Maximize Rental Property Income
By Steve Gillman
There are a number of ways to increase rental property income,
but some of them are only short-term solutions. Don't be too
tempted by plans that put more cash in your pocket for a few
months but hurt your revenue in the long run. The following suggestions
are about that "long run" and how to maximize what
you get out of your real estate investments.
Most of the time you will make more money when you raise the
rent on your apartments or other rental properties. When won't
you? When you raise them too far beyond the going rates for the
area and the type of units you have. Do that and you might get
more from your tenants for a few months, but they will be looking
for other options, and you might lose a lot of income from vacancies.
So if you find after some research that you are charging less
than others, raise those rents, but not above the current market
Flickr photo by Janine
and Jim Eden
Lowering rent can
be an option if you are already facing occupancies and you might
be charging too much. Also, lowering or just freezing the rent
at the current level for years can be a good way to keep really
good tenants. Many landlords would prefer to charge $50 less
per month and have great tenants who stick around for many years.
It saves on the costs of lost income from vacancies and the expenses
that come with preparing the apartment for the next tenants,
and it also means less time spent managing your rentals.
Improve and Raise Rents
When you do have vacancies it can be a good time to make improvements
to a unit which justify charging more rent. New carpet and paint
are possibilities, but if you can add to functionality with things
like a second bathroom, a new closet, a storage shed, or a carport,
those minds of improvements will be worth more. $4,000 carefully
spent and financed can result in $75 more per month in rent,
which easily makes the payments for the money spent and gives
you more net income.
Other Income Sources
To make more income from existing tenants without raising
rents, you have a few options. You can install coin-operated
laundry machines if you have an apartment building. If you own
a four-plex you might buy several cheap sheds for the yard and
rent them out to tenants who are getting crowded by their stuff.
If you have tenants you think you can trust, you can offer to
allow a month-late rental payment once per year for a $50 fee.
You not only lose the income from empty units, but you also
have the expense of preparing them for the next tenant, and the
costs of utilities. One of the best ways to increase rental property
income then, is to keep those units full as much of the time
as possible. Some landlords have found that of all factors that
might be used to predict how long a prospective tenant will stay
in a rental, the most predictive is how long they stayed in their
last rented home. If in the interview or on the application you
see good jobs and six years in the last residence, you might
have a great new tenant, especially if you find out that they
paid their rent on time for all of those previous six years.
Apply one or two of the suggestions here and you can boost
your rental property income substantially.