Make More Money With This Guide to Managing Your Boston Rental Property

Updated March 25, 2022

Are you a property owner who wants to make more money? If so, this blog post is for you!

Owning rental houses is a great way to make money and build wealth over the long term. A well-priced rental home in a great area is the perfect investment. Companies specializing in the best rental management Boston offers to suggest buying and holding real estate for ten years or more to build equity in the home and free up money to purchase more real estate to grow your portfolio. Of course, successful management of each property is also critical to making more money from your real estate investment!

Cash Flow is King

A primary goal for investors with residential rental property is to generate cash flow. The best way to do this is to collect enough rent to cover all recurring operating expenses—with enough income left over as cash in your pocket.

A basic example is buying a rental unit for $300,000 and setting a monthly rent amount of $2,500. Your ongoing monthly expenses plus the mortgage payment are around $1,685 per month. This leaves a difference of $815 per month that falls into the category of "cash flow." Next, let's look at some other factors to consider when evaluating cash flow to make more money.

What is NOI?

Net operating income is the money left over after rent collection and subtracting all operating expenses. The four main operating costs are:

• Vacancy 

• Repairs

• Management fees

• Delinquency

Managing these costs vs. rental income helps investors improve NOI. 

Rental Unit Vacancy

A vacancy is the time between when a lease expires and prospective tenants move in. When lease agreements end, the property must be "turned over" before the next move-in date. You don't have a tenant to pay rent during this time, so property managers and rental owners must account for this "expense" when analyzing cash flow. Most experts estimate about one month of rent per year as the cost of vacancy.

Repairs

These are the property upkeep things you deal with routinely (and in emergencies), such as faucet fixes, appliance repairs changing door locks, replacing light fixtures, and HVAC repairs. The cost of maintaining a house varies, so work with a local property manager to estimate an annual budget for maintenance and repairs. 

Management Fees

While owners don't have to partner with a property manager, someone has to handle every property they own. When hiring a rental management Boston company, be sure to budget for property management fees. These costs provide expert management for everything from maintenance issues to providing landlords with a free lease agreement or a move-in checklist. 

Delinquency

The cost of delinquency is more difficult to predict. However, if you buy and manage a quality rental property, this might not be an issue for you with a proper tenant screening. A property management company can save you time and money with tenant screening so that you never have to issue a notice to vacate. 

Nevertheless, it's a good idea to budget for delinquency costs. Experts say to budget about two percent of the gross rent.

After paying expenses, the amount left at the end of the month may not seem like a significant money-making investment. However, investors must focus on the longer-term, buy-and-hold strategy that makes real estate investors more money.

A Property Owner Must Think Long Term

In addition to monthly rental income, real estate investors also build wealth through appreciation. Appreciation is the long-term rise in the value of an asset.

Why Causes Rental Properties to Appreciate?

There's no guarantee that home prices will go up, so it helps if property owners understand a little behind what causes appreciation.

No More Land

As the U.S. maxed out on land space ideal for residential real estate, the increase in population slowly increases demand. Increased demand coupled with a fixed supply means prices (and home values) rise over time.

Growing Population

Population growth has been (and will continue to be) on the rise. More people means the need for more housing. Growth means demand increases, which drives up the price. Research appreciation rates near your rental properties, or contact a Boston property managementcompany to share some of their insights.

Overall Housing Market in the Area

When housing prices rise or fall in an area, this affects homes in that area. The housing market is in a state of constant flux, but successful investors look for homes in areas where there will always be a growing number of people, jobs, the economy, and other factors that drive rental house demand.

Upgrades

Renovations to your rental home or added amenities to a community are also factors in appreciation. Landlords with renovated rental units can charge higher rental rates and see better cash returns when it's time to sell a property!

Build More Wealth With the Right Boston Property Management Company

There are plenty of variables involved to make more money in real estate. However, partnering with the right Boston property management company can help you maximize cash flow and improve appreciation for your properties. CHARLESGATE Property Management is here to help! Reach out to learn how we can put our experience with rental agreements and more to work for you.