Leasing your property investment puts you in a position to earn passive income. Someone – or a company – rents your property and pays rent. You don’t have to do anything other than collect rent payments, yet money ends up in your account.
It’s a fantastic investment model, but how do you maximize the gains you receive? We’ve got a handful of tips to help you earn as much money as possible from your property.
When a tenant signs the lease, make sure they set up instant payments with their bank. This will ensure they pay the rent on time every month. It also guarantees that the full payment will come through, so you’re never chasing people up.
If a tenant isn’t willing to do this, then you shouldn’t give them the keys. This is a great way of avoiding a potentially bad tenant. Realistically, a financially stable tenant will be more than happy to do this as it gives them one less thing to remember each month. For you, it gets a steady stream of regular income without missed payments to chase.
You will have plenty of expenses when managing properties, which means you may be able to put these expenses as tax write-offs. Working with an accountant helps you understand what you legally can or can’t claim. It also assists you in coming to terms with new lease accounting rules, so you can manage your investment a lot better.
With an accountant by your side, you can reduce how much tax to pay on the property, which reduces how much it costs. At the end of every year, this means that all of your rental payments generate a larger profit because you’ve not technically spent as much!
Many property investors make the mistake of leasing a property and not doing anything with it. When you think about it, this doesn’t make any logical sense. If you buy a house to live in, you do everything to maximize its real estate value. So, why shouldn’t you do the same with a property you’re renting out to others?
Gradually improve your property with new equipment, better windows, etc. This increases its value on the market, which means you can up the rental price. In turn, you get more money every month while keeping tenants happy. Nobody wants to pay more rent, but they’re willing to do so if the landlord is improving the property to suit the new amount.
Moreover, think about the end game. Rental properties will eventually be sold at some point. If you keep improving your property over the years, it’ll fetch more money when you sell it. You get more cash from rent, plus a bigger profit from the final sale!
That last point really drives home the benefit of rental properties. Not only can you maximize what you earn in rent, but you can also improve what you receive when selling the home. Think about how much money you could earn from renting a property for 5 or 10 years, and then selling it. It’s comfortably one of the best investments anyone could make.