Every investor has a different set of goals when they buy, inherit, or rent out a Dallas-Fort Worth rental property. Depending on your level of experience and the state of your portfolio, you could be focused on the rental income that you’re earning. Or, perhaps you’re watching property values increase and making plans for what you’ll do with all your extra equity and appreciation.
One thing every property investor hopes to achieve is impressive ROI. The growing return you earn on your investment tells you that you made the right investment decisions and you’re making good money on your property.
Rental values are rising in Dallas-Fort Worth, and so are property values. The market itself is helping your ROI right now.
But, markets shift and you need to be prepared to maximize your returns no matter what kind of economic conditions are driving consumer behavior when it comes to housing.
We have 7 tips on getting the best ROI possible on your Dallas-Fort Worth rental property.
1. Price your Dallas-Fort Worth Rental Property for ROI
In a strong rental market like the one we’re currently experiencing, you can price your property at the high end of what the market demands and still find a great pool of tenants willing to pay your price. There’s a huge demand for well-maintained homes, and a supply that simply cannot keep up. Even as new construction projects continue to move forward, the number of tenants looking for homes far surpasses the number of homes that are available.
This helps you increase the rent on your property, which also drives your ROI even higher.
In markets less robust than this one, you’ll have to be strategic about your rental value. Vacancies will hurt the return you earn on your investment property, and it will be nearly impossible to recover the money you lose. One of the biggest mistakes we see investors make is to price their rental property too high. We understand wanting to earn as much as possible in monthly rent; you don’t want to devalue your property or lose what you could potentially earn.
Overpricing your property can be just as damaging and even more expensive. Today’s tenants are pretty savvy, and they understand the rental values in Dallas-Fort Worth. Make sure your property is priced competitively and that your rental value is aligned with what similar homes in your area are renting for. A well-priced property will always earn more ROI.
Consider this when you’re setting your rental rate at renewal time, too. Good tenants will stay in place when they know that they’ll pay more renting a new home in Dallas. You should always raise your rent when you renew the lease with your current tenants, but don’t increase the price so much that you motivate them to look elsewhere.
2. Marketing Your Dallas-Fort Worth Rental Property
Does marketing impact what you earn on your rental home?
Your marketing plan will determine how quickly you’re able to rent your home and how qualified the tenants you attract tend to be.
With good marketing, you can reduce vacancy loss. You can weed out unqualified tenants. You can also give prospective renters an excellent reason to schedule a showing. When your marketing photos are professional and you provide video tours with your listing, you’ll gain more interest. When you mention that you’ll consider pets in your listing, you’ll expand your pool of prospective renters.
Take marketing seriously when you want to increase what you earn on your home. Sticking a For Rent sign in your yard and forgetting about it will only bring a limited number of tenants to your door. Leverage the power of online advertising. Take dozens of excellent photos. Write engaging descriptions.
Most importantly, follow up when prospects reach out to you. Don’t lose tenants by ignoring those phone calls and messages that concern the home you have for rent. Be available. Your ROI depends upon it.
3. Be Selective with Dallas-Fort Worth Tenants
Tenants do impact your ROI. With well-screened and highly qualified tenants in your Dallas-Fort Worth property, you can expect the rent to be paid on time consistently every month. You can expect that there will be less vacancy loss, fewer turnover costs, and no real threat to the condition of your rental home.
A good tenant means you don’t have to worry about the cost of eviction or the pain of chasing down late rent payments. Your property makes money.
When you rent your home out to well-qualified residents, you will also have someone helping you maintain your investment by taking care of it, keeping it clean, and notifying you immediately if something needs attention.
Good tenants lead to more money for property owners because they’re reliable, stable, and they don’t lead to extra liability or risk.
Bad tenants will deplete your ROI. They’ll cause property damage – sometimes in excess of the security deposit you collect. They’re unlikely to pay rent on time. They’ll have a new excuse every month. Tenants who are not screened can cost you money.
To find the best possible tenants on the market, you have to make your property attractive to them. Market your home well and screen your tenants carefully. The ideal tenant will be financially responsible and have a clean, positive rental history. Check for past evictions and any money owed to former landlords.
Tenant retention also improves your ROI.
Attracting good tenants is important, and retaining them is even more important. When tenants renew lease agreements year after year, you’re saving yourself from those expensive vacancy and turnover costs. This will go a long way towards increasing the returns you earn on your investment property.
4. Establish and Enforce a Rent Collection Process
Maximizing your ROI requires a consistent and on-time rent collection process. The best way to ensure you’re getting the rent paid on time is by establishing and maintaining a good relationship with your residents. Communicate openly and transparently with them, and let them know what your expectations are for on-time rental payments.
Put together a rent collection process and share it with tenants before they even move into your home. You should outline it in the lease agreement and you must enforce it consistently every month.
Good rent collection policies include:
- How much rent is due
- When rent is due
- Whether there are any grace periods for rent to be paid
- The exact date that rent is considered late
- Late fees and other consequences, including eviction
- How to pay rent
Online rental payments are usually the easiest for both owners and tenants. You’ll have more on-time payments. Be flexible, though. If you’re willing to accept rent in a variety of ways, you’re more likely to get your payments in on time. That’s good for your ROI.
5. Preventative Maintenance Protects Property Values
It’s hard to maximize your ROI without a solid maintenance plan. Preventative maintenance is critical to increasing what you earn because it reduces the expense and the drama of unexpected maintenance emergencies.
Repair costs are rising and it may be tempting to put off those minor repairs. But, smart investors know that taking care of minor repair issues right away will save money and time by preventing larger or emergency disasters. Be responsive with repair requests. Not only does it show your tenants that you care (thereby increasing tenant retention rates), it also protects the condition of your home.
Preventative maintenance is necessary and it helps you earn more on your rental property. Have your HVAC system serviced once a year, get your gutters cleaned out, and have someone take care of cleaning and landscaping on an annual basis. Don’t forget pest control and check the foundation of your Dallas investment every few years. Get an idea of when your roof and your appliances will need to be replaced. Preparation leads to higher incomes.
6. Upgrades and Improvements for ROI
Upgrades increase rental values.
These upgrades can be as minor as switching kitchen cabinet hardware, installing new modern fixtures, or changing light bulbs. If you want to, you can go all in and change out carpet for hard surface flooring. Or, you can add a fresh coat of paint. Think about energy-efficient, stainless steel appliances and new counter tops. These things would really get the attention of great tenants and increase your rental value.
Consider in-unit laundry. Provide some tech upgrades like smart home devices or video doorbells. Even minor renovations and improvements lead to more money in the short and long term.
7. Work with Professional Dallas-Fort Worth Property Managers
One of the most reliable ways to increase your ROI is by working with a professional property management company. A good property manager will save you money on maintenance, help you find and keep great tenants, and ensure you’re not making any expensive legal mistakes. We understand the Texas Property Code as well as federal fair housing laws. We know how to collect and return security deposits and we can help prevent eviction.
Your property management company has the tools and resources to lease and manage your home in more profitable ways. It won’t take long to notice that you’re earning more and spending less.
Would you like to hear more about how to increase your ROI? We can give you some personalized ideas. Contact us at Assign Property Management.