-demand seasons to increase the chances of finding someone all the sooner.

Reduce Turnover

Of course, being able to hold onto one tenant for as long as possible is an even better strategy. Long-term rentals tend to be the best approach to this, so building your market in family homes or targeting young professionals can help you reduce your tenant turnover. Aside from vacancies, turnovers can bring cleaning costs, repairs, and marketing expenses.

As such, you should invest in steps like screening tenants to make sure they’re financially stable and a good fit for the property. However, beyond screening, you should work to maintain positive tenant relationships, providing prompt maintenance, showing respect for their privacy and rights, and even offering renewal incentives to keep them in the property once their initial lease runs out.

Find Opportunities To Increase Your Rent

Cutting your costs is one way to make your rentals more profitable, but there could also be opportunities to grow your income further, or well. You can justify higher rents over time, or even attract better tenants, by investing in strategic upgrades, such as modern appliances, better security, or in-unit laundry.

Providing access to better amenities like faster internet or off-street parking can do much the same. Regardless of upgrades to the property, you should be sure that your rent aligns with the increase in market rates.

You should do this steadily and with care, as sudden rent increases can result in you losing your tenants. There’s a careful balance to be struck in order to avoid making less money, in real terms, as the cost of living and property maintenance goes up.

Track Every Dollar

The various costs of taking care of your properties can be easy to lose track of. However, when you do, you also have no idea of how profitable or not your properties might be. As such, financial tracking with the help of real estate accounting software can be truly vital to your operations.

These can help you track your income, expenses, cash flow, and even tax deductions, making it easier to keep more of your money once the tax season comes around. This way, you can more easily see where you’re overperforming, which properties are underperforming, and where you can start setting money aside for future investments.

Refinance When The Numbers Make Sense

The highest cost you have to deal with, as a landlord, is the mortgage that you pay on each of your properties. As such, refinancing that mortgage can unlock significant savings. Keep an eye on the market and look out for drops in interest rates and track increases in your own property value.

When either of those is in alignment, you may be able to access lower monthly payments and more generous payment terms, as well as freeing up equity you can use for reinvestment. Refinancing now and then can make a lot of sense, but you need to be careful to avoid letting fees pile up from doing it too often. Smart refinancing decisions help keep your rental portfolio financially flexible and resilient. 

Consider Multiple Properties to Diversify Your Income

When you rely on any one property, you also take on a certain degree of risk. If that property remains vacant, you still have to pay the mortgage, but it will come directly out of your own pocket. Diversifying across properties, especially across different locations and target markets, can help you spread your income, reducing the impact of vacancies and market shifts.

One underperforming property is less damaging when balanced by others producing steady cash flow. Diversification also creates opportunities to try out working with different types of properties and tenants. It can help you see which markets can make more money, and which you’re better suited to working with.

Being a landlord is one of those paths that becomes more profitable the more you put into it, especially as you get more properties. Hopefully, the tips above show you where you can potentially squeeze out a little more reward for your hard work.