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Get More from Your Rental Properties in Dallas (2019 Update)

Rental properties are a great investment for more income now and for your retirement. They do a lot to stabilize and diversify your property, and with the right property management, they can be completely passive investments that require very little of your time or energy over the long run. However, many investors don’t realize that they could get more ROI from rental properties, and that they can do it without putting in a great deal of time or effort. Here are a few tips for getting the most return for your investment.

Never Underestimate the Power of Quality Property Management

When you think of property management, you probably think of a company that handles day-to-day maintenance, repairs, rent and fee collection, and other sundry details of rental properties. Did you know, though, a high quality property management firm will also handle tenant acquisition for you and that they’ll provide services that will make your tenants want to renew their leases, rather than looking for new places to live?

We cannot stress enough how important it is to find a good property management company. You may pay a bit more in monthly fees for their services, but their rates will be more than covered by your tenants’ rent, and you’ll be much less likely to find yourself in search of new tenants every year when their leases expire.

Minimize Turnover as Much as Possible

On that note, the advantages of minimizing vacancy with help from your property management firm are obvious. However, the advantages of minimizing turnover are not quite as apparent to newer investors. Even if you find a new tenant immediately upon finding out that your old tenants are moving out, and there will be no gap in rental fee payments, you will still have costs associated with changing tenants.

Specifically, when old tenants move out and new ones move in, you’re almost always going to have to repaint the interior walls and replace at least some of the flooring. Add any upgrades and/or other repairs (there are always a few), and you have lost income.

The longer you can retain tenants, the less you’ll have to pay in turnover costs, and that’s a serious consideration when it comes time to negotiate new lease terms. Weigh the cost of repairs and renovations against the costs of upkeep and maintenance on the house, along with the current rental rate and the increase you would like to see in rent for the next year. It may pay to increase your rental rates at a smaller increment and give your current tenants a better deal, rather than risk losing them, paying for repairs, and finding new tenants.

Be Strategic with Your Rate Increases

On that note, you are going to have to raise rent every one to three years. This is only fair, as it allows you to keep up with the costs of maintaining the property, taxes, and other fees. However, tenants tend to balk at rate increases, and these increases can motivate them to move out. That’s why you need to be very strategic with your increases.

Typically, unless you offered the property at a drastic discount for the first year’s lease, we do not recommend increasing rent for the second year. This builds trust with your tenants and lets them know that you’re not going to constantly attempt to gauge them. However, after two years, it is absolutely reasonable to expect a 1-3% rent increase. This is little enough that your tenants should be able to pay it, and a year of increased rent will likely cost them less than moving expenses.

At the same time, keep an eye on rental rates in your area. You want to ensure that your rates are competitive with other properties. If you’re charging more, there needs to be a good reason that will be attractive to your tenants. For example, your property could boast the latest appliances and fixtures in your kitchen and bathrooms. An in-demand location and access to a pool and/or hot tub and other luxuries and amenities will also help you justify an increased price.

To get more ROI from rental properties, you need to balance great services and a fair but profitable rental rate to minimize vacancy and retain your tenants over the long term.

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Why Now Is the Best Time to Invest in Real Estate in Dallas (2019 Update)

For over seven years, the residential real estate markets across the United States have been slowly climbing out of the hole that was left when the housing bubble burst in 2008. While other markets have seen halting, faltering progress with a lot of dips, valleys, and stagnancy, real estate in Dallas has been consistently ahead of the curve.

In general, buying homes in Dallas has been a great investment move for years now, but that makes some newer investors nervous. They believe that they must have “missed the boat” and passed up the opportunity to get in on the ground floor with a lot of great investment opportunities. As a result, now they think that investing in real estate in Dallas at this point will not yield good deals or positive returns on their investments. This couldn’t be farther from the truth, though. The Dallas residential market is hotter than ever, but experts do not believe that it is anywhere near its peak. In fact, now is the perfect time to buy homes in Dallas and build your investment portfolio for a number of reasons.

More Jobs Mean More Tenants

First of all, Dallas is home to a lot of major industries, and the economy here is booming. We are seeing more and more businesses moving in and/or increasing their presences in the Dallas/Fort Worth area, including State Farm, Raytheon, AT&T, American Airlines, Southwest Airlines, Dean Foods, Dr. Pepper, and a long list of other Fortune 500 companies.

With more jobs flooding into the area, more people are moving here and are in need of rental properties. Young professionals are waiting longer these days to buy houses, which means that a lot of the tenants coming into Dallas are likely to be long-term ones, rather than those who’ll stay just a year or so and then find a house to buy.

Basically, because more companies are moving into the area and bringing more workers, the housing market is expected to continue to see growth because tenants aren’t just moving from one place to another. Instead, there is an all-time high in demand for rental properties in and around Dallas.

Home Prices Are on the Rise

Not only are rental rates up, but home values are increasing at a significantly higher rate than other residential markets in the United States. Experts say that this has to do with the diversification of industry in the Dallas area. Think of it this way… You diversify your portfolio to maintain its stability and to continue growing your wealth, no matter what any one particular asset or market does, correct?

Well, industry in Dallas is much the same way. Looking at the brief sampling of just the Fortune 500 companies in the area, you can see that there are numerous industries represented. Unlike a city like Detroit, which was built almost solely on the auto industry and has seen disastrous declines since the ‘90s, Dallas is built on such a wide variety of industries that no single industry recession can hurt the city and/or its surrounding neighborhoods.

At the moment, other cities’ real estate markets are faltering due to the current energy recession, but Dallas is flourishing, thanks to its diversified field of industries. Thus, while other markets are flat or declining, the housing market in Dallas is in full swing and showing major demands that only look to continue upward.

Waiting to purchase real estate in Dallas right now would be a mistake because current market prices are as low as we can expect to see them at any time in the near future. The market looks to be sustainable, and there is no shortage of long-term tenants for rental properties. Whether you are investing directly in homes in the Dallas area or you’re interested in buying equity in a larger residential or commercial project, now is most definitely the time to make your investment.