Stuck With A Money Pit Rental: Five Things That You Should Know
Nothing is worse than having an asset that is losing money for you. If you own a property that is currently hemorrhaging cash, what can you do to make things better for yourself? These five tips can help you stop losing money on your rental and turn things around.
1) Increase The Rent
A large number of landlords make the mistake of not charging enough rent. Your goal is to charge an average of 1 percent of the overall value of the home. If your home is worth $100,000, you should try to charge around $1,000 a month. Make sure that you also study market trends before settling on how much to charge in rent per month.
2) Stop Making Questionable Upgrades
You don’t need to turn your 1,000 square foot house into a posh living space. Part of the reason why you may be losing money is because of upgrades that don’t need to be done. When you fix the toilet, simply replace it with something that works instead of something that has a push button flush or another unnecessary feature.
3) Sell The Property
Although you may take a loss, you can always sell the property and use the loss to lower your taxable income. People who buy and sell properties for a living could use the loss one house to offset capital gains from other properties.
4) Find New Tenants
Tenants have a tendency to expect the world from their landlords. If you have a tenant who is bleeding you dry with minor repairs, it may be time to find a new tenant. Consult a lawyer who can help you determine your rights when a tenant requests that repairs be completed. Additionally, you may find a tenant who has some experience with home repair. That can be a win-win for both parties.
5) Market The Property Better
It is a lot easier to offset your expenses when you have tenants paying you rent each month. By using better marketing techniques, you can convince more people to take a look at your apartment and potentially rent it from you.
Owning a rental property can be a great thing, but it can also be very difficult. I recommend hiring a good property management company to manage your rental property to take care of all of these responsibilities. The great thing about a property management company is they probably manage several properties, so they know the industry in your area well. Plus they can give you sound advice.