Make Money On Rental Properties: Investing Strategies to Maximize Returns
Rental properties offer a stable source of income that also allows you to spend time with your friends and family. However, it’s essential to understand that to be a successful landlord. You need to invest in your properties and manage them effectively.
Some individuals think that investment property management is only for those who want to make lots of money fast. But, unfortunately, that’s not the case! There are many ways to make money from rental properties.
You may also be wondering how to make money on rental properties. This article will discuss some strategies that can make this possible, such as:
1. Investing in Triple Net Properties
The triple net property lease absolves you of the risks associated with net leases. In addition, it’s an excellent way to make money from property rentals, seeing as the costs of structural maintenance and repairs are paid by the tenant—in addition to rent, property taxes, and insurance premiums.
While the landlord charges lower rent for a triple net lease, the advantages far outweigh the low rent. As a real estate investor that owns a triple net lease, you can decide to sell it and use the total money to buy a replacement property by utilizing the Internal Revenue Service section 1031 exchange option. Please refer to this complete guide to 1031 exchange companies to help you facilitate this process if interested.
2. Leveraging Your Expertise
Before you dive into real estate investing, you’ll want to find out your expertise. What do you know that others don’t know?
There’s a high probability that you don’t know how to get into property management if it’s your first time giving it a trial. However, as an expert in a specialty, you can use that knowledge.
For example, a real estate investor may be great at analyzing properties and zoning laws, but they may not know much about construction techniques or financing techniques. On the other hand, if you see a lot about real estate investing, you can leverage your expertise and make serious money. You can also use your knowledge to find undervalued properties.
3. Finding and Fixing Undervalued Properties
Making money on a rental property depends on how you find and fix undervalued properties. You can find properties at great prices by looking through your local paper or MLS.
Another way you can find undervalued properties is by utilizing your network. Your network can be made up of other investors, real estate agents, landlords, or anyone else that you know. Ask around and see who has any connections with rental property owners.
When you contact and ask them if they have any properties they’d like to sell, they might have some properties listed at great prices.
4. Using Cash-Flowing Properties
Another option that makes it to our list of how to make money on rental properties is finding properties that have cash flow. You’ll always enjoy a steady return with less of your money going into the property.
5. Adding Value to Your Properties
Another method you can apply to make money on rental properties is to add value to your properties. With this, you can improve the quality of the properties so that they’re more appealing to tenants.
You can do this through renovations or improvements. Besides allowing you to raise the rent on the property, you get to make a good profit.
Let’s say you find a property currently rented for $1,000 per month. You decide that you want to give the place a quick facelift. Considering this point, you can paint the walls, put in new flooring, and change out the light fixtures.
The renovations carried out can help increase the rent on this property by $200, which is a way to add value to the rental property.
6. Adding Flexible Off-Season Units
Another strategic approach to making money on rental properties is to add flexible off-season units. Applying this method can require you to have units fully occupied at the end of the summer or the end of the winter season.
You can then lease these units back to the occupants at the end of the off-season. These units can then be rented at lower rates during the off-season.
7. Combining Properties
Another great way to make money on rental properties is to combine properties. This means that you can incorporate two or more parcels into one more considerable property. You can then rent out all of these units as one project.
Considering this tip can help you make money on rental properties because it’ll increase the rent you’re charging. Also, explore the option of looking into project financing. This will allow you to combine properties and get a loan backed by the profits from the project.
8. Finding Short-Term Holdings
You can also make money on rental properties by finding short-term holdings, meaning that you can buy properties for just a short time. Then, selling them again when the current rental agreement ends can help you make lots of money.
These short-term rentals can also be used to test out different neighbourhoods. You can find the best places to invest in rental properties.
9. Utilizing Risk Management Strategies
You may wonder how much profit you should make on a rental property. The truth is, it depends on your risk management strategies.
Application of risk management strategies involves incorporating insurance or cash to cover risks that can pose a threat to your business in the future. This strategy is a great way to make money on rental properties because it’s a guaranteed way to cover any expenses that may come up.
As you can see from this article, there are many ways to make money from rental properties. Investing in triple net properties, finding undervalued properties, adding value to your properties, and using short-term rentals are just a few ways to make serious cash on your rental properties.
You may think that it takes a long time to make money on rental properties, but once you learn the ropes, it’ll only take a short time to reap the rewards.