How To Optimize ROI On Your Investment Property

Real estate investing is not, under any circumstances, a new investment path, but it has become all the more alluring with recent financial instability in the stock markets. Many people are drawn to this opportunity as it is both a long term investment and an ongoing income throughout this period.

With today’s mortgage market and exponential rise in real estate prices, it is no surprise that many investors opt to buy properties directly from developers and contractors. Buying off the plan allows investors to purchase a home before it is even built, at much more affordable prices and ultimate quality.

However, there are some ways to optimize your investment portfolio, both in the short and long hauls. Tweaking elements of a property can make your investment more attractive to buyers, increase the rent, and save you valuable time and maintenance.

Make A Data-Informed Decision

Salespeople can be quite convincing. No matter how alluring they make a deal seem, never go with the first quote you receive. Get at least a few quotes to compare, research different options, take into account all different scenarios and use all the resources you can find to make a decision that you will be confident about.

Upgrade, Renovate, Upsell

Renovating, or upgrading, an investment property could make a significant impact on the returns, both in terms of tenants' monthly rates and in the property’s resale value. While most builders offer some customizations to accommodate owners’ requests, some upgraded elements can generate value that will optimize your return on investment and increase your revenues. While some investments, like an entire kitchen upgrade, won’t be worth the investment; upgrading a carpet to wooden floors, or upgrading the airconditioning systems,  could definitely make a difference to buyers and renters.

Choose The Right Neighbourhood

As opposed to other financial investments, real estate has a lot to do with its location. Some neighborhoods are more suitable for families, who are likely to be homeowners; while other areas are more alluring to renters. Try to make sure the property you buy is in an area people want, that the price is competitive and that the price index is on a positive incline.

Choose A Low Maintenance Property

Stone floors, for example, are sturdier, more functional, and will most likely uphold their appearance over time much better than, say, a carpet. When managing a property, especially one with a few years in its history, there are so many unpredictable surprises and maintenance issues that can generate an immense amount of work, not to mention the extra costs. Buying a new property is one way to minimize the risk, as it comes with more advances, sustainable systems, as well as a few years of warranty protection.

Calculate ROI’s

ROI, which stands for return on investment, is a percentage used to assess the return relative to the cost of an investment. The ROI percentage indicates the profit or loss incurred in an investment after factoring in its cost. This concept applies to both upselling and renting out properties. Analyzing the ROI of upgrading a recently purchased home or renting out an investment property can assist in determining the value of the investment. By doing so, one can determine whether the investment is a worthwhile choice or not.
‍

Get Warranties and Take  Out Insurance on Whatever You Can

As a landlord, all the calculations in the world won’t be able to predict what happens in the next few years. Extreme market fluctuations, global pandemics, or even a pipe burst could have a significant effect on your asset’s value. Take up and keep track of all the warranties that come with appliances, materials and infrastructure. Appliance breakdowns, pipe bursts or wear and tear could be resolved swiftly and keep tenants pleased. Home insurance, for the same reason, is a good way to ensure renters are happy and prevent you from spending large amounts of money on replacements and fixes.

Sustainability is Not Just a Buzzword

In addition to helping the environment, optimized climate performance will ensure more resilient, long term property maintenance as well as reduce heating, cooling and other electrical bills. Proper insulation, low flow fixtures and a smart climate control system are all huge money-saving measures and support the goal of landlords and tenants alike.

‍