Landlords are constantly looking for ways to increase rental income.
One way to do so is to buy larger, more attractive properties and rent them at a higher rate. However, this plan is not feasible for every real estate investor.
Most landlords want to know how to increase profits of the properties they already own.
You don’t have to sell your properties or make massive improvements to maximize your rental income. In fact, by evaluating your rental businesses’ efficiency and assessing the value you can offer your tenants, you might be surprised at how you can harness the assets you have to create more.
Here are four strategies to maximize your rental profits.
#1 Increase Rent
Increasing rent is the most logical way to increase your rental income. But it isn’t always feasible, nor will your tenants appreciate it.
If you decide to go this route, you need to do your research first. Find out the rates of comparable properties nearby, and ask yourself if your rate is appropriate given alternative options in the area.
If you’re charging significantly less for the same features and amenities offered by the property across the street, you may have lots of interested renters yet lagging rental income. This would be a scenario in which raising the rent rate would make sense.
Another option is to make improvements or renovations. If you add value to your properties, you can justify a rent increase and attract higher-paying tenants who want those features.
Remember to follow all state and local regulations for increasing rent and providing notice. Most states prohibit landlords from raising rent in the middle of a lease term. Many landlords must also provide several months’ notice before increasing rent.
A few states also have statewide rent control. These laws set a cap on rent increases and restrict landlords from charging above a certain amount. Check for these laws as well as local rent control ordinances before raising your rent rate.
#2 Limit Tenant Turnover
Tenant turnover is expensive.
The costs of cleaning, inspecting, screening a new tenant, and moving them in are significant. The labor and time these steps take are equally as taxing on your budget. By reducing tenant turnover, you can save hundreds of dollars each year.
There are two ways to reduce tenant turnover. First, you can try to find long-term tenants, so you don’t have to flip units at all. This is the most ideal solution. If you want more rental income but find yourself adding up expenses from frequent turnover, focusing on long-term tenancies is a good place to start.
The other way is to become more efficient during the periods tenant turnover that you do have. You can do this by contracting cleanings and inspections to efficient experts, listing your units early, and using property management software to access comprehensive screening reports instead of running credit and criminal histories separately.
#3 Rent Out Storage or Parking Spaces
If your rent rate is appropriate and you’ve limited tenant turnover to the best of your ability, it’s time to think outside the box. One creative solution for increasing revenue is to rent out any additional space you have for storage or parking.
It may be best to find renters who aren’t your tenants for these spaces. This will allow you to generate extra income on the side while maintaining your current rental units.
#4 Add Amenities
Lastly, consider increasing rental income by adding amenities. For instance, you could offer your tenants in-unit laundry machines, internet, cable TV, or another amenity for an additional fee.
Tenants who pay for these services anyway are likely to purchase them from you since they pay you rent already. Fees for secondary amenities or services can be added to a tenant’s rent bill on your property management software.
Conclusion
Figuring out how to maximize your rental income without aggravating your tenants can feel like a puzzle. However, there are many creative ways to cut costs and maximize profits. By following any of these four tips, your rental business can generate optimal income and operate at peak efficiency.
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