What are your profit goals for 2018?
If you’re like most landlords your main goals are all centered around turning a profit but few landlords actually realize this goal because the become overburdened with all of the day-to-day responsibilities which come with managing a rental property.
Thankfully, accomplishing your profit goals in 2018 is going to be simple, especially if you follow the tips in this article.
How To Accomplish Profit Goals
Treat your rental properties as a business
Most owners fail at this and never turn a profit because they fail to view their rental properties as a business and continue to look at them as a pastime or side occupation rather than something which could bring in significant cash flow for them over their lifetimes.
To start treating your portfolio of rental properties as a real business you should start devoting at leas 2-4 hours per week towards doing things like maintenance, customer service and making sure your tenants needs are met because, this will ultimately increase your renewals and profits.
Hire a property management company
Don’t wait until you own three rental properties before you start thinking about hiring a property management company, make the right choice by hiring a qualified Portland Oregon Property Management company now like Property Management Systems now, rather than later.
We can save you the time, money and hassle of managing rental properties yourself especially when it comes to things like rent collection, tenant screening / placement, marketing and more.
Set realistic goals
Another helpful way to accomplish your profit goals is to set realistic goals that you can accomplish given your current time constraints and commitments.
Your profit goals should also be measurable and achievable because once you start accomplishing them it will be easier for you to continue making progress with accomplishing even more goals.
More Effective Ways To Accomplish Your Profit Goals
By mid January most people will already have forgotten about their goals, especially people who own rental properties. Don’t let this happen to you.
Here are more effective ways for you to accomplish your profit goals:
Reflect on What Your Profit Goals Are
Take some time initially to pause and reflect on what your profit goals are. Do you want to become more profitable by a certain percentage across the board, for example; or are you aiming to eliminate areas where your profits are not as robust as they could be?
For example, if rents have been climbing in your area, you may think that a profit increase across the board is possible. However, if you have a persistent issue with vacancies, your profit goals might center around methods of keeping vacancies low to boost your profit margin.
Set SMART Goals
If you fail to clearly define your goals, you’ll never reach them. You also need fully articulated goals so you’ll know if you need to redefine them or tweak your methods if you aren’t reaching them later in the year.
Many people swear by SMART goals. This acronym stands for:
Specific
Measurable
Achievable
Realistic
Time-Based
Try to set goals that follow the SMART criteria. For example, say that you want to grow your profits by 10% next year.1. First, develop specific methods for reaching this goal. Is it realistic to raise rents, given the markets in which you operate? That may be so if real estate prices have been climbing. A general rule of thumb is that property managers can charge 1 percent of a home’s value in rent each month.
If this growth is occurring in your area, great! If not, how else can you achieve your profit goals? Can you cut vacancies in half, or eliminate them entirely? Marketing for reliable long-term tenants may be a wise strategy to reduce your vacancies. Have you made headway toward paying off large capital improvement projects? Can you reduce your expenses? Examine every category from which you can derive additional profit.
2. Measure the progress you’ve made toward your goals every month. If you’re not hitting a particular goal, you may have to try different methods or reset the goal.
3. Make sure that your goals are achievable and realistic by doing your research in the goal-setting phase–before your work has actually begun. What are other property managers charging in rent? Are your rents comparable to other units in the area? If you are already over-market in your rents, you may not be able to achieve profit hikes by raising them, for example.
If you need to make property improvements, such as replacing water heaters or roofs, you may end up with rising costs, which will make the achievement of a profit increase unrealistic, at least for now. Evaluate the entire year’s worth of needs to determine the achievability and real-world likelihood of meeting your goals.
4. Associate all goals with a time-based deadline. Setting short-, medium- and long-term goals is prudent. If increasing your profits by 10% is your annual goal, for example, you need to determine what would be achievable increments for each month and quarter.
You can make some changes to affect your profit margins immediately, for example. Raising rents is one. Others, such as negotiating new leases with long-term tenants or advertising in new markets for better tenants, may take a quarter or more. Take the time you’ll require to achieve each goal into account.
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