7 Surefire Ways to Make Sure You're Profiting from Your Rental Property

Rental properties can be great investments -- particularly in today’s high-rent, low-housing-supply environment.

But rentals aren't an "if-you-build-it-they-will-come" type of situation. If you want your rental property to remain occupied and turn a profit, it takes a certain amount of strategic effort.

Not sure what those efforts should be? Here are seven places to start.

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You can't make a profit if you don't know what your property is costing you in the first place. And those costs? They can change often.

Keep an updated ledger of your costs and analyze them every few months. Include your mortgage payment, insurance, maintenance expenses, repairs, taxes, and other costs. And be sure to include soft costs, too -- like what you pay your accountant or the costs of marketing the property when it's vacant.

With inflation on the rise, there's a good chance many of your property's operating costs are rising, too. Staying on top of these changing numbers can help ensure you're asking enough rent to not just cover them but also net you a healthy profit.

READ MORE: 6 Rental Property Costs You May Not Know You Can Depreciate

There are many reasons good maintenance helps you stay profitable. For one, it can prevent unwanted (and costly) repairs.

Cleaning your gutters and downspouts can help you avoid major roof issues. Having your HVAC and water heater serviced once a year can help those systems last longer and need repairs (or replacement) less often.

On top of this, proper maintenance keeps your property looking great -- and that means fewer vacancies. Many times, it can also justify a higher rent price, too.

READ MORE: How Much Should You Budget for Home Maintenance?

Having a good handle on your local market is critical to profitability. You need to know what other properties are renting for in your area and whether you're on par, below, or above that.

You should also have a handle on supply and demand levels in your market. Are there lots of new residents? Is a new corporation moving to the area and bringing new jobs? If so, you can expect higher demand and likely raise your rents.

Understanding what local renters want is important, too. Get with a real estate agent to find out what their clients' general preferences are. What sort of amenities are they looking for? What paint colors and flooring do they like? This will help you make your property more marketable and command a higher rent.

A good insurance policy can keep you from eating a lot of unexpected costs -- things like large-scale repairs, damage from natural disasters or theft, or, in some cases, even litigation from a tenant.

You should always have a good landlord policy on any rental property you own and consider requiring rental insurance for all your tenants, too. The more coverage you and your tenants have, the better protected your investment will be in the long run.

ALSO READ: Best Landlord Insurance

Late rents cost you. They make it hard to cover your bills, and they cause tension between you and your tenants, which hurts retention and leads to more vacancy and turnover costs.

Streamline payments as much as possible to make sure late rents aren't an issue for your business. Use an online rent payment platform or let your tenants pay via Venmo, Zelle, or Paypal. You can even offer to report on-time payments to credit reporting bureaus -- another strategy for encouraging on-time payments.

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Losing a tenant is expensive. First, there are the cleaning and turnover costs that come with prepping the property. Then, you have the costs of marketing your property and finding a new tenant (plus possibly paying a real estate agent to help).

And finally, you have the rent lost for each month your property's vacant. Even just two lost rent payments can significantly hurt your profits, not to mention make covering the general costs of your property (mortgage, utilities, etc.) much more challenging.

For these reasons, you'll want to work hard to keep existing tenants around, especially those who pay on time and keep your property in good condition. Respond to their repair requests quickly, give them plenty of heads up if you need to inspect the property or plan to raise rents, and check in occasionally to ask if there's anything they need.

Rent isn't the only way you can make a profit off your rental property. You can add on ancillary services that can net you cash, too.

For example, if your property has a yard, you might offer landscaping and mowing services. You could, of course, do these tasks yourself or, if you have a portfolio of properties, find a professional crew that can offer you a bulk rate. Then, add your extra fee on top and send them out to all your properties.

Your tenants can either pay you directly for the services, or you can add it to the cost of their rent. The same goes for cleaning services (especially move-in and move-out cleaning).

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Charging the right rent is critical to keeping your property occupied and profitable. If you haven't analyzed your rents in a while, it's time to do so. Average rents have increased significantly over the last year, and there's a chance your property could warrant an increase, too.

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