It’s a renter’s market, but you may not be doing all you can to maximize your profits off of a rental property. The best way to stay out of debt and on top of your mortgage with a rental is to increase your bottom line. Instead of expanding your business to include more rentals, strategically run your current properties in a smarter and more profitable way—and watch yourself reap the benefits!
Long Term Tenants
Few things are as costly for a landlord as consistent vacancies. To ensure your property is filled at all times, do your best to find long term tenants. Turnover is expensive; updating, cleaning, maintenance, and the like will set you back a small fortune with no rent income to soften the blow. If you want a great rate of return on your property investment, make sure you’re properly vetting all of those who reside there. To ensure you find long term tenants, follow thorough screening procedures. Use a background check for renters that scans for a criminal history, prior evictions, and gives you information on credit.
It’s not always plausible to keep a long term tenant, especially if you reside in a college town that sees yearly turnover. If this is the case, be sure you’re always on the move whenever an impending vacancy is announced. Ask your tenants for a 60-day notification period before their departure, and place an ad the moment you know the date of an upcoming vacancy.
Another thing to consider to keep long-term tenants is to lower your rent rates. It might seem counterproductive to lower your monthly income to make more money, but consider this: If you have several vacancies a year and can’t keep a tenant, the problem could be your exorbitant rental charges. Try altering your rent rates and see if you can land a more consistent tenant. The money you’ll save on updates and maintenance from turnover projects and unfilled apartments is likely going to offset the lower rent you’re charging.
If you want to ensure your property is reaching the best clients, you’ll need to use the proper advertising routes. Don’t rely on fliers and Craigslist; to attract higher-paying clientele, you’ll need to use properly vetted rental sites. There are many to choose from, including Hotpads.com, Apartmentfinder.com, and Zillow.com. Make sure your ads are professional and attractive. High-resolution photos, thorough descriptions, and strategic highlighting of specific home features are necessities.
Utilize Late Fees
Don’t become a pushover. While it’s understandable to want to sympathize with your renters, especially those you truly like, not enforcing late fees can be detrimental to your bottom line and your role as landlord. You can still be respectful and kind, but allowing late rent to become a habit will only see your business suffer. From the first time, impose a late fee. This will ensure your tenants regard your lease as the binding contract it is.
If you are still on the fence about charging a late fee to your tenants and not sure how much you should be charging, be sure to reference to this discussion on Zillow to see how others are building late fees into their contracts.
Other Revenue Builders
If you run a multi-unit apartment, townhouse, or the like, consider adding services that can gain you more money. Whether it’s a coin-operated laundry machine, cleaning services, or landscaping additions, you can charge fees for use and improve your bottom line. The initial investment in a soda vending machine could pay dividends you never expected, and contracting out services that help you with upkeep can make you a small profit and ensure your property remains in the best condition possible. You can also save a lot of money by securing tenants who can complete services themselves. Offer rent decreases for loyal tenants who have handyman skills and can deal with unforeseen problems like plumbing issues and other house maintenance issues. The money saved from having to call a professional will be worth the small amount shaved off of your monthly rental income.
Looking for even more creative ways to increase your rental property earnings? Be sure to check out this list of five additional ways landlords can maximize their profits with existing rental properties.
Improve Curb Appeal
If you want to attract higher-paying clientele, your rental needs to reflect this. Update appliances, repaint the front of your building and spend time on your landscaping. No one will be willing to pay more for a place that doesn’t stand out from the crowd, and you should highlight what your rental can do to make their life better and easier. During your presentations, highlight nearby amenities, including restaurants, bars, schools, and shopping hot spots. Have a cleaning service come and give the house a detailed scrub down between each and every tenant turnover and make sure all of your cupboards, windows, and light switches work correctly—along, of course, with all of the appliances in the home.
One of the best ways to increase earnings from your rental property, while still working with a budget, is knowing how to maximize your appeal in each and every room. This is something onproperty covers on a room by room basis — which is also a must read for any landlord and property renter.
If you’re looking to make bigger profits from your rental investment, consider altering the ways you operate your business. Make improvements to the rental itself, practice better advertising, and find the best tenants to ensure your property is the money maker you always dreamed it could be.
Art the end of the day, there is always going to be someone with a big enough budget and need for your rental property. Now it’s time for you to put in the time and effort to make it stand out from the competition.