The return on investment (ROI) you earn on your Las Vegas investment property can be calculated in many different ways, and success looks different from investor to investor. Earning goals will depend on your investment plans and whether you’re effectively reaching those goals will depend on the metrics you’re using and your investment roadmap.
Regardless of how you’re investing or why earning more money on your rental properties in Las Vegas is a goal that all real estate investors share. So whether you’re looking to increase your cash flow, generate higher appreciation, or leverage the equity you currently hold, we have some ideas on how to earn more.
Here are 5 tips for getting the best return on your Las Vegas investment home.
1. Adopt a Buy and Hold Investment Strategy
Lately, the real estate market has been pretty wild and you may have seen a lot of homeowners and investors eager to sell or flip or cash out completely.
You don’t have to follow this crowd.
If you want to really increase both your short-term and your long-term returns, you’ll stick to a buy-and-hold strategy with your real estate investments. It might not deliver the rush of adrenaline that those thrill seekers are experiencing by chasing every real estate trend as it peaks, but this strategy will deliver some serious financial stability and foundational wealth.
Short-term income is delivered in consistent, recurring rent payments. That passive income does more than deliver a deposit into your account every month. Basically, your tenants are paying your mortgage for you – even as you maintain control of the asset. In the long term, you’ve got an appreciating property and growing equity. You’ll sell the real estate at a higher price than what you purchased it for, and that’s where your money is made.
You’re also taking advantage of tax breaks and protecting yourself against inflation with this strategy, earning and saving you more. Decrease your tax liability with deductions for interest, depreciation, and operating expenses. As housing costs rise across the country, you’re still paying the same amount for your property (assuming you have a fixed mortgage). Even as you increase rents. That’s more money.
2. Pay Attention to Preventative Maintenance
Maintenance costs, you may have noticed, are only rising. Those emergency repairs that you’re not expecting are going to hurt. How can you avoid them and earn more money on your property?
By paying attention to preventative maintenance.
A strong preventative maintenance plan can sometimes be off-putting to investors because it requires an initial investment. You’ll have to pay an HVAC contractor to inspect and service your heating and cooling system, every year, for example. You’ll need a pest control contract that comes with a monthly fee. Having a roofer check your tiles will come with a cost and asking plumbers and electricians to look for potential problems isn’t cheap.
But, these preventative maintenance costs are saving you money. Because the repairs that will ultimately be needed without these inspections and service calls are always going to cost you more.
Replacing an air conditioning unit in a Las Vegas rental home in August will cost you up to $5,000, not including the installation and the ductwork. Wouldn’t you rather pay $200 for an annual inspection?
Sound preventative maintenance policies and plans will protect the condition of your investment and preserve its value. A rental home that falls into disrepair or deteriorates quickly will not attract any tenants. It will not earn high rents. It will not be easy to sell at an acceptable price in the future.
Keep up with your maintenance contracts. Put together a list of reliable and cost-effective vendors and contractors who will help you keep your property well-maintained. Avoiding those emergency repairs will increase your ROI and leave you with more valuable property.
3. Focus on Las Vegas Tenant Retention
Vacancy is going to drain the return on your investment property quickly. When your rental home is unoccupied, you’re not earning any rent. You’re paying out of pocket for utilities, landscaping, marketing, cleaning, and security.
The best way to avoid vacancy is by keeping the tenants you already have. Tenant retention is a huge boost to your ROI. It means your recurring cash flow isn’t interrupted by a month or two of no rent coming in. You’ll also have a stable tenant in place, taking care of your home. There’s likely to be an increase in rent when the lease is renewed, and you won’t have to worry about paying to repair those wear-and-tear items that always need attention between tenancies.
Here are a few ways to ensure your tenants are happy to renew their lease agreements year after year:
- Be responsive with maintenance requests.
- Communicate openly and transparently.
- Thank tenants for paying rent on time.
- Keep those rental increases reasonable and market-driven.
- Provide small gifts or cards at move-in and renewal time or on birthdays and holidays.
Turnovers will devastate your bottom line, so minimize the loss of good tenants and keep your Las Vegas rental property occupied.
4. Make Cost-Effective Upgrades and Updates
To increase the value of your property and the rent you earn, it’s important to keep your rental home modern, updated, and in good repair. This speaks to your maintenance plans, but it’s more than responding to repairs quickly.
You don’t just want a well-maintained home. You want a home with upgrades and improvements that will raise your rental value, attract the best tenants, and deliver healthy ROI.
Evaluate your home during every turnover period so you can get an idea of how to make it stand out in the rental market. Some of the improvements that tenants are willing to pay more for include:
- Hard surface flooring instead of carpet
- Fresh, updated paint that’s neutral but not stark white
- Energy-efficient appliances
- Cosmetic updates in the kitchens and bathrooms, particularly faucets, drawer pulls, cabinet knobs, and things like tile backsplash behind sinks and stoves
- Improved lighting (interior and exterior)
- Low-maintenance landscaping
You don’t have to spend thousands of dollars on a complete renovation. But, if you make some small renovations every time you have the opportunity, you’ll find you’re earning more in rent and you’re allowing your property to increase in value.
These improvements and upgrades will also attract and retain better tenants.
5. Collect Rent On Time Every Month
It’s difficult to increase the returns you earn on your Las Vegas rental property if tenants aren’t paying rent on time.
When your renters pay late, you have to spend time, energy, and other resources collecting those overdue payments. If you ultimately have to evict your tenants, you’re going to spend more than you’d like on the court process and the length of time that no rent is coming in with your property.
Increase what you earn by enforcing a consistent rent collection policy. Include it in your lease agreement and make sure you have a discussion with tenants about your expectations before they move in. Here are some of the important components of a rent collection policy:
- How much rent is due every month.
- When that rent is due, and what the grace period is, when there is a grace period.
- What the consequences will be for late rent, including late fees and potential eviction.
- The methods in which rent will be collected.
- The fees and penalties for returned payments or insufficient funds.
Online payments are especially popular with tenants. You can also offer payments by check or credit card, and even money orders or cash through third-party merchants like 7-11 or Walmart.
Screen your tenants for timely payments and good credit. This will help you avoid the potential for chasing down late rent or making threats about eviction. While you’re screening, keep in mind that you’re looking for long-term tenants with a positive rental history.
Late fees are useful. They encourage people to pay on time, and they also provide you with a bit of compensation if rent payments are late. If you do find yourself having to evict, always talk to an attorney or a Las Vegas property management company. There’s a strict legal process that must be followed.
If you find yourself struggling to increase your returns, you might need some professional help from a Las Vegas property management company. We know what tenants are looking for in a home and we understand what the market trends are in this part of Nevada. While these suggestions we’ve shared today are general tips that can likely help every investor, you might have some unique opportunities with your own property or your entire portfolio. We’d be happy to make some recommendations that are specific to you.
Please contact us at New West Property Management. We’re passionate about the services and value we provide to the owners and investors who trust us with their properties. Our team expertly manages residential rental homes in Las Vegas and throughout Clark County, including Henderson and North Las Vegas.