Education
July 12, 2023

Battle for Your Bucks: 9 Tips for Landlords to Combat Inflation

Education
July 12, 2023

Battle for Your Bucks: 9 Tips for Landlords to Combat Inflation

Education
July 12, 2023

Battle for Your Bucks: 9 Tips for Landlords to Combat Inflation

Since the COVID-19 pandemic began, individuals and businesses across the country have been feeling the strain of inflation. Though year-over-year inflation appears to be calming – coming in at just 4% in May 2023, as opposed to the 8.6% recorded in May 2022 – it’s still a top concern for many landlords, driving up costs to maintain their properties and operate their businesses.

If you aren’t careful, inflation can dig into your bottom line and put your business at risk. Fortunately, you can protect your rental property business with these strategic tips.

9 Ways to Cope With Inflation

1. Get a Little Green
If you pay for professional lawn care and maintenance for your rental property, consider doing it yourself instead. If you already have the equipment, the cost savings can be significant, especially if you own multiple rental properties. Just make sure you have enough time to take on the responsibility and be proactive in your lawn care. Regular trimming of grass, shrubs, and trees is more than aesthetic – it can prevent pest infestations, mold growth, and property damage.

2. Look for Utility Savings
If utilities like internet and cable are included in the rent you charge tenants, shop around your area to make sure you’re getting the most affordable services possible. You could also consider having tenants take responsibility for these utility costs instead. Not only would this help reduce your operational costs, it could encourage tenants to be more conscious of their usage.

3. Save the Planet (And Your Wallet)
Energy costs can spike during harsh summer and winter months. Even if tenants are responsible for utilities, you’ll need to cover utilities anytime the property is vacant. To keep costs low, consider updating the property to be more energy efficient. Replace worn weatherstripping, seal holes and cracks that allow drafts, and switch to energy-efficient appliances when replacing old ones. Energy efficiency can also be a strong selling point when renting the property or if you decide to sell it later on.

4. Reevaluate Your Rent
Raising rent might seem like an obvious solution to rising costs. While it can be effective, it’s important to weigh your options carefully. Consider market trends and the potential strain on your tenants. You want to charge a fair price for your property, but raising rent too high can result in losses from delinquent payments, evictions, and vacancies.

If you do decide to raise rent, doing so in increments or at lease renewal can lessen the impact on tenants. When communicating rent increases, be transparent, empathetic, and open to discussion.

5. Update Your Administrative Process
Property management staff can help you take a truly passive role in your rental property business, but are they really cost efficient? Scout around to make sure you’re getting a fair deal on their services, and don’t be afraid to negotiate pricing and fees when possible.

Digital solutions, like using online rent collection and digital lease agreements, can also limit time, money, and resources spent on administrative functions. Just make sure you have the proper protection to account for potential liabilities.

6. Market Yourself
Keeping good tenants in your units means a steady stream of income with minimal effort. To attract quality tenants, market your rental properties in multiple ways, like newspaper ads, paper flyers, and on social media or rental websites. Ads should be eye-catching and highlight valuable features like modern amenities and 24/7 maintenance.

Once you have good tenants, building a positive relationship with them is essential to retaining them. Each interaction is an opportunity to market yourself as a great landlord.

7. Make a Mortgage Move
Look for ways to save on direct property costs, like revisiting your mortgage. For instance, if you have at least 20% equity in the property, you may not need to pay for private mortgage insurance anymore. If interest rates are lower than when you secured your mortgage, you may be able to refinance at a lower rate. Your lender can help determine whether either of these options would work for you.

8. Deduct to Save Bucks
As a rental property owner, you technically own a small business. When tax season comes, ask your tax professional about possible deductions related to your rental property business, like mortgage interest or tenant screening costs. It’s also smart to invest in tax planning services, which can help you strategically plan your business finances to optimize what you may owe or get refunded
at tax time.

9. Double-Check Your Coverage
Reviewing your insurance coverage annually can yield savings in two ways. First, your agent might be able to find savings on your existing coverage, like new discounts. Second, you might discover you need increased coverage. Changes in property value due to renovations, the housing market, and the economy could mean that last year’s coverage limits aren’t enough to rebuild the property this year if it gets damaged. An adequate policy can be the difference between an economic safe haven and a financial crisis.

Let Millers Help You Through the Hard Times

When your rental property business is feeling the crunch of inflation, every dollar counts. Millers Mutual provides rental property insurance solutions tailored to your needs, plus expert advice and resources to help you navigate rough waters. Ready to make sure your rental property business is fully protected? Reach out to your Millers agent today.

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