One primary reason why many people opt to invest in real estate properties is to strike a profit. Owning such profitable investments, particularly multifamily properties, is an excellent way to generate positive cash flow. You need money to pay for your monthly expenses such as the apartment or multifamily loan, insurances, and property taxes, so financial stability is essential.
But aside from these non-negotiables, extensive renovations or repairs and extravagant purchases can come sooner or later. So if you want to keep up with your expenses and make more money, increasing your rental property income should be a priority. Fortunately for you, this goal is not as expensive or too challenging if you know your way through real estate management. Interested? Then check out our list of some strategies to help you increase your rental income.
- Reduce vacancies
As we all know, filling rentals is a challenging task for any rental owner or landlord. While there are tons of online marketing tools available, running an ad may cost you about $200 or more, depending on what you use. Plus, the rental marketing is very competitive. So if live near, exert extra effort to show your property at least thrice a week. If you live far from your rentals, you can just line up the showings in one day. If you don’t have the time to do that, you can choose to hire a property manager to help you out.
Another great way to avoid vacancies is to ask your current tenants at least three months ahead until the lease expires if they’re planning to leave or stay for another year. Make sure to understand the market and check if you’ve set the right rent.
- Increase rent strategically
If you want to go bold with your strategy, you can opt to raise your rent without losing a renter. A good way to do this is to increase rent incrementally every year by 2-4%. This is a manageable raise for the tenants and still competitive at market levels. Avoid raising the rent to 5-8% as this might scare off the tenants.
Building a good relationship with renters is also an effective way to make the raise much easier to implement. Tenants will less likely to be frustrated or leave when the rent goes up as they know you aren’t doing it to take advantage of them. Just like with any other business, building trust is key to better revenue.
- Improve the appearance
When people opt to rent a unit or house, the first thing they look at is the aesthetics. Doing basic aesthetic improvements such as replacing mailboxes, painting the front door, and hedging any trees and bushes can impact your earnings in many ways. You can attract more potential tenants, keep your existing ones satisfied, and even give you another valid reason to increase your rental fees in the coming months or years. If your tenants are seeing quality properties, then they are more likely to be glad