The real estate industry provides numerous pathways to wealth for savvy investors. You can dip your toe into this field by investing in a real estate investment trust (REIT) to allow fund managers to handle the portfolio while you enjoy the dividend payments. Another option is to buy a distressed property, renovate it, and sell it for a profit. The level of risk often matches the potential rewards for the investor.
Investing in rental properties is another strategy that can yield consistent income. You might be at a point where your current rental property is doing very well and you are looking to grow your portfolio. Here are a few tips to help you grow your rental property business to multiply your income stream.
Consider Forming an LLC
Many entrepreneurs start their journeys as sole proprietors. They are the founder and CEO of their companies, which makes them responsible for all business assets and decisions. Growing your rental business may mean adding new partners or employees to the mix to handle the increased load. A limited liability company is a type of business structure that could benefit you. The primary purpose is to insulate the personal finances of members from business assets. This means you can be better protected personally if the company has debts or goes under. Additionally, an LLC can allow for an easier transition when adding new owners.
Increase Rental Rates
One of the simplest ways to generate more income from your property is to raise the rates. Maybe you are having no trouble filling the unit with guests or tenants, so a small increase in the price would not have a drastic impact on the vacancy rate. The key to raising rates strategically is awareness of the local market. Is this price hike going to put you on the more expensive end of the spectrum compared to other similar properties? Do you have the amenities to justify this increase? You must be reasonable when raising prices, or else current and future tenants may look for other options.
Funding Your Next Property
Another method for growing your business is to acquire more properties. Just getting one more property could double your income, and since you are already taking in profits from the first property, it becomes a little easier to afford the next. There are a couple of options to finance your next property. An investment property refinance can load you up with some cash for a down payment on the next one. A debt-service coverage ratio loan can be acquired with your profits from the first property to finance the next one based on its projected income. If you have built up a lot of equity in your own home, then a home equity line of credit is another way to finance your next rental unit.
Beef Up Your Social Media Presence
Rental properties, under the right management, can be extremely profitable. However, there are still going to be times when vacancies occur, and if your unit is empty, you are not making any revenue while still paying the mortgage. A strong social media presence can shorten the delay in payments caused by vacant units. You can advertise pictures of the property on Instagram, Facebook, LinkedIn, and even X. Share listings on Airbnb or other property sites to your social channels as well as the company’s accounts. A better social media campaign can help you navigate growth in the hospitality industry, particularly as a rental property owner.
Take Advantage of Modern Trends
Renters today are different from renters five years ago, especially after the chaos of the pandemic. People have new needs for their living spaces, whether they are in a long-term rental or a vacation spot. Upgrading your property to accommodate modern trends can let you raise your prices, keep vacancy rates low, and earn better reviews from tenants or guests. Invest in sustainable concepts like energy-efficient appliances. Create a space that perfectly translates to a home office for remote workers. Add a private outdoor space such as a balcony or patio so people can spend time outside without being in the immediate presence of neighbors. Embracing modern needs for renters will ensure your business continues to thrive and grow.
Future Success Depends on Current Effort
If you ever want your rental property business to become an empire or at least to expand beyond one property, then you need to start planning now. Maybe it is time to start evaluating potential locations for the next property. Perhaps you should speak to an advisor about what type of financing will work best for a new rental building or unit. If there is no social media presence for the brand right now, then get one started so that it is up and running when the next property is added to your portfolio. Do the work now so your business can grow in the future.