Tips to Accelerate ROI on the Rental Property You Manage

As a real estate investor, the only way to earn a profit is when rental property is making a profit. However, a property manager income depends on how lucrative the property is since you get a percentage of that amount only. To earn a good chunk of money, your goal is to enhance the ROI on the properties you are managing.

Define ROI – Return on investment:

The following formula calculates ROI:

ROI = Net Operating Income/Cost of Investment x 100

It is the ratio of cost of investment and net operating income. Where the cost of investment is the cost that the owner paid in acquiring the said property and Net operating income is calculated annually by subtracting the gross income by operating expenses.

NOI = Gross Income – Operating Expenses

The following generates the gross income

• Rental income
• Other income such as laundry charges, parking charges or vending machines and such
• Operating expenses may include the following.
• Property taxes: Paid according to the size, location and value of the property
• Vacancy: When the rent isn’t paid due to tenants not moving out or paying
• Insurance: Protection against loss of income, threats, natural calamities like floods etc.
• Repairs/maintenance: fixing minor stuff like broken heating systems and maintenance like lawn care, and painting

Your fee is deducted from the ROI, which means that the higher your payment, the lower is the ROI. So, as a property manager, you need to accelerate the ROI so that both you and the investor can stay happy with the income received.

Here’s how you can maximize the ROI and justify your fees to the investor.

Improve The Rental Listing:

The vacancy is the downfall of your ROI, in order to avoid that crater get a better listing. You can easily list your property on giant real estate sites like Zillow, Realtor.com, RealtyTrac, Trulia and Apartments.com- to accelerate your listing.

To maximize traffic on your listing, make sure that you post a compelling description as well as quality shots of the rental property. To lure in potential renters, you can also give and account of the neighbor and amenities that come with it. Mentioning how safe the area and the schools around it will appeal to couples with kids.

Marketing Tactics:

To keep the vacancy rate low, you can do a lot. Start with better marketing. Getting the word out there, about how cool your rental property is one way to attract quality renters. With effective, you can easily maximize the return on investment on your rental property. Make sure all your social media pages are up-to-date with pictures and necessary information. Make sure all of them are linked to your phone for quick replies and feedback. If you aren’t into social media marketing, start learning today as it’s the fastest way to get your property out there. You can also go for offline marketing strategies like ads in newspapers or on radio or TV.

Inspection and Maintenance of the Rental Investment:

Getting a potential client is easy, but to keeping him interested in your property is hard. If you have a dirty, unsafe and depleted property, your renter will not even stay one minute, even check the rest out. Inspection and maintenance is a must if you want your renter to like your place. Keeping your property in good shape will benefit you in the following ways.

• It will attract and retain potential clients and lower your vacancy rate
• It will lower your renovation as well as maintenance cost in the long run, hence increasing the ROI

Following the above tips will help you improve your ROI, which automatically increases your fees as a property manager.

If you’d like to talk more about property management, or you need help with Everest Property Management, please contact us at Everest Realty.

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