70 percent of rental property in the U.S. is owned by individual investors. As one of these investors, you're certainly content that you've made a smart investment. Real estate is one of the safest investments that can generate steady returns over several years.
Are you getting maximum returns off your rental properties, though? If your rentals have low occupancy rates, for instance, you aren't making the most of your investments.
To turn things around, you need to implement various real estate asset management best practices. This article will tell you how to best manage your realty assets and generate more value.
1. Ensure Routine Property Maintenance
Whether you own commercial or residential real estate, one thing stands out: buildings experience wear and tear. As an investor, a key responsibility and property management best practice is to keep your buildings well-maintained. When repairs are needed, don't hesitate to get them done.
Proper property maintenance does more than keep your tenants happy and satisfied. In many jurisdictions, landlords are required to maintain a safe and healthy environment in their properties, so routine maintenance will ensure you're compliant at all times.
Maintenance also helps preserve or even increase property value. As a result, you'll build positive equity in the property, which you can tap as a line of credit when needed.
2. Managing Risk
Real estate investing comes with certain risks. In the aftermath of the Financial Crisis of 2008, for example, the housing market crashed, sending property values tumbling to the floor.
That's not the only risk investors face. When you own physical real estate, there's the risk of damage, which can be caused by fire, storms, and vandalism.
What steps are you taking to protect yourself from financial loss in the event that your property is, for instance, razed down by an electrical fire? Smart investors purchase adequate property insurance, in addition to fireproofing the buildings.
There are many types of property insurance. Be sure to go through the fine print and ensure you're getting the right type of coverage for your property.
3. Reducing Operating Expenses
Your primary goal is to increase your rental income. An effective way to achieve this without subjecting your tenants to unjustified rental increases is to keep operating expenses as low as possible.
You have external vendors who provide key services such as tenant background checks, rental property accounting, security, cleaning, and maintenance. You'll spend a big chunk of your operating expenses on these vendors. Find opportunities to cut these expenses.
If you have multiple rental units, for example, negotiate for a lower rate or find a vendor who's willing to offer you a discounted rate. Such small savings will add up over time.
Practice Sound Real Estate Asset Management
Your real estate assets are a valuable part of your investor portfolio. However, they need sound management to deliver maximum value. Be sure to observe these real estate asset management best practices in your day-to-day operations and you'll see impressive growth.
Is an Orlando rental property in your real estate portfolio? Contact us at Monte Davis Property Management and we'll help you manage it.