Rental Investment: Five tips And Tools For A Profitable Rental Management

Investing in rental property can be a great way to generate passive income and benefit from capital appreciation.

However, managing rental properties comes with its own set of challenges. To succeed in the real estate market, you will need to develop your management skills and have the right tools. In this article, Hopem got five tips to help you make your rental property purchase more profitable, along with helpful tools to make your job easier!

The Advantages of Rental Investment

Rental real estate is attractive to real estate investors. This is an interesting path for you if you are just starting out, since this type of investment has many advantages, such as:

  • Rental income stability;
  • Capital appreciation opportunity;
  • Tax benefits related to depreciation, mortgage interest, etc.;
  • Possibility of generating passive income;
  • Accessible market thanks to lower entry costs than other types of investments;
  • Low vacancy rate and higher rents in several Quebec cities, including Montreal and the National Capital.

If you play your cards right with your rental purchase, you will be able to turn a profit in just one year! This is good news for those aiming for financial independence.

However, to get there you will have to develop your management skills, especially if you decide to take care of it yourself. With administrative tasks, expense and income management, tenant management, building repairs, apartment renovations and all the other tasks that fall to you, your rental investment could quickly turn into fulltime work!

Rental Property: Manage Yourself or Hire a Manager?

After investing in the rental market, you can take care of the management of your rental properties yourself or entrust it to a firm specializing in this area.

By hiring a property manager, you can save yourself some headaches. You will also have peace of mind knowing that a professional is taking care of your rental investment. However, this will obviously incur additional costs.

Taking care of it yourself gives you more control over the investment and saves money in the long run.

Hopem has some tips and tools to help you turn your real estate investment into a success!

 Centralize all your data and gain efficiency. Discover our property management software.

Five Tips for Profitable Rental Management of Your Rental Property

Managing rental properties can take a lot of time and energy. To make your real estate investment profitable, it is important to put good strategies in place.

From the use of technology to careful tenant selection, to preventative maintenance, there are many steps to consider. Here are five tips that could help you make your rental purchase profitable.

To read: Property Management Guide to Becoming an Effective Property Manager

1. Technology is Your Best Ally: Use Rental Management Software

Make managing your rental property portfolio a breeze using specialized software. These will allow you to have an overview of your apartment buildings, to be proactive in your decision-making. Here’s what they can do for you:

  • Automate certain processes such as managing accounts payable and accounts receivable, preparing invoices and (electronic) payments to free up your time;
  • Facilitate communication with tenants;
  • Process unforeseen maintenance requests and ensure the management of preventive work;
  • Help you with financial management, managing leases and annual increases, preparing and sending renewal notices;
  • Perform accounting, financial statements and annual reports

Basically, property management software is an ally that will make your life much easier. At Hopem, our solution has been developed based on the real needs of the industry. It was designed to allow you to grow and expand. Whether you have 200, 2,000 or 20,000 doors, Primmo is adapted to your reality and allows you to save time at all stages of your tenants’ life cycle.

2. Choose Your Tenants Carefully

Taking the time to carefully choose your tenants could save you a lot of trouble! It is important to check their creditworthiness with a credit check. Computer tools exist to do this work quickly and have the right time before signing a lease with a potential tenant. Their personality and way of life are also to be considered. They will not be alone in the building; they should not cause problems with the other tenants. So don’t be shy about asking for references.

Do not hesitate to delegate this task to a professional in the field such as a rental agent.

3. Consider Preventative Home Maintenance

To attract quality tenants and avoid major renovations, it is essential to keep your property in excellent condition. Preventive maintenance will allow you to protect your investment. In the same vein, you will have to be reactive in the event of a problem. If for example a tenant complains of a problem, it will be important to act quickly.

The use of property management software like the solution offered by Hopem is ideal for providing an overview of the work to come and not forgetting anything.

4. Prepare a Detailed Rental Contract

Clearly stating your expectations to potential tenants will help reduce the risk of misunderstandings (and potential disputes). Writing a detailed rental agreement is essential to successfully manage rental properties.

This document should include all relevant lease details such as:

  • tenants name;
  • the monthly rent amount;
  • the late payment fee policy;
  • the amount of the security deposit;
  • the building rules;
  • pet and smoking policy, if applicable

5. Be Proactive About the Rental of Vacant Units

An apartment that remains vacant for a long period of time becomes a brake on the profitability of the building. Property managers should therefore be proactive and not wait too long to advertise their vacant properties.

To achieve this, you will have to make sure that the unit is ready to welcome new tenants. Before renting, you can carry out small works that will allow you to increase the value of the rent and make it more attractive on the real estate market.

Using social media or advertisements will help you find tenants for your units faster.

Your Questions About the Rental Investment Profitability

To assess the rental investment profitability, you need to look at different performance indicators (commonly called KPIs, for Key Performance Indicators):

  • The gross rate of return (the ratio between the annual rent and the purchase price of the property);
  • The net rate of return (the ratio between the annual rent and the purchase price of the property after deductions and all costs related to the building (maintenance costs, management costs, taxes, insurance, etc.);
  • The occupancy rate (the percentage of time that the accommodations are rented over a given period).

The best renting apartments are often those that are strategically located. They are close to amenities such as public transport, shops, schools, hospitals, etc. However, it will be important to do a market analysis specific to the region in which you wish to buy a rental property, since the demand will not be the same for a type of housing in a large city than in a remote region, for example.

To determine the apartment monthly price in an apartment building, you need to take into account the following elements:

  • Market supply and demand;
  • The building location;
  • Parking
  • Storage spaces (locker)
  • The type of dwelling and its characteristics (size, inclusions, renovations, style, etc.)

Note that if you buy an existing apartment building whose apartments are rented, you will not be able to increase the rental prices as you see fit, since this is regulated by law. You will need to comply with TAL regulations.

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