How Can I Maximize the Return on Investment (ROI) for my Rental Property

Ashley Stayner • March 28, 2024

The smartest and most successful real estate investors we work with understand the importance of maximizing return on investment (ROI). This essentially means earning more money than you spend on your property over the life of your investment. The longer you hold your property, the more ROI you’re likely to earn because your tenants are paying down your mortgage. The more you invest in improvements, the more ROI you’ll earn because you’re able to increase your rental value and attract well-qualified tenants. The better your tenant retention, the less you’ll lose on vacancy and turnover costs. That maximizes ROI as well.

A lot of investors will come to us with this common question: how can I increase the ROI on my rental property?

Fortunately, there are several ways to do this, and we’re sharing some of our real estate and property management expertise by giving you some tips on how to earn more and spend less when you own rental property.

Prioritize Renovations and Updates: Be Willing to Invest in Your Investment

Well-qualified tenants are often drawn to properties that are aesthetically pleasing and in good condition. You don’t have to be an expert to understand that well-maintained homes are always going to earn more than those that are deteriorating or not in great shape.

It’s more than maintenance that’s required, however. You need to be willing to improve your property and make cost-effective renovations that will increase its value. You want to renovate and upgrade the property to make it more appealing. This process may include:

Replacing old appliances with modern, energy-efficient models.
Improving the lighting inside and outside of the home.
Installing hard surface flooring instead of carpet. It’s more durable, less allergenic, and appealing to residents.
Creating better curb appeal with good landscaping.

If you can attract high-quality tenants, they’re more likely to be willing to pay higher rent and stay for a longer period of time, which will increase your ROI.

While we’re on the topic of earning more through property renovations, you need to understand what tenants want. Today, tenants are looking for smart home technology. Consider smart thermostats and video doorbells. Environmentally sustainable rental homes are also growing in popularity and value. By switching out your fluorescent bulbs for LED lights and installing better plumbing fixtures to save water, for example, you’ll have a modern and environmentally friendly home to offer tenants for top dollar.

Making Smart Rental Increases

It’s pretty obvious - to maximize ROI, you need to bring in more rent.

Raising rent is one of the most effective ways to increase the ROI on your rental property. However, it’s important not to overcharge tenants, or they may look for a more affordable option. To avoid this, it’s recommended to research the local rental market and assess the market value of your property. If you find that the market rent is higher than what you’re currently charging, you can gradually increase rent.

You’ll have to pay attention to any rent control laws that pertain to your property. You’ll also have to access good market data. We have that; our insights and analytics are constantly coming in, and it helps us to price properties accurately, recommend renewal increases, and get an idea of what good tenants are willing to pay.

Be smart with your rental rates and increases. You do want to maximize what you earn, but not at the risk of a longer vacancy or an expensive tenant turnover.

Lower Your Rental Property Expenses

To earn more, you have to spend less. So, increase ROI is by lowering expenses associated with your rental property. You might find ways to cut down on maintenance costs without sacrificing the condition and value of your investment. Maybe you can look for new vendors or invest more heavily in preventative maintenance in order to avoid those costly emergency repairs. You can reduce utility bills by upgrading your systems, paying attention to HVAC servicing, and investing in technology.

Look for ways to offset expenses with extra income. Are you allowing pets? You should be. That way, you can collect a pet fee and even charge pet rent. If you’re providing landscaping services or pest control for your property, roll those monthly expenses into the rental amount so your tenant is ultimately responsible for covering them.

Diversify Your Investment Portfolio

Another great way to increase your ROI and maximize what you earn is to reduce your risk. That requires some diversification. Consider looking for new property types, investing in new locations, or renting out a few short-term vacation rentals in addition to your long-term leases.

You can diversify in the way you finance your next acquisition or you can consider a 1031 exchange. Talk to your Merced property manager about the opportunities that exist in this and in nearby markets.

Partner with a Property Management Professional

Finally, hiring a property management company can help you maximize ROI. We can handle all aspects of property management, including the leasing and the maintenance. This will actually save you money because we can negotiate better rates from vendors and service providers. We can watch for deferred and unreported maintenance. We can also help you avoid expensive legal mistakes and claims or lawsuits.

Property management is going to help you maximize your ROI with our technology, our data, and our expertise. We can free up your time, reduce vacancies, and ensure that your property is taken care of. Additionally, property management companies have access to resources and networks that can help you attract high-quality tenants and increase your ROI.

Maximizing ROI is an ongoing process that requires constant attention and effort. By renovating and upgrading the property, raising rent gradually, lowering expenses, considering portfolio diversification, and hiring a property management company, you can significantly increase the ROI on your rental property.

