How To Get The Best Return on A Rental Property in Orange County | H&M Realty Group

Owning a rental property (or several) is a great way to make passive income. Andrew Carnegie once said:

Ninety percent of all millionaires become so through owning real estate.

But before you go diving in, there are some things you should know about getting the best return. We will review some things to consider in our latest blog.

How To Get The Best Return on A Rental Property in Orange County

Your Geography

Within each geographical area, are sub-markets. A home on one side of the street might rent for more than a home on the other side. Make sure you have a good understanding of what these sub-markets are doing real estate wise. What sub-markets are seeing the highest rents in your area?

Add Perceived Value

Often times you can come up with a few low-cost upgrades that will make a big impact on the space. Of course, there is always a fresh coat of paint. You can do this yourself and completely revive a room. If cabinets are weathered, you can consider a fresh stain or coat of paint to give them new life. Update fixtures such as faucets, doorknobs, and drawer handles. In some cases, sheet vinyl can be laid right on top of old, dingy tiles. Small cosmetic fixes can go a long way to increase the property’s value.

Don’t Forget The Yard

Whether people are buying or renting, it is important that they get a great first impression of the home. A neat and tidy yard, with some low maintenance flowers, will make people want to come in and see more. Your curb appeal should be warm and inviting. In addition, you will want to spruce up the backyard or patio area, depending on what your particular rental offers. Treat the outdoor space as if it were another room in the house. Create another space people will want to use and it can turn into a huge selling point for your prospective renters.

Whats It Going to Cost You?

You should put serious thought into your fixed and variable expenses. Your fixed expenses include things like taxes, HOA fees, insurance, property management, etc. Your variable costs would be things such as repairs, vacancies and turnover costs and CapEx. CapEx is the IRS’s way of describing major repairs that are not part of routine maintenance. A new roof for example. It’s safe to put away about 6%of your gross rental income towards CapEx costs, 5-7% away for repairs and another 5% or so for vacancy and turnover costs.

Another trick investors use is the 50% rule. This simply states that 50% of your rental income will need to go towards expenses and maintenance on the property. If you follow this rule, you should be able to generate positive cash flow from your rental property.

Our Tips:

Ultimately you want a low-maintenance tenant, who is timely with their rent payments.

  • To ensure you are getting the highest return for your rental property, look for someone who wants to rent long term.
  • Create justifiable rent increases. Make repairs and upgrades coincide with the lease renewal. Add new energy efficient windows at the same time you are raising the rent so the tenant will feel like it is a fair trade
  • Condo’s can be a low-maintenance alternative to a single family home. Just make sure you factor in the HOA fees and that the community is approving of your desire to rent out the unit.
  • Make sure you have an iron clad lease that covers EVERYTHING. Don’t get stuck paying utility or landscaping bills that should have been the responsibility of the tenant.

The more you rent out your properties, the less overwhelming it will all become. To get the best return on a rental property, make sure you are offering a house that you would want to live in yourself.

Are you interested in getting the highest returns possible on a rental property in Orange County? We can help! Send us a message now, or give our office a call today! We can’t wait to talk to you! 949-625-4533

Joe

Broker/Realtor/Investor/Mentor (41 years experience) Specialties: Buyer's Agent, Listing Agent, Foreclosure, Short-Sale, Property Management, Landlord I'm a Full Time Real Estate Professional, house flipper and mentor to many of my clients. I am here to help you get top dollar for your home or get you the best price for a home that you are going to live in. I have over 40 years of real estate experience for you to draw on and actively list and sell over 20 homes a year. I have sold over 600+ homes in the last ten years alone. I am a very skillful negotiator and will work diligently to help you realize the best possible price when buying or selling your home. With my Exclusive Home Acquisition & Sales System, I can find the Right Home for You! I have access to homes no other Realtor will show you. I can show you how to save an average of $10,000.00 on the purchase price. We will find a home that fits your needs, in a neighborhood that suits your style. If you are selling your home then I can bring all the professionals to you. I always include professional photos in ALL my listings. I have contractors standing by to assist with those upgrades if needed. I can also quickly get you ALL CASH offers for your home if you desire. My marketing surpasses all other agents. It begins with extensive internet advertising to hundreds of websites throughout the world. I do direct mail marketing for you home and also knock on doors in your neighborhood when I am holding an open house. I hold you home open to expose it to as many buyers as possible. My Exclusive program is designed to sell your home for Top Dollar in Any market. I am an experienced flipper here in Orange County and therefore can offer you my over 40 years of real estate experience. The information is available to you at no charge! If you like what you see, please call me and setup Your Free Consultation.

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