Filling Rentals: Where Is The Money Best Spent?
How can real estate investors fill up rental units and maximize their ROI on every dollar? Between years of slower home building and a massive influx of renters into the market, you wouldn’t think landlords would have any vacancies. However, several factors continue to burden prospective landlords. Vacancies are, unfortunately, more common than one would expect. So how can these real estate investors fill these rental units faster? Perhaps even more importantly, how can they ensure maximum ROI on their budget? Let’s take a look at some of the ways to find tenants and make properties more attractive: Upgrading Units In many cases, filling units and making them more attractive may simply come down to updating. Many investors try to avoid this ‘big’ expense. They think marketing or lowering rent is the more profitable solution. However, when the long term value of property improvements is contrasted against settling for being locked into reduced cash flow for years, modest improvements can easily be trumped when looking at ROI. Investors must weigh total returns and the choices between long term fixes or more affordable cosmetic improvements. Marketing Sometimes increasing occupancy quickly is about the marketing strategy deployed. It can be about visibility and highlighting the perks of the unit. Sometimes this can dramatically increase results on properties which may otherwise sit vacant, off the radar for extended periods of time. However, rather than simply increasing marketing expenses, real estate investors ought to consider the quality of their marketing campaign. What can add more perceived value? How can prospective renters that will be willing to pay premium rates be reached? Track your campaigns to make sure they are maximizing your reach and exposure. Balancing Move-In vs. Monthly Rental Amounts Some real estate investors have acknowledged the traction they gain from low asking prices. However, there are two potential flaws with this strategy. First off, a lot of marketing money and time could be getting spent on attracting prospects of a low caliber. Secondly, deposits are not profits. If move-in costs are not an issue in your area, this may be fine. However, in many parts of the country, the biggest issue for renters is move-in funds. They’d rather a fast move-in with the least out of pocket, even if that means paying significantly more each month. That’s real yield investors can add to net returns and useable cash flow. Leveraging Third Parties Using third parties to generate renter leads and referrals can be one of the best moves for filling units quickly, consistently and with maximum ROI. This can be achieved via regular community networking, setting up affiliates, using real estate agents or third party listing platforms. Do the math. You may find the net ROI on a good property manager really delivers when all benefits are considered.