Maximizing the Profit of your Property Portfolio
Every sensible Landlord is always looking for strategies to get the most out of their property portfolio. Here are some tips to help achieve your goals in the commercial property rental industry.
Setting the correct rent
As a Landlord the rent is your only source of income, and it is vital you set it correctly. But getting it right is one of the most difficult decisions a landlord has to make. Advertising a rent that is too high can leave you with an empty property, while a price that is too low will lead you to financial difficulties.
To avoid these problems make sure you do your research – find properties. Search the market for similar properties, and make sure your property is competitive. But remember your rental fee needs to cover your mortgage repayments and all annual expenses, and that is before you have even started to think about making any profit.
Keeping your properties occupied with tenants is one of the best ways to make your portfolio profitable. At times of renovation you may prefer a void property, but other than that try to keep voids to a minimum by setting up new tenants before the old tenants have left the property. You can do this by marketing your property and finding a reliable letting agency as soon as you know your current tenant plans to leave. Do your best to minimize voids as much as possible.
At times it may not be possible to increase your income, but you can increase your profit by reducing costs.
• You can look to your mortgage repayments, is it possible to get a better deal with your current provider, or can you switch your provider to reduce your monthly payments. Even a small monthly reduction can increase your annual income significantly.
• Consider your renovation costs, can you find a tradesman or handyman that can do the jobs you need done for a better price or to a better standard.
• Are your professional fees to high? Is there a lower cost accountant who can save you money? Are your letting agency good value for money or is there someone who can do the same job, or better for a lower cost?
Regularly checking your costs can save you a lot of money in the long run, and is well worth the effort.
Keeping good tenants
Your properties need good tenants that pay in full and on time. Getting a reference can help you make a find suitable tenants, however do not ignore your gut feelings. If you have any doubts about your tenants it is better to refuse them tenancy then regret it further down the line. Once you have a good tenant encourage them to stay and listen to any of their problem, this with help you minimize voids and maximize profits.
In the commercial property rental industry there are no guarantees, but if you follow these steps and do your own.