Let’s talk about some strategies that will work for you, specifically. Please contact us at Wisdom Property Management & Realty, Inc. We lease, manage, and maintain investment properties in Merced, Atwater, Livingston, Winton, and Delhi.

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Demographic Shifts in California: Adapting Rental Strategies for Merced

By Ashley Stayner • February 20, 2025

Discover how demographic shifts in Merced are reshaping the rental market. Learn key investment strategies to maximize ROI in this evolving real estate landscape.

Leveraging Social Media to Market Rental Properties in California: Tips for Merced Landlords

By Ashley Stayner • January 16, 2025

It is time to get social, and we’re going to insist you become an influencer even if you don’t naturally gravitate towards the likes of Instagram, Facebook, and other social media platforms. Leveraging social media to market rental properties in Merced and throughout California is essential. You gain a lot more traction on social sites than you do by simply posting a listing on Zillow or HotPads. All of your potential renters are on social media, and you should be there too. Let’s talk about some tips, assuming you’re not already going viral on the ‘gram. Part One: Put Together Your Profile A successful social media strategy starts with a profile that will attract the kind of attention you want. If you’re already a presence on social media, that’s great. If you’re just getting started to better market your rental home , be intentional about how you present yourself. Your audience will likely be potential renters who will view your page and consider the homes you have to offer. If you’re posting homes for rent on your personal social media pages, you can easily include all of the people you already know in your network. However, you also want to make sure your personal page is professional. If you’re prone to angry political posts, you might alienate a lot of potential renters on the other side. Your social media presence, as a landlord, needs to be welcoming to everyone. Generally, we recommend that you establish a separate profile for the work you plan to do sharing your rentals. This will help narrow your social media postings on that particular profile to the rental property you’re marketing or related topics. Visitors won’t get confused, and they won’t have to scroll past photos of your pets and vacations to find the homes you offer for rent. Before you start posting about your available rental properties, you’ll want to make sure you have all of the pertinent information on your profile. There has to be updated contact information, for example. You’ll also want a credible profile photo. Maybe it’s a snapshot of the property you’re trying to rent. It could be a picture of the neighborhood or even a photo of the state or region you’re in. A picture of yourself is also fine, as long as it’s professional. Reaching the Right Social Media Audiences When we’re talking about social media marketing, it’s important to understand that the audience is everything. Social spaces are crowded, and you want to reach the right people. According to the Pew Research Center, more than 72 percent of Americans use social media daily. By using hashtags, joining local or industry-specific groups, and following popular sites and spots throughout Merced, you’ll focus on the people who are looking for a new rental home or on the people who know people who are looking for a new rental home. Create a Social Media-Friendly Listing What will get the most attention on social media sites? Photos and videos. These will be your most important tools when we talk about posting your rental listing on social media sites. This is the type of content that gets attention. It gets likes. It gets shares. It gets comments. All of those things will expand your audience and increase your reach. Although text plays an essential role in social media, and you’ll use it to share details such as: Rental amount Move-in ready dates Rental qualifications Security deposit amounts Images and videos are especially crucial. You’ll want to upload clear and crisp photos so that they render well on mobile devices. You’ll want short, engaging videos that showcase your property and provide people with a glimpse of how things look. If you want to be more impactful with how you market Merced homes for rent on social media, focus on the property’s layout, show real-time room sizes, give viewers a close-up of amenities , and an idea of the property’s location. When you have special features to show off, such as walk-in pantries, garden tubs, smart home technology like video doorbells, and fenced backyards, video is a great way to show those things off while giving viewers an idea of what it’s like to actually be there. Plenty of social media platforms are built for video; you can use Instagram reels, Facebook and Instagram live videos, Snapchat story updates, and of course YouTube. Hashtags are Essential Please tell us you know what a hashtag is. They’re helpful when you’re posting because they get the attention of your target audience. Using hashtags on your posts makes them more accessible because when people search for a particular hashtag, your post will be there, ready for them to view. Use specific hashtags that identify your location, the type of property, or the neighborhood name. Try #Mercedrentals, #Mercedhomeforrent, #Mercedapartment, and similar hashtags to get attention and focus on your desired audience. Promote Your Merced Rental Listing

The California Landlord's Property Management Checklist: Tailored for Merced

By Ashley Stayner • December 19, 2024

Here’s our property management checklist – Merced edition. These are the things to look for as a landlord with local properties who wants to have a pleasant and profitable investment experience.