Investors might feel gunshy about buying because the real estate market seems like such a toss-up (especially with un-affordability and unpredictable reactions to slashed interest rates). Never feel pressured to buy properties if it goes against your risk tolerance. Still, though, investors should do something. It isn’t enough to twiddle our thumbs, even as passive investors.

So what do we do?

Investing in the properties you already own can build wealth, increase rental income, and raise property values. Here are some of the best ways to do just that:

6 Ways to Make the Most of Your Rental Properties

#1 – Renovations and Upgrades

Energy-Efficient Upgrades: Adding energy-efficient features like solar panels, new insulation, or modern windows reduces utility costs and makes your property more attractive.

Modernizing Kitchens and Bathrooms: These high-ROI renovations can significantly boost your property’s value. It doesn’t necessarily need to break the bank, either! Sometimes, aesthetic improvements are all it takes to see added value.

Curb Appeal Enhancements: Curb appeal is your property’s handshake. What’s the first impression it makes? A fresh coat of paint, mindful landscaping, and good lighting make the property more attractive.

Adding Smart Home Features: Everyone, whether owning or renting, can appreciate tech improvements – especially if they increase a sense of safety. Consider smart locks and thermostats, security systems, and other “smart” features that make modern living more convenient.

#2 – Convert or Add Space

Finishing a Basement or Attic: Is there “dead space” in your property? An unfinished attic or basement can become usable living space and boost property value, especially in areas where square footage is valuable. Even a crawl space is worth “finishing” through proper encapsulation. Not only does it mitigate moisture issues and reduce pests, but it can function as additional storage space.

Layout Reconfiguration: Sometimes, property layouts are dated and no longer appeal to modern needs. For example, a 1920s bungalow is unlikely to have much closet space! Consider how a property can be reconfigured to better utilize or create more space.

What do your residents want, anyway? Read this: Here’s What Rental Residents REALLY Want in SFRs

#3 – Refinancing for Better Terms

Lower Interest Rates: Refinancing your mortgage when rates are low can reduce monthly payments, freeing up cash flow. This is especially true if you bought when rates were higher before the recent federal cuts.

Cash-Out Refinancing: If you’ve held a property for a while and have significantly paid down the mortgage or seen appreciation, you likely have untapped equity. A cash-out refinance allows you to pull out equity and invest it into other properties or improvements for the current property. It’s not a win-win, though – carefully consider the risks versus the rewards.

#4 – Increase Rental Income

Update Lease Terms: If rents in your area have increased, updating your lease agreements to reflect market rates can boost your rental income. A professional property management team will stay on top of comps and lease adjustments.

Add Amenities: What are some value-added amenities that can increase cash flow? Including certain appliances, like washers and dryers, can be a big incentive and an easy justification for a higher rental rate.

Longer Lease Options: Consult with your management team about increasing lease flexibility for your residents – especially those you wish to retain. For example, the option for longer terms with a better rate can prevent turnover and increase long-term cash flow.

#5 – Leverage Tax Benefits

Tax Deductions: Mortgage interest, property taxes, repairs, and operating expenses are deductible. Staying informed on tax benefits can improve your cash flow. Work with a knowledgeable CPA or other tax professional with experience working with real estate investors. They may have greater insight than others!

1031 Exchange: If you decide to sell, consider using a 1031 exchange to defer capital gains taxes by reinvesting the proceeds into a new property. This is a highly regulated, rule-driven process, so consider it long before you seek to sell.

#6 – Property Management Optimization

Reduce Vacancy Rates: You can improve and stabilize cash flow by improving the vetting process and offering attractive amenities. Consult your management team about what steps you can take and realistic expectations.

Professional Management: A property management company can streamline operations and increase your ROI. You might be paying for their services, but the added value is often well worth it!

Investing in your current properties allows you to leverage existing assets, boosting income potential and long-term appreciation. Pay attention to your existing assets if you’re not buying properties now. If you do, you’ll be in the best position possible when you’re ready to scale again.

Our Portfolio Advisors at REI Nation make investing in real estate stress-free. Tap the button below to start!