The goal of owning a rental property is to make money. Thankfully, you don’t need to own hundreds of properties to make that happen. You only need to know how to reap the most profit from what you currently own.
So, in this article, we share with you 6 tips on how you can maximize your rental income. Let’s get started, shall we?
Tip #1: Strategically increase the rent.
Setting the right rental price is a balancing act. If you price your rentals too high, you risk putting off your tenants. If you price it too low, then you risk leaving money on the table. It goes without saying that either of the two scenarios is bad for business.
What you want to do is find the sweet spot in between. One important factor to consider is expenses vs. revenue. Examples of property expenses include:
- Property management fees
- Landlord insurance
- Mortgage payments with an ARM
- HOA fees
- Property taxes
Once you’ve factored your costs, now you must look for ways to increase your rental value. Examples of improvements you can make to increase your rental property’s value are:
- Upgrading your appliances
- Adding a fresh coat of paint
- Increasing storage
- Installing better countertops
- Upgrading plumbing fixtures
Tip #2: Avoid rental vacancies.
Finding tenants is no easy task. Thankfully, the process is now much easier than it used to be. All thanks to the internet.
Today’s renters are internet-savvy and will search for rentals online. Gone are the days of simply placing a ‘For Rent” sign outside a home and trying to rent it. Tenants nowadays want to see videos, rental reviews, interactive media, 3D walk-thrus, and real-time mapping.
Online rental listing platforms can make all these things possible. Good examples of rental listing sites include Zillow, and Craigslist.
Besides knowing where to market your rentals, it’s important to have a good screening process. This will help you find a renter who pays their rent on time, abides by the lease terms, and doesn’t damage your property. Also, most importantly it will allow you to have a consistent rental income.
Tip #3: Have a pet friendly rental property.
Whether or not to allow pets in your property is an important decision. It’s one you’ll have to make as a landlord when drafting your lease agreement.
According to a survey conducted by the American Pet Products Association, about 85% of U.S. households own a pet. So, with a “not pet” policy it’s likely that you’ll lock out a huge tenant pool.
Besides access to a huge tenant pool, allowing pets in your properties also has a number of other benefits. The benefits include:
- You may be able to charge higher rents. This is especially true if your area doesn’t have a lot of pet-friendly properties. And subsequently, this helps to increase your rental income.
- Pet owners tend to be relatively more responsible. Owning a pet requires a lot of responsibility. Now, if a person can care for their pet, it’s highly likely that they will treat your property with similar respect.
- Pet owners typically stay longer in a rental. This is because it can be harder for them to find a pet-friendly property.
Allowing pets into your rental property also comes with some risks. For example, property damage and noise. Luckily, most issues can be avoided by having a pet clause in your lease.
Tip #4: Charge a roommate fee.
Charging a roommate fee is also another way of maximizing rental income. Yes, having extra people live in your property isn’t exactly a great idea. It usually means more wear and tear on your rental property.
However, the reality is that many renters go from an initial two occupants to three or even more. The extra people could be your tenant’s lover or family member.
If you don’t allow guests, then it would be wise to perform inspections every now and then. But if you do allow them, then go ahead and implement a roommate fee in the lease or rental agreement. In doing so, ensure you follow industry best practices such as:
- Make all roommates jointly and severally liable for lease terms. This will allow you, for example, to seek rent from any of them should there be an issue.
- Add a lease term prohibiting subleasing of your property.
- Require potential roommates to pass your screening process.
Tip #5: Screen your tenants thoroughly.
To command a good rental income, you need the right tenants. You’ve probably heard of other landlord’s horror stories, right? A bad tenant can be your worst nightmare.
To make things even worse, tenant evictions can be lengthy, costly and stressful.
To avoid all these, you need to properly screen tenants. Among other things this means, checking on prospective tenant’s income, references, credit scores, and criminal records.
If the tenant passes their background checks, you can rest-assured that they will be high-quality renters.
Tip #6: Work with a professional property manager.
You might believe that you’ll save by self-managing but in the majority of cases you will make more money by working with a professional property management company.
The truth is you should be focusing on what makes you the most money.
In the majority of cases it pays to focus on what you are great at and having professionals help you where you aren’t as strong. If you have 1 or 2 properties it may make sense to self-manage - but if you are serious about real estate investing and you are going to acquire more rental properties – you may want to hire a professional.
The best way is to make an effort in finding the right property manager to work with and slowly build a relationship with him or her. In doing so, scaling your real estate portfolio becomes vastly easier - knowing you have a team you can trust in helping you. If you’re curious and you’d like to know more about how we at Dean & DeWitt can help you – check out our rental property owners page or give us a call!
The goal of owning rental properties is, of course, to profit. If you already have but looking to maximize it, we hope you’ve found this article insightful. Try these ideas to see what happens.