[fa icon="calendar"] 07.19.2016 / by Rory Williams
As a real estate investor, the best way to ensure your properties are generating profit is to imagine yourself as the CEO of your own investment company. Your first priority should be looking for ways to maximize revenue. This involves everything from setting the right price point to looking for tax deductions. Here are a few key tips that real estate investors can use to get the most out of their commercial investment properties:
Set the Right Price Point
The real estate world is competitive and tenants often have the freedom to choose between multiple properties. If you set the price too high, you will have a lot of vacancies to deal with. If you set the price too low, you will attract low quality tenants that are shopping by price point alone and not those who are looking for a long term agreement. The goal is to set the highest possible rate that will cover your expenses and still attract tenants while minimizing the amount of vacancies and tenant turnover you experience.
There are different ways to calculate rental prices which depend on factors such as the economy, the type of business your tenant is running and the need to retain occupants. Also, keep in mind that setting a standard price for all units is not always beneficial unless they are exactly identical. Rent should be calculated based on the desirability of the unit.
There are lots of tax deductions available for property investors, but you must file your taxes in very specific ways to qualify for these savings. Taking advantage of these deductions is a big part of what makes property investing so lucrative, so it is vital to keep track of all important documents, expenses and revenues every year. Here are just a few essential items you should be keeping track of both digitally and physically:
- Tenant leases
- Legal documents
- Insurance policies
- Loan documents
- Property title
- Advertising costs
- Entertainment expenses
- Mortgage and credit card payments
- Wages paid
- Travel expenses
- Repairs performed
Just like any successful businessperson, real estate investors need to know how to cut back their expenses. You don’t want to cut just any expense, however. As mentioned earlier, slashing your rental prices to attract tenants can actually hurt you in the long run. The key is to cut wherever appropriate and reduce operating costs while increasing the marketability of your property.
For example, don’t stick with just one maintenance company. Shop around and look for other companies that offer the same quality of service at a greater value. You can also look for ways to make your property more energy efficient. Adding insulation or sealing cracks can save you hundreds of dollars on energy costs a year.
Getting the Most out of Your Investment
Real estate investing can be highly lucrative if you are managing your properties effectively. You’ll need to have as much knowledge as possible to ensure you are not spending money unnecessarily and maximizing your profit margins. These tips should get you on your way to running a successful real estate investment business.