If you’re looking for a way to maintain your investment property returns, it’s important to understand that there are unexpected ways to ruin ROI. Maintaining excellent returns takes work and the right strategies. Today our Provo property management team highlights five “hidden” things that could affect your property ROI negatively. We’ll also share what you can do to avoid these pitfalls.
1. Neglecting Maintenance and Repairs
Whether you choose to delay critical repairs or you didn’t budget for preventive maintenance this year, neglecting critical maintenance and repairs is one of the best ways to ruin your ROI.
We understand that ongoing maintenance or unexpected repairs can be expensive when thinking through upcoming expenses vs. rental income. However, in most cases, investors that hold off on repairs or don’t conduct routine maintenance throughout the year spend more on significant repairs that happen due to neglecting smaller issues that could have prevented a bigger problem.
When purchasing a new property, it’s critical to budget for ongoing maintenance while setting aside some cash to handle emergency repairs. Property owners enjoy better renters and property values when prioritizing maintenance. When tenants are happy with a safe, comfortable rental home and your ongoing maintenance costs go down, your returns improve!
However, unexpected (and costly) repairs or tenants that don’t stick around because a property owner doesn’t keep the property in good condition will sabotage your returns.
What does a property manager do? The right experts help investors budget for repairs and prioritize preventive maintenance. They also deliver expert maintenance services that reduce costs while keeping properties in excellent condition.
2. Frequent or Lengthy Vacancies
Too many months without a renter can leave you without the monthly income you need to generate better ROIs. Vacancy is expensive! Successful investors understand the cost of frequent or lengthy vacancies and put strategies in place to avoid this issue.
When a tenant decides not to renew, property owners should take action to market the rental unit and line up a new resident to move in shortly after the current renter moves out. A Provo property management company can help you determine a competitive rental rate to attract good tenants and keep your rental properties occupied. In addition, a property manager helps real estate investors keep properties in excellent condition and choose smart upgrades that renters look for in a rental home.
While knowing the market is important, some level of vacancy should be expected. However, home rental companies can help you shorten vacancy periods and find great tenants to minimize rental income loss.
3. Poor Communication
Having strong lines of communication as a property owner is very important to your bottom line! Investors must communicate well with renters to schedule maintenance, check on late rental payments, keep them updated about the property, and enforce the rules. Property owners must also communicate well with vendors or contractors handling maintenance or property management services.
Operating a rental property means you’re running a business! Proactive communication helps reduce tension between owners and renters, simplifies the process of scheduling repairs, and helps build good relationships with vendors and residents. Happy tenants are more likely to keep paying the rent on time and renew their leases—improving your returns!
4. Unclear Expectations
When renting out an investment property, working within realistic and clear expectations is very important, especially to your tenants. Scheduling work with a contractor requires a thorough understanding of the problem, how to resolve it, how they’ll fix it, and how the work and scheduling impact your renter. If you promise a solution to a renter, then fail to deliver on time or with quality work, that renter can become unhappy and move on when the lease ends.
In addition, setting clear expectations with contractors helps them complete work on time and on budget to reduce costs. When managing rental properties, working with realistic expectations and guidelines helps investors avoid income loss.
5. Lack of Plan and Goals
While there are many paths you can take to earn a strong ROI, investors must set goals and develop the right plans and strategies to get where they want to be. Failing to plan or work toward goals can leave you without the revenue you need to maintain properties or build long-term wealth.
Without a sound plan and strategy, it can be difficult to know the right decisions to make for properties, renters, or when building a real estate portfolio. If you’ve struggled to define goals or incorporate the best real estate investing strategies, work with a property manager in Provo to align your goals and strategies and maximize returns!
Avoid ROI Killers with a Provo Property Management Company
Avoiding these five ROI killers is easier with the right strategies and expert support! However, these aren’t all of the pitfalls investors must avoid to optimize return on investment and build more long-term wealth. If you want to make sure your property ROI doesn’t suffer, reach out to Reeder Asset Management! Our skilled Provo property management experts have the experience and expertise to help property owners make smart decisions and avoid missteps that can ruin ROI.
Check your ROI! Use our free resource to Calculate Your Rental Property ROI.