Oh, to be a landlord. You’re self-made, taking responsibility for yourself, and all those good things, but there’s the flip side of the coin too. You have to ensure that what you’re doing is actually making you money, and not slowly leaking through your savings until you have to search for a rented home to live in yourself.
So, you’ve got the business up and running, and one or more properties up for rent, but you aren’t making money? Let’s see why this might be the case.
1. Paying entirely too much for your property.
As much as we’d like the market to work according to all of our whims and fancies, it doesn’t. Even if your opinion and gut says that a particular property is going to rise in value like a phoenix from the ashes, it may not turn out to be that way. If the surrounding conditions dictate that you shouldn’t overpay for a particular property, it’s probably best to listen to reason.
If you pay too much for something that isn’t going to net you a lot of monthly rent, you’re losing money. In fact, if you’ve been losing money in this fashion on a property for too long, you might just want to cut your losses and move on by selling the property.
2. You’re charging your tenants too little.
Inflation is constantly on the rise. Everything out there is getting more expensive. Fuel, food, utilities – everything. In lieu of this steady increase in prices, you need to raise your rents to make sure you are making up the difference.
Even if your tenants are a bunch of college kids, you need to tell them that there is a certain amount you simply must have or you won’t be able to allow them to stay on your property any longer. You don’t need to spring this up on them out of the blue, either. If they’ve been paying attention, they know that prices are on the rise, and after all, you’re here to make money.
Look around and see what other landlords in the vicinity are charging their tenants, and make adjustments accordingly.
3. You’ve got too many frequent fliers on your properties.
One of the cardinal rules for making a living as a landlord is to have a group of stable residents in your rented homes. If you have a rotating cast of characters which changes every couple of months, you won’t be able to generate a stable cash-flow.
Whenever you look at new tenants, try to find out about their history in their previous rented homes, if they have any. If they have a history of constantly moving from place to place, you might want to pass on their offer.
In addition, make sure your rent and living conditions are competitive according to current market conditions, so that your tenants aren’t always on the hunt for better places.
4. You’re overspending on your rental properties.
So, it’s technically your house (in a roundabout way) even if you’ve given other people the permission to live in it. And while there’s a lot of wisdom in keeping your property clean and maintained, you don’t need to go overboard.
If and when you do have to make repairs, you don’t necessarily need to go with the companies who have the largest ad in the newspaper or the flashiest website. These might end up costing you way more than a local contractor would. Ask around and look for alternatives before you commit to any major repair contracts that might burn a hole in your pocket.
5. You’re way, way too miserly.
As a counterpoint to the previous one, you might also be one of the landlords that have to coaxed and cajoled into spending even a single rupee on their properties.
Look, if you have to stay competitive, your properties have to remain clean and inhabitable. You can’t expect tenants to just walk in and accept an apartment that looks like the set of a horror film.
If you have a good apartment, you create good buzz around your property, and you will attract a better class of tenant.
In summation, if you’ve got a bunch of rental properties but you still have moments where you look at your income/expenditure sheet and go “Wait, what?”, go through the above list and make sure you aren’t making any of these mistakes.