Landlords: How to Maximize ROI on Investments

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As a landlord, you should be looking for properties that allow you to minimize expenses and maximize your income as much as possible. Return on Investment (ROI), should be your top priority, helping you to build a financial future for your family. You need to look at all the expenses that will be incurred to purchase an investment property. Then, look at the money that you can bring in through the rent payments.

Size Matters

Sometimes, I see people who own rental homes that are quite a bit larger than other rental properties in the area. In my opinion, this type of investment is a risky choice if you want to maximize your profits! If my clients ask for advice about buying an investment property, then I usually advise them to choose smaller rental to boost ROI.

As a general rule of thumb, a larger home will result in a smaller Return on Investment. If a family is looking to rent a home, then they usually don’t want to pay top-dollar for that home. Instead, they are looking for something that is affordable so that they can save their money to prepare to buy a home in the future. Rental properties are usually short-term places for people to live, so they don’t want to spend a lot of money.

Smaller is Better

What is the “ideal zone” for an investment property? The sweet spot for landlords tends to be in the 3-bedroom, 2-bathroom range. This size of property will give you a better return compared to a big home.

If you have $500,000 to put into investment properties, then you should skip the larger home and consider buying two $250,000 properties instead. The only reason that you might consider renting a larger home is if there is a special circumstance for your family. For example, if you are planning to move back into the home in the future, then it might make sense to rent the property for a while to cover the mortgage costs.

Talk to the Temecula Real Estate Expert

Do you have more questions about maximizing your ROI and equity? Then, I invite you to contact me for more information. I am here to help with anything that you need! Call, text, or email me for more details: (951) 473-0390 or [email protected]