Renting your property to long-term tenants is a great way to generate a steady monthly income, while generally demanding little of your time and sanity. Long-term rentals are the preferred type of housing for the 18-34 demographic, with nearly 80% of millennials today choosing to rent instead of buy. This high demand has imbued these investments with great profit potential, but owners can still lose out if they don’t take the right approach to renting their property. Below are some tips to help you make the most of your long-term rental investment.
How to make money on long-term rentals – Minimize Turnover
Though you’ll obviously endure a much lower tenant turnover rate with a long-term than a short-term rental, replacing tenants on even a yearly basis can be costly. Every time you lose a tenant you’ll be faced with a range of expenses, from renovations and repairs, to new marketing, to the cost of sitting on a vacant property.
But there are a few ways you can minimize your tenant turnover. Setting your rates a little below market value is a great way to get one up on the competition, possibly costing you money in the short-run, but saving you in the end by giving your occupants more incentive to stick around. The local market experts at Authentic Real Estate Team can help you perform the balancing act of setting a price that’s fair for you, and for your renters.
Another way to reduce turnover is simply to communicate. Landlords who are accessible, informative, and attentive to their tenant’s needs stand less risk of them moving out with no notice. This increasingly common tenant tactic is called night flight, or midnight move-out, and it can cost a landlord thousands.
How to make money on long-term rentals – Strict Vetting
Finding the right long-term tenant can be a difficult process, but it’s essential to maximizing your rental’s profitability. And it certainly beats the alternative. The wrong tenant can be destructive, noisy, financially unstable or irresponsible, and untrustworthy, potentially leading to property damage, complaints from neighbors, late payments, or midnight move-outs.
Vetting potential tenants is like interviewing potential employees. Start with an application to check their employment status, rental history, etc. If it’s satisfactory, then conduct a background check, credit check, and contact their current and previous landlords and employers.
The Authentic Real Estate Team works closely with property management companies and HOA’s to make sure you get the renters your property deserves.
How to make money on long-term rentals – Raise Rent Tactically
Though setting your rates slightly below market value can give you an edge on the competition, you shouldn’t count out the potential to tactically raise your rent. If done strategically, you can increase your profits without scaring off your tenants. Remember, moving is expensive. So even if your renters find lower rates in the area, the cost of the move may nullify their potential for savings. The market experts at Authentic Real Estate Team can tell you what the local competition is charging, so you can see how much wiggle room you have.
Another smart tactic is to give your renters the impression that their increased rates are paying for increased services. For example, you can cite rising HOA fees that cover services that benefit your tenants as a reason for raising rent. You can also schedule beautification projects like repainting or re-landscaping to coincide with their renewal date to make the increase look justified.
Orlando is one of the country’s leading markets to make money on long-term rentals, and the Authentic Real Estate Team is Orlando’s leading agency for long-term rental investors. Our experienced team will not only help you find the perfect investment opportunity for your needs, but also help you maximize your ROI.