If you’re like the rest of us, then you try to save as many hard-earned bucks as you can. Obviously though, you can only save within reason. As an income property investor, you will find yourself spending money on your property from time to time, but this is to the betterment of your investment. Spending considerable amounts in the meantime will often save you massive payments in the future. Here are four ways to save money on an income property.
Running an income property does not have to be a one-man show. To save time, energy, and money, hire some professionals that will provide help.
At some point, doors will need to be repaired, circuits will get loose, and the toilet will leak. These problems could be solved by handymen, electricians, and plumbers, respectively. Sure, you could conduct these tasks if you know how, but you would have to live nearby the rental and be able to arrive quickly to perform the fix.
It’s important that every damage is repaired quickly. If not, you could lose money in two ways. The tenant will become upset and will be more likely to leave. Keeping tenants (especially good ones) is a top priority. Also, the damage could become worse, along with your property. Hire handymen, contractors, and other professionals who will fix up your rental. Those working freelance tend to charge less than those tied with companies.
A great income property has great management. Having a property manager will save you a lot of time and money by taking care of multiple duties. The property manager will take care of tenants’ problems, advertise your rentals, review applications, present the property to interested tenants, review local laws, sometimes act as a handyman, and collect rent. As you can see, having a manager places a lot of temporal and financial stress off your shoulders.
Wait, how do renovations save money, you may be asking yourself? Renovations cost money! That’s true, but here’s why this works. Renovations repair issues that can worsen in the long-term, that end up costing you much more. Not only that, but renovations make your tenants happy and they become more likely to stay. You get lower vacancies and the tenants get satisfied, it’s a win-win situation!
Renovations in kitchens and bathrooms in particular are both very useful and appealing to tenants. That’s because these two areas need a heightened degree of neatness, order, and cleanliness. Your main renovations in kitchens and bathrooms should attempt to improve maintenance and function. Doing things like changing the showerhead, adding a new dishwasher, and cleaning drains will definitely make your income property better. Renovations for alluring value also don’t hurt. Painting walls and adding a backsplash will make the income property look better.
Here’s another renovation tip: try to repair something before you replace it. This generally holds true. But, if repairing costs are more expensive than replacement costs, it’d be better to replace. The call is yours; do what you can to save money on your income property. If repairing a TV costs $50, and getting a brand new TV of the same type is $300, then it should be obvious which path to take.
Don’t Act The Fool
Sometimes you can save money but not dealing with the property, but instead with the tenant. The way you deal with the tenant, either foolishly or rationally, pre- and post-renting, will influence your income.
It’s a jubilating feeling to get a tenant interested in your income property, especially if you’re a new landlord. The problem, though, is that landlords may rush when accepting a tenant. How does this happen and what consequences can it have? Landlords may forget or poorly screen the tenant. And, only after the furniture in the rental is all gone, does the landlord find out that the ‘tenant’ is on the police’s most wanted burglars list.
Related: 8 Things That Make a Good Tenant
Ok, that might’ve been a stretch, but the point is still valid. Landlords may not get a proper background on their tenants, which can make them lose cash. Be sure to screen the tenant and have him/her fill out a rental application. The goals of the application and screening are to obtain the tenant’s basic information. You need to know who this person actually is and if he/she will be able to pay rent. This prevents unpredictability from the tenant that would be at the expense of your earnings. Find out the person’s basic personal information, rental history, credit history, and employment history. Here’s a great example of a rental application. Don’t forget to verify the tenant’s information.
Keeping good ties between you and the tenant is also a key to saving money for your income property. As mentioned earlier, keeping your tenant pleased means lower vacancies. Be patient and polite when dealing with the tenant, even if it’s difficult to be, like when rent is not paid on time. In this case, it’d be a good idea to call the tenant to see what is going on.
This will perhaps be the one of the few motivating factors to file taxes. As an owner of an income property, you can claim expenses for repairs, management, cleaning, supplies, and insurance premiums. What are you waiting for? Go file your 1040s!
These methods boil down to three general principles that save money on your income property. Preventing further damage (repairs), having lower vacancies (repairs and being cool with the tenant), and claiming expenses through taxes. Saving money is always great for your investment and profit. Saving money is not too difficult, it just requires proper planning and execution. One thing’s certain though; it’s worth it in the end.
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