“Buy real estate in areas where the path exists and buy more real estate where there is no path, but you can create your own.”-David Waronker
One of the ideal avenues for financial freedom is to invest your money in real estate. After all, no matter the time, there will always be a market for houses granted that you find an ideal location for prospective tenants to rent out. However, even veteran investors in real estate are under the misguided notion that in order to make properties profitable and marketable, you have to accumulate more of them. Unfortunately, the reality is that no matter how many properties you have amassed, if no one is renting them out then all your investment endeavors would be for naught. So, how do you address this dilemma? Well, for starters instead of acquiring as many properties as you can, ensure that you can make the existing ones you already have profitable—regardless of whether these are condo units in Avida Cebu or house and lots elsewhere. Focus on your current portfolio first and make it flourish. Here are several ways you can do that:
1.) Decrease Vacancy
It might seem counterintuitive considering you would need tenants to ensure your rental property’s profitability. However, instead of renting out your property to many but short-term clients, it would make so much more sense if you rented it out to a few long-term tenants who would provide a steady stream of profit. Furthermore, finding a long-term tenant means you would not have to deal with the turnover which would be explained in the next item. However, having tenants move out is inevitability, but you can minimize vacancy by keeping the turnaround time to a minimum. This means you have to be savvy when it comes to posting ads and permeate every avenue for advertising it is possible. Furthermore, the moment you learn of the move, you should begin posting so as to screen prospective clients immediately.
2.) Minimize turnovers
Turnovers are costly in innumerable ways. Initially, there are advertising costs to consider (which can easily rack up the longer your property is unoccupied and stays advertised) as well as patching and wall painting costs. Furthermore, repairs that need to be attended to would also cost you. Considering all these, you should be a little discerning and meticulous when it comes to finding tenants which mean you should favor quality above quantity. Find tenants that would take care of your property and consistently pay on time. If you have existing tenants of this caliber, do what you can to keep them. Keeping them would range from ensuring that your rent is not exorbitantly high and excellent customer service. After all, nothing is more disappointing that seeing a good tenant end up with landlord just across the street from you. To ensure tenant retention, establish and cultivate a good tenant/landlord relationship with them.
3.) Increase Rent Strategically
Although tenants tend to be more loyal to landlords who can give them lower rent, this does not mean you should leave your profits to stagnate. You are running a business after all and not a charity project. If you wish to increase your rent to longer-term tenants, do it strategically. In fact, you can already have this stipulated in the initial stages of your negotiation and your lease contract. However, to maintain an edge over your competitors, you should have an awareness of what the rents are like in your area. You would then find that you have plenty of room to increase your revenue by a small amount each year all the while remaining competitive.