Operating costs in any business are as inevitable as the rising sun, and the same goes for all rental properties. Property owners can only find ways to reduce operational costs to save money, and luckily for landlords, several precautionary measures can be taken.
Prioritize Property Maintenance
One of the main tasks in property management is maintenance. You can learn about property issues that need to be resolved through maintenance requests from tenants, but proactive maintenance is still the most cost-effective course of action for landlords.
Regular property inspections can help you identify issues early, drastically reducing operating costs by avoiding costly repairs as you resolve them before they get worse. Fixing faulty wirings, for instance, can help you avoid electrical fires that can bring risks to tenants and destroy your property.
Performing preventative maintenance is also just as important, as property upkeep will prevent any issues from arising in the first place. This will help with tenant retention and avoid operating expenses brought on by repairs needed in your rental property.
Utilize Property Management Software
Property management software can simplify tasks like rent collection, maintenance requests, repair requests, and more. This leads to operational efficiency through automation and boosts tenant satisfaction. Some of the things a property management software can do include:
- Automate rent collection
- Coordinate maintenance requests
- Automate payments for bills
- Track income and operating expenses
- Schedule routine maintenance tasks
These will not only reduce the workload of rental property owners but also reduce administrative costs. Landlords can also track cash flow and expenses to make data-driven decisions for lowering operational costs.
Conduct Tenant Screening
The tenant screening process determines whether prospective tenants can make rent payments on time and respect your rental property. You can easily rack up significant expenses when you skip your due diligence and your tenants fail to maintain their units properly.
This helps your rental business run smoothly, and you won't have to worry as often about turnover costs. Landlords and property managers tend to use criteria like credit scores, employment verification, criminal background, eviction history, and more.
Optimize Energy Efficiency
Investing in energy-efficient upgrades can lead to significant savings, seeing as utility bills are part of your day-to-day expenses. Some rental properties have started installing smart thermostats for utility savings since they can automatically adjust based on the needs of your tenants.
Energy-efficient appliances can significantly reduce your operating expenses, and even help you attract eco-conscious tenants who ask about your rental property's energy usage. While they aren’t considered minor upgrades and can be expensive at first, energy-efficient upgrades are a good investment that can help you cut costs in the long run.
Build Long-Term Relationships with Vendors
Building relationships with contractors and vendors can help you negotiate better rates and reduce operating costs. Having a reliable network of vendors is just as important as property maintenance. You can consult competing vendors to consider the best prices for your rental property.
Many landlords enter long-term contracts for services like maintenance and landscaping, which lower operating expenses and help with consistency in property maintenance.
Get Property Insurance
Even with attentive property management, some things are still unavoidable, such as property damage caused by natural disasters. Getting insurance policies can help lower operating costs and alleviate financial pressure for maintenance and repair costs. You need to compare insurance policies and types to find the best options for your business.
- Landlord insurance typically covers repair costs from damage caused by fires, electric/gas malfunctions, and natural disasters.
- Renters' insurance can be required to cover costs for tenant-caused damage in their units. The financial help can reduce operational costs or keep you spending at all.
- Homeowners insurance can be a good fit, but only if you live on the premises as it can also cover furnishings within the residence.
Research the kinds of insurance you can purchase carefully or hire a professional to do so for you. Learn about the yearly or monthly fees you have to pay and what coverage comes with the policy.
Learn About Tax Deductions
Certain tax deductions can help with lowering operating expenses overall. You can deduct mortgage interest, property taxes, depreciation, operational costs, and more, which can be an easy way to save money as a landlord.
Property taxes alone can already be a complicated matter, so hiring a real estate expert, property management company, or tax professional is advisable. Even the smallest mistake can lead to legal trouble, which can only add to your operating expenses when you pay for legal fees.
Benefits of Following the Suggested Practices
Reduced Costs: The most evident perk of following these tips is reducing operational costs, which boosts your rental property's profitability. This prevents the need to raise rent prices or lease renewal fees to cover high repair costs, energy costs, and more.
Steady Rental Income: With measures like preventative maintenance, you will encounter fewer repair and maintenance requests, which typically cost money to resolve. A stable income allows you to focus on other matters like mortgage payments and property upgrades.
Tenant Satisfaction: The mentioned practices contribute to better property management, which tenants will appreciate. Improving tenant satisfaction, in turn, can lead to lease renewals and avoiding turnover costs.
Turning to a Property Manager for Professional Management
Between marketing your listings to day-to-day operations, a landlord's work is heavy. Hiring assistance to improve your business might just be the right move for you, and companies like Green Tree Property Management can certainly help with that.
We can help improve cash flow for your business as we regularly review your financials to determine the best course for maximum profitability. Schedule a free consultation with us today!
