Whether you have a massive empire of rental homes, apartments, townhouses, and condos, or you are just starting your investment-property journey, you always need to be thinking of ways to improve your rental income.
From adjustments in how you screen tenants to changes in how you collect rent, here are 12 ideas to make your rental income larger, more consistent, and more reliable.
12 Tips to Improve Your Rental Income
1. Use Property-Management Software
In many ways, improving rental income comes down to improving efficiencies, especially if you have a large portfolio. Time is money, as the cliche tells us, and property-management software can help reduce the time you spend on all the small tasks. Acting, in many ways, like a customer relationship management program (CRM), these applications can automate payments, schedule maintenance, and give tenants a seamless way to connect with you.
2. Buy Higher-Quality Properties
The higher the price of your property, generally speaking, the more you’ll be able to charge in monthly rent. High-end properties, although they cost more to purchase, can bring a significant increase to your portfolio, allowing you to charge hundreds of dollars more every month.
When balanced with a competitive purchase price and (possibly) a low-interest loan, high-end properties can significantly improve rental income for portfolios of all sizes.
3. Purchase in the Right Cities, Neighborhoods
Some cities bring a high demand for rental properties. Some cities don’t have as many tenants looking for rental space. Even within the same city, there are areas where rental properties thrive and other neighborhoods where landlords struggle to find tenants.
The larger point is simple: do your research and understand what cities, suburbs, and neighborhoods are conducive to high-quality rental properties.
4. Make Improvements That Attract Renters
Think long term here. What improvements attract renters? What are the amenities and improvements that attract reliable tenants, and which of these improvements are affordable? Essentially, the best improvements for a rental property are the same as adjustments before selling a home; the things that attract people are, essentially, the same.
A good kitchen, a clean, attractive bathroom, and a well-maintained lawn are just a few of the simple improvements that create a better impression for your property.
5. Optimize Your Marketing
Your marketing acts as a first impression for your property. Make sure you are sending the right message by optimizing your marketing efforts. Good marketing, essentially, improves rental income in two ways. First, it bring in more potential tenants, giving you are larger pool of potential candidates. (With more renters, you have a better chance at finding the best one.) Second, good marketing gives the impression that your property is worth a higher price.
6. Screen Tenants Thoroughly
Before you agree to rent your property to a specific tenant, spend about an hour contacting their previous landlords. Run a thorough credit check, and interview them about work, finances (within reason, of course) and their past rental history.
Remember, an eviction can cost thousands of dollars in legal fees, and this doesn’t even account for the loss of income. Avoid this situation by thoroughly screening potential tenants.
7. Manage Properties Yourself
Recently, we discussed the pros and cons of hiring a property manager. The main disadvantage? The cost. Hiring a property manager can eat into your potential profits, reducing the percentage of rental income that actually ends up in your bank account. While this step won’t increase the amount you can charge, it will make your efforts more profitable.
8. Invest in High-Demand Amenities
There are certain technologies and amenities that people are willing to pay for. ManageCasa, citing information from a variety of sources, found that security cameras and other safety features are in high demand. Renters may be willing to pay more for homes that have these high-tech features.
9. Consider Higher-Cost Short-Term Leasing
There is a certain comfort, a sense of security, that comes from long-term rentals. However, if you are willing to sign short-term rentals, you may be able to charge a higher premium. Some tenants needs housing for only a few months, perhaps half a year, and they are willing to pay more for the convenience.
With short-term leasing, you could charge as much as 10% to 20% more per month, which would boost you overall income and create a higher profit margin for your property.
10. Allow Pets…for a Price
It can be extremely difficult to find a rental property that allows pets. So difficult, in fact, that many renters are willing to pay a premium for properties that allow cats, dogs, and other types of furry companions.
Allowing pets can increase your pricing power. You can charge a nonrefundable pet deposit, which should be enough to cover cleaning and potential damage. In addition, you can charge an additional $20 to even $100 a month (depending on your market) to allow pet owners. Let’s say you allow a renter to keep two pets for an additional $50 per pet per month and an $800 nonrefundable deposit. The deposit should cover the cost of cleaning and repairs, if needed, while the pet fee would bring another $100 per month, or $1,200 per year.
11. Sell Low-Performing Properties
To use another cliche, it may be time to trim the fat. It may be time to enhance your overall portfolio by getting rid of some of the properties that are not performing to a high standard. If any properties are performing poorly, sell them as soon as possible and purchase something that is more likely to increase and improve rental income.
12. Refinance to a Low-Interest Loan
If any of your rental properties have high-interest loans, it can cripple your finances. Just a few percentage points can result in hundreds, even thousands of dollars every year. Contact our team today and let us take a look at your current investment mortgages. We may be able to reduce your interest rate so you can enjoy greater profit margins.
Contact our team today and let us help improve your rental income!