Ever heard of an add-on? Think of these 6 strategies as add-ons that can increase rental income. Some are optional, some are an added convenience for tenants and others are a smart way of managing business. One thing to keep in mind, though, is whether the market will bear the add-on.
6 Ways to Increase Income from Rental Properties
- Laundry Facilities Offer Additional Income from Renters
If you own a multi-family property, adding coin operated laundry machines is a great way to earn some additional income. Will every single tenant utilize them? Probably not, but there will be a good majority of them that will and in a few months your investment will have paid for itself. Things to think about when deciding whether this will be a lucrative move for you as a rental property investor are: do you have adequate space for the facility, your tenant ratio (are there enough tenants to justify the cost), and maintenance costs.
- Rent Parking Spaces!!!
I’m sure we all know someone who has said, ‘I love my place, but the parking is becoming such a hassle, I may move’. This could be an opportunity for you if there is part of the driveway that isn’t being used or garage space that you could utilize as a rental parking space. Even better would be if there were an area where you could maybe create parking. Here is an example: I had a building with a grassy area that had no parking of its own and street parking was limited. Now, as a kid I had to begrudgingly cut the grass at this property, a task I still didn’t enjoy as I got older. One day it dawned on me, why not pave it over and make some parking spots? Well that is exactly what I did. The town loved the idea as it freed up more of the side street parking. When it was done, low and behold, we had 14 spots at $100 dollars a month per spot! I see a lot of multi-family properties that could utilize the space they have much better.
- Rent Out Space
Your ability to implement this rental income idea will depend on the type of building and the state and town laws in your area, but if you have a space you could rent it would be worth investigating. What do I mean by renting space? Does your building have a roof you could rent for events? What about a room that could be used for conferences? Another idea is to approach one of the cell phone companies and see if they would install cell towers on your property and pay you for renting the space.
- Yearly Rent Increases
If you’ve ever rented a place, were you surprised when the yearly lease expired and the rent went up? Make it a point to increase the rent yearly but keep it reasonable. Even if it is just $20 dollars a month, it all adds up and yet it isn’t enough to make a tenant think about relocating. Make sure that you know what the market rent is for a similar style rental in your area so you don’t run the risk of overcharging or undercharging. If your rent is too low, cash flow could be an issue and if rent is too high, the unit might remain vacant for too long. Offer options cause, who doesn’t like options? For example, offer a short term lease or a month to month lease as opposed to a yearly lease at an increased rental amount. Or, give your tenant an incentive to pay early in the form of a slight discount. You might reduce the rent by $10 if they pay 5 days before the 1st of the month. Wondering how offering a rental discount adds value? Value can be obtained in many ways so, let me ask you, would you sleep better at night and be less stressed if you knew you weren’t waiting for late rents or having to call the tenant or property manager to find out when you’re getting paid? That peace of mind is added value, in my opinion.
- Thoroughly Screen Tenants
An aspect of being a rental property investor that is sometimes overlooked is the screening of tenants. Whether it is you or your property manager doing the screening, it is imperative that prospective tenants are screened well prior to a lease being signed. Sometimes securing a better tenant with a slightly lower rent is better than a bad tenant who will end up costing you money in legal fees and nonpayment of rent, etc., not to mention that bad or disgruntled tenants can do some costly damage to your rental unit. We focus on the steps for screening tenants effectively in the OTA Real Estate Rental class.
- Charge Tenants Pet Fees
Something I’m starting to see more and more of in the last few years is people wanting pets and let’s face it, to most people their pet is part of the family. Please check with your state, county and town regarding service animals as they are protected. However, if you decide to accept pets you can charge a non-refundable deposit. I have seen them as low as $250 and as high as $500. Additionally, you can charge an extra $25 a month pet fee as well. Make sure to limit the number of pets, type of breed and weight according to your preferences.
As you can see, there are several ways you can add value to your rental properties. Whether you manage your own property or manage your property manager, the key is to lower your costs, raise your income and hold on to the good tenants as these will all increase your bottom line.