You’ve heard the saying, “A penny saved is a penny earned.” There’s no better place to focus that advice than on your rental business.
You don’t have to be miserly to save a bundle of money on your rentals. Rather, adopting a conscious approach of minimizing both routine expenses and eliminating potential costs before they ever have a chance to occur can have a dramatic effect on the profitability of your rental.
The secret is to develop a cost-savings mindset and routinely assess your leasing policies. Every dollar saved will drop right to your bottom line.
Here are some ideas to get you started:
Restoring units is one of the most common profit-killers for landlords. Anticipating the process is the easiest way to cut these turnover costs. For instance, ban cigarette smoking in your units. Get picky about tenants, and choose those renters who have proven they will care for the property. Offer tenants an orientation when they move in, and be specific about what is expected of them.
Wear and tear on your unit is inevitable, and another common cost a landlord must absorb. Adapt the property to the trials of renters, and you will prolong its useful life. For instance:
In snowy climates, salt and other de-icers used this winter could wreak havoc on carpet and floors if it is tracked in from outside. Supply a entry mat and instruct tenants to leave their shoes near the doorway. If your carpeting runs to the entry door, consider creating a hard surface like stone or tile inside your unit’s entry, where shoes can be removed.
Moving furniture in and out, time and again, inevitably wears out the corners of your walls, especially the walls around the entry. Clear plastic corner protectors are inexpensive to purchase and will add years of life to your drywall.
Perform regularly-scheduled maintenance on all your appliances, such as changing furnace filters, cleaning air conditioning units and periodically draining your hot water heater, removing sediment. Refer to your owner’s manuals for instructions. The simplest maintenance can add years to the life of your appliances — and reduce the cost of replacement or repairs.
Schedule maintenance checks on major appliances like furnaces or air conditioners off-season, when contractors are looking for work, and the wait is minimal.
Water damage can be one of the most costly and frustrating experiences you will encounter. Neglected water leaks quickly can become major repairs, and may cause persistent mould, which leads to more income loss.
Check for water leaks frequently, especially after a severe storm. Look for signs around your windows, doors and ceilings that water may be leaking. Attic leaks point to a roof repair, which only grow worse with time. Catch these early, and save on major repair — and losses.
Thoroughly inspect shower grout and toilet seals, making sure water and mould are not taking a slow but deadly toll on your bathrooms. If you see any hints of water damage, address it immediately, before it becomes a full-blown catastrophe.
Landlords can also reduce expenses by reducing liabilities. For instance, pay close attention to complaints from tenants about the habitability of the property. Issues like bedbugs, security, heat and mould can have dire consequences if left unresolved. Landlords stand to lose more than the cost of remediation if a tenant breaks a lease or pursues legal action.
Another liability that can be minimized is crime in the rental property. Avoid fines, lowering property values, or losing good tenants by running tenant background checks, prohibiting crime in the lease agreement (to aid in eviction), and routinely checking up on the property.
Discrimination claims are costly for landlords — one claim can rob you of years of rental profits. Fortunately, these claims are largely avoidable. Simply adopt tenant screening practices that focus on the tenants’ abilities rather than their gender, race, disability, age and so on. Set your policies to writing and keep documentation of applicants who come through, including those who were rejected, so you can quickly defeat any frivolous claims.
Keep tabs on your insurance coverage. While you definitely want to have adequate insurance for you rentals, it’s worth reviewing your coverage periodically. Make sure the property is not over-insured and that you are not spending more money on premiums than necessary. Have you updated the agent on any changes to the property?
It’s also a good idea to suggest that your tenants purchase their own renters insurance policy. That may reduce the risk of the tenant pursuing the landlord for lost possessions in the event of a disaster, like an apartment fire. Renters insurance also protects tenants from suffering a catastrophic financial loss which could prevent them from paying rent.
This post is provided by Tenant Verification Service, Inc., helping landlords reduce the risks of renting with fraud prevention tools that include Tenant Screening, Tenant Background Checks, (U.S. and Canada), as well as Criminal Background Checks, and Eviction Reports (U.S. only).
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Disclaimer: The information provided in this post in not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting your local, state, federal or provincial tenancy laws.