Posted 13 December 2022 by
Keith OsborneBecoming a first-time landlord is one of the most incredible and frightening eras of anyone's life. Being a landlord is almost the greatest financial achievement anyone can make. Also, being a first-time landlord can be frightening because of the limited experience, and the risky financial investments that can occur while trying to gain profits. As with any financial asset, there is no fool-proof plan for avoiding risks, but you can significantly minimise and maximise your earnings.
Here are five ways to maximise your profits as a first-time landlord.
Request a security deposit always
As a first-time landlord, it is easy to want to fall into the trick of being too nice to incoming tenants. However, being nice is only sometimes the best route if you want to ensure you generate a profit. There is a need to request from your intending tenants a security deposit.
A security deposit is a fee paid to you by your new tenant when they move in. the price is usually insurance for possible damages your property sustains from the tenant. It is best to request a security deposit because it gives you immediate capital when the tenant moves in and helps you avoid having to personally make up for the damage caused by your tenant to your property. Whether it is a security deposit you request of your new tenant or a move-in fee, it is best to make clear documentation of the cost and its nature. You need your tenant to fully understand the terms of your agreement before signing.
Get reliable tenants
Choosing the right tenant will determine how profitable a house-renting business will be. Landlords can't stress enough the importance of thoroughly screening potential tenants before signing agreements. The screening of tenants should include basic qualifications like criminal background checks, rental history verification, income guideline, and creditworthiness check.
A thorough investigation into the basic stuff of every potential tenant would help you reduce your chances of getting a bad tenant. However, your work as a landlord doesn't just stop at selecting the right tenant; you need to find ways to ensure your right tenant stays for as long as possible. The best way to retain a reliable tenant is to treat them well. When it comes to maximising profits, the best way is through retained tenants.
Get a full coverage insurance
Prevention is better than cure, and in the case of being a first-time landlord, it is best to have full coverage insurance and not need it. Rather than need it and not have it. You would think your homeowner's insurance should be enough for a first-time landlord, but sometimes it is not. The best thing about full coverage insurance, landlord insurance, is its cover for damages and potential legal battles.
As a first-time landlord, you are more than likely to get into a tricky situation with a tenant. Landlord insurance would ensure you don't have to bear the cost of tenancy implications. Also, if your house is a new build, you need a warranty that covers the house. You can contact BuildSafe for help with building warranties. Their longevity in the industry is their major selling point, as this ensures that your warranty is in excellent hands with the company. Moreover, you'll have quick access to a team of specialists who can guide you at any point.
Analyse your rental cost
As a first-time landlord, it is easy to get sucked into making a lot of expenses, whether essential or non-essential. Of course, all rental fees are necessary, but you must ensure that your spending is manageable. The best way to ensure your rental cost is effortless is to keep track of everything.
Yes, you must note all expenses made, even the most minute of them. You can separate your expenses into monthly and annual costs. Tracking your rental fee is important because it would help you reduce your expenses to the barest minimum. When you follow your costs, you will know when any is due and be able to prepare for it to get the best price possible. Your rental cost tracking would also help you reduce your repairs because you can invest in quality fixtures and fittings for your property.
Do a regular home maintenance
There is no better way to maximise your profit as a new landlord than to keep your property in the best shape possible. Regularly maintaining your property helps you stay cost-effective and avoid large emergency repair bills. Thankfully, many of the maintenance tasks are things you can do yourself as a landlord, so you can reduce the cost of hiring outside vendors.
You should do preventive maintenance regularly to avoid causing problems. Some include; servicing or replacing appliances and refinishing or replacing worn floorings, amongst others. It is also best to perform whatever tenants make maintenance requests immediately to prevent any problems from arising. A property that is in its best condition and well-presented tends to let quickly and let for the highest rent. Keep your property in the best shape, and you will ultimately maximise your profit as a first-time landlord.
Conclusion
There are many ways you can maximise profit as a new landlord. The most important factor of all is to protect yourself and your property as a landlord. Whatever you do has to be in the interest of your property. If you have done all you can to make your property the best and have everything you need as a landlord, then make sure your rent income maintains its value.
As a new landlord, it is easy to forget that renting your property is a business which means that if your rent income reduces, you are losing. To maintain your rental income, you need to increase your rent annually. If you don't increase your rent by the value of inflation which occurs yearly, then your property value is falling over time.
Do your best to keep your property in the best possible condition so it remains attractive to tenants, and then you can demand changes over time. The above is the key to maximising your profits as a new landlord.