Want to become a real estate investor? Real estate investors invest in properties to make money, however many beginner investors fail and never see their returns. Here are 8 ways to maximum your earning potential and reduce your risks as a landlord.
- Find upcoming markets – This is one of the most difficult tasks in becoming a real estate investor. Find an area in development with a young professional demographic. These areas typically have low cost properties that charge high rent. You can expect these properties to significantly grow in value over the next 10 years.
- Look for the most rooms – The more bedrooms and bathrooms, the higher you can charge for rent. This also provides you with a larger tenant pool to pick from.
- Charge your tenant weekly or bi-weekly – For those who don’t know, there are 52 weeks or 12 months in a year. One month does not equal 4 weeks. A monthly fee means that your tenants are paying more in February, or less in December, because the number of days differ between months. Charging a tenant weekly or bi-weekly will get you an extra month of rent. Weekly rent also helps your tenants budget so that you will experience less late payments as a landlord.
- Don’t include free internet or utilities – Some landlords offer free electricity. Tenants will take advantage of that. You also want to eliminate your liabilities. What if your tenant does something illegal online? You wouldn’t want their activity associated with your internet account.
- Charge for a background check – Zillow’s $20 application for rental properties includes a background check. You can charge potential tenants a $25 application fee and do the background check yourself. Just ask them about their employment status, salary, and free credit score found on most banking and budgeting apps. Remember you can’t ask a tenant their race, gender, religion, disability status, political affiliation or culture.
- Set the appropriate deposit – As a landlord, you have the right to charge a higher deposit for pets or college students who are more likely to damage your property. Set the deposit based on the risk level of the tenant. Dog and cat owners are wiling to pay a higher deposit and rent if you allow their pet. A typical pet fee ranges from $100 per month to $400 per month, depending on the area.
- Depreciation – Make sure you depreciate your property to save on taxes. You can subtract your depreciation from your income to reduce your taxable rental property income.
- Airbnb Reviews – If you offer your property on Airbnb, be sure to keep the property clean and be respectful to your renters. With great reviews, you can raise your prices and earn more.
