Three Easy Ways to Grow Your Rental Profit
Welcome to another segment of our Real Estate Quick tip series. As a real estate syndication company that partner with investors, we often get asked how we can further increase their rental profit.
The goal of many real estate investors is to have cash flow. Once you take over a property, the existing income and expenses are at your disposal. Putting into place strategies to increase the income and decrease the expenses, will help you get the higher Net Operating Income. (NOI). This in turn which increases the property’s value and the investors’ rental profit.
Today we are going to focus only on the income portion. There’s several ways to increase the NOI and rental profit through income adjustments.
Increase the Amount of Income
This is done through raising rents. We look purchase assets that have below market rents. Some owners are fearful of losing tenants so they don’t forward rent increases. We see it all the time with Mom and Pop shops that are self-managed. Because of this sometimes we can increase rents without even doing anything physical to the property, and still be competitive in the market. Other times making strategic improvements to the property will also drive rents, and your NOI as a result.
Increase the Quality of Income
This is huge. You want quality tenants that will pay on time and keep your units in great condition. If you have good tenants your tenant turnover should be lower and the repairs should be minimal. There are expenses involved in turning a unit, so you want to reduce those as much as you can.
Increase the Longevity of Income
Ensuring you have a steady flow of tenants is critical to the success of your rental profits. Buying in strong markets where both the economy and population are growing, helps keep the demand for rental units high. That is why location is such an important element of investing.
Implementing these strategies can do wonders for increasing your property’s NOI and it’s value. Can you see why we love real estate so much! By implementing certain improvements and process you can further increase your and your equity investor’s rental profit.
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