Success tips and ideas for profitable rental portfolio

I’ve been in real estate investing my entire adult life, beginning with my dad at age 12 some 32 years ago. Last year my rental property holding companies had a the most profitable year yet since the 1990’s from rental profits, even in one of the most difficult times in recent history. And the majority of our inventory is in areas in eastern NC where the highest unemployment in the state has been recorded. Following are a few things that are helping us experience success in the midst of the storm:

  • Careful screening of tenants. - We interview carefully BEFORE the application and screen all tenants for their living history (moves, etc), court filings, and credit. We don’t worry so much about medical bills on credit but do reject if we see they don’t pay their housing obligations, or if they obviously don’t pay any of their obligations.

  • Constant tenant communications - if a tenant starts to get behind we don’t let it go. We keep communications open and never let a tenant get more than one month behind before starting court papers. Most tenants can come up with money if they try hard enough. Still, we do cut a little slack to allow some flex, and we chase those late fees and enforce them!

  • Take care of the tenants - we do our very best to take care of our tenant needs. By treating tenants right, and communicating in a caring way with respect for the tenants, we enjoy much higher than average occupancy and get a lot of our tenants through word of mouth. We even have a waiting list!

  • Keep costs to a minimum - we do our very best to keep our operating expenses to a minimum. By staying on top of repairs, and by using responsible contractors that know what they’re doing and are trustworthy, we are able to keep maintenance and repairs in a manageable range. We also watch very carefully our overhead costs using eBay, coupons, whatever we can to cut costs.

  • Tight property management oversight - we have some of our inventory managed by third party managers and some by team members. For the management by team members we have checks and balances in place to make sure mistakes are caught. We keep very open lines of communication and document everything in email when dealing with our third party property manager. By remaining responsive, and doing what we can to help them advertise, through flyers, etc. we have been able to not only keep occupancy high with properties they manage but have also gotten to the top of their list of preferred clients meaning our tenants get better service.

  • Treat tenants with respect - We treat our tenants with respect. We understand things happen sometime, and we try our best to keep communication lines open and if a tenant experiences hard times we share in their pain and empathize. This helps tenants feel like a part of the family and when it comes to a decision between paying the rent or going out for fun, tenants will pay their rent. Higher collection ratios means more profitable operations.

  • Keeping vacancies filled - when a unit goes vacant, we pull out all the stops to get it turned and rented. A vacant unit is lost rent that comes right off the bottom line. Vacancies are one of the largest expenses a typical rental portfolio experiences. View vacancies as a big expense and do everything you can to cut the expense to the bone. BUT, screen tenants carefully and do NOT fill properties with derelicts just to get them filled. A vacant unit filled with a bad tenant will cost you MORE than the vacancy itself.

Overseeing a rental portfolio can be time consuming but also can be quite rewarding. By carefully watching over your operations and paying attention to the numbers you can be profitable in this business and over the years as your debt is paid down you will have a residual income stream that will make you smile.

It would be great to hear other ideas of success tips for profitable rental portfolio management.

Happy Investing!

All your tips were good. I need to use your idea of ebay and coupons for business expenses. We just started doing it with Big Lots, the discount store that offers 20% off for members. 20% off a sale recliner makes a good deal.

I recommend reading the Harvard Study “5 Stages of Small Business Growth”, a tip from Olson on this site.

You need to think beyond today. Where is your business going? I had no business education, so I am learning as I go.


Good solid info. One thing I would also stress is make sure you buy smart.
If it is your first or 10th portfolio property you have to keep in mind that there is always another deal. Do not settle just so you can get in the game.

Absolutely! There is a saying that “you make money when you buy”. This is so true. One of the most vital keys to success in real estate investing is to buy right.

And I wholeheartedly agree – there is always another deal, so don’t get sucked into a bad one by emotions, or anxiousness.

I like most investors that have been at this a long time have learned the hard way through very painful experience what happens when you don’t buy right. It can be EXPENSIVE!

If you don’t know how to evaluate the deals you are considering against your objective and in light of all applicable aspects of the deal then study up BEFORE closing the deal. For example, a long term rental portfolio might have different criteria entirely for what constitutes a good vs marginal deal from a rehab and resale deal. You MUST know how to PROPERLY evaluate the deals BEFORE jumping in.

I couldn’t agree more. When I was getting started I really wanted badly to get into the rehabbing leasing and renting of a house. I had the fever. I was advised by my mentor that deals are like the bus, there is always another one coming along. That caused me to examine other deals. Then one day I was examining a deal and he told be if I didn’t buy it he would. That woke me up. The key to not buy until it is a deal then buy it. This is not how most people’s minds work and may not immediately make sense right off the bat but there are 2 deliberate actions and you need to have active decision points for both. A decision point is when you apply your criteria to the deal and make a decision. The first action to determine is to not buy a house that is not a deal. The second is to buy it if it is a good deal. Never just let the time on examination a prospective purchase just pass. Make a decision. You may draw a line threw it or just say no or whatever but make an affirmative action of saying no somehow and move to the next option or buy it.