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Statistics show that the average ROI on real estate over a 5 year period is 8.1%.
How can you maximize rental returns on the properties that you currently have? What is a good ROI for a rental property? What options are there for help with rental property management?
You can save time and gain more income by managing your properties properly.
Keep reading to learn more about how to calculate ROI on the rental properties that you invest in:
Break Down The Numbers To Calculate ROI
In order to calculate ROI, you will need to look at a few numbers related to your investment. First, you need to know how much you spent on the property. Then, add up all of your investments in a given month or over the course of the year.
Once you have done this, you can add in the income that you receive as a result of renting the property. Having all of these numbers will allow you to reach the percentage of your ROI. You can calculate this by dividing the amount remaining after expenses by the cost you spend on purchasing the rental.
Knowing this number is important because it gives you a baseline to go off of for the future. Early on, your ROI may be lower as you figure out the best strategies and the cost that you can charge for rent while trying to lower your overall expenses.
This number is especially important when it comes to business financing as well. To get approval for certain loans to improve the condition of your rentals, you may need to show the lender that you are making a good return on investment thus far.
Get Busy Renting
One proven way to increase your ROI is to make sure there are tenants in your properties at all times. A property that sits empty does not benefit you financially and often will require expenses from money you are not making in rent.
Advertising your open rental opportunities and filling them before the previous leases are done can help you not have days, weeks, or even months of unrented time between tenants.
Get Paid On Time
There are expenses associated with renting a home, from its maintenance to taxes and insurance to name a few. In order to pay for these expenses, you will be dependent on your tenants paying their rent on time each month.
If you find rent collection to be stressful or a time drain for you, we can help. We have services dedicated to rent collection and eviction that allow you to focus on other areas of your investments.
Get Started Today
Now that you have read more about how to calculate ROI on the rental properties that you invest in, you can take action today.
You can schedule a consultation today to talk through our process and how our management services can benefit your income in a positive way. Check out our website for more information on these services.
