Maximize Rental Property Yields
With a little strategy, and a few tweaks rental property investors can quickly elevate their property yields beyond forecasts…
Streamline Financing with Blanket Mortgages
Utilizing blanket mortgages has been far underestimated and underleveraged for far too long. Of course until new blanket mortgages were released by Rental Home Financing in 2014 they weren’t as efficient as they are now. These investment property loans enable investors with portfolios of single family homes to not only reduce interest rates and borrowing costs, but simplify paperwork and organization labor burden. Both of these elements can increase yields. Even more significantly investors can leverage these loans to tap pent up equity and expand holdings. This means improving overall portfolio cap rates. Remember, that after significant appreciation, true cap rates decline, unless equity is put to work. What is your return on your total equity, not original cash invested? Can you do better than that?
Very few landlords ever think of purposefully going out of their way to wow tenants, or make it a core investment philosophy. Some go the opposite way. A few prioritize this, and reap far above average returns. Little efforts, and friendly service can make lunar leaps towards developing tenant loyalty, long term, and high performing tenants, and generating repeat leases and referrals. Try it out and you’ll find the math is far better than dealing with constant renter churn, vandalized properties, and marketing for new tenants.
Kill the Cash
Stop collecting cash. Stop accepting cash for rents. There is absolutely no need for it anymore. Any perceived tax benefits of unreported earnings can also come with extremely lengthy jail sentences. More commonly, counterfeit bills, labor expenditure in collections, exposure to theft, and higher bookkeeping costs, including human error, mean cash rents need to be heavily discounted when it comes to rental property performance projections.
Instead consider accepting bank deposits or online payments.
Kick Liability to the Curb with Pro Property Management
The value of property management company services are often debated by real estate investors. All too often they only focus on the surface costs. Yet there are many more functions and perks of a professional third party manager. One of the most overlooked is protection from liability. In America landlord tenant lawsuits are only likely to rise over the next decade. A third party buffer can save an investor thousands in legal costs each year, and often be critical is preserving their entire personal wealth.
“A stich in time, saves nine.”
Have a Tax Strategy
The savviest and most successful investors and financial advisors invest with taxes in mind first. A long term and annual tax strategy incorporating self-directed IRAs, buying and expenditure schedules, and proactive bookkeeping, as well as exchanges and re-insurance can help deliver double digit improvements to rental yields.
Reduce Liability and Risk Exposure
Building on the above; reducing risk, and protecting from loss is as important as pushing for gains. Protect capital first, or gains will only be temporary, and it’s a hard slog starting from scratch again. The Black Belt Investors Cash and Wealth Report suggests Land Trusts as one of the tools which can aid in privacy and asset protection.
Intuitive Tenant Screening
Managing by the metrics has become the status quo for most Realtors and property management companies today. Many self-managing landlords are now engaging in enforcing hard and fast rules based on data alone too. However, it takes more than looking at a few bare digits to effectively predict a future tenant’s performance.
Build in Rental Increases
Some landlords have been afraid to raise rents. Others have ejected tenants in order to circumvent rental caps after years of flat rents. Tenants expect rents to go up annually, and it only makes sense. Build in reasonable annual rental increases and everyone will be best served, including the bottom line.
Rental Property Marketing
Real estate success relies a lot on marketing, and rental home performance is no different. Investors may be amazed at what a little PR, verbal branding and the right positioning can do to elevate property value and enable premium rents.