As the owner of rental houses, apartment buildings and other rental property your goal should be maximizing returns from every rental unit. There are steps you can take to maximize rental income.
Top 5 ways to increase rental property income
1) Reduce vacancies
It is not possible to predict which tenant will stay for a long time and which one will not so your goal must be to minimize turnaround between one renter and the next. According to a report on time.com, a month of vacancy cumulatively costs a rental property owner about 8.3 percent of the gross yearly income. Reducing the rent slightly to attract tenants and get revenue every month is better than accumulating rental losses month after month.
- Rent a house to a group of roommates. In most cases, the roommates will take the initiative to find another roommate when one leaves so that they don’t have to cover their rent.
- Hire a property management firm who will effectively advertise and market your rental vacancy
2) Keep tenants happy to reduce turnover
As a rental property owner you may not know what’s good and bad about living there like your tenants do. Reduce turnover and the costs that come with it by keeping tenants happy so that they stay.
Have a suggestion box and frequently open it to get feedback from tenants. Another way to do it is to send tenants postcards and ask them for their feedback. When tenants present concerns reach out to them to get them resolved.
3) Be careful with rent increases
Over time, living expenses generally go up rather than down. Therefore, increasing rent is inevitable but it will need to be done strategically. One thing to keep in mind is the rent being charged for units in the same vicinity that have the same space and amenities. If your rent remains lower than that of comparable units, you will still have the upper hand. You can see prevailing rent rates in an area on websites such as Zillow, Rentometer and Craigslist.
Communicate rent increases to tenants by letter well in advance if possible. Explain that HOA fees have gone up or a property upgrade is coming so that tenants feel that they are getting value for their money.
4) Be strict on late payment fees
Being respectful to tenants does not mean being a doormat when it comes to collecting rent. Rent is the return on your property investment and you must be strict about collecting it. One way to do this is to enforce late payment fees which should be outlined in the rental agreement. Send back rental checks that come in outside the established grace period without the late payment fees. Let tenants know they don’t have a choice right from the beginning and they will most likely comply.
Try to work with good renters who have fallen behind because of a particular circumstance but understand that sometimes eviction for non-payment is necessary.
5) Add revenue streams
Apart from making money from the rental units, a property owner can open up additional revenue streams by providing extra services at a cost. For instance, put in coin-operated laundry machines and perhaps drinks and snacks vending machines.
One way to increase revenue streams with single-family rental property is to offer contracted home maintenance services such as cleaning and landscaping. You can agree on a commission with the contractors in exchange for bringing consistent work.
With strategy and vision, you can find ways to retain good renters and maximize returns from your rental property.
Son-Rise Property Management has been serving the property management needs of Bellingham and Whatcom County since 1996. Contact us today to see how we can help you find a rental property for your family or manage your rental properties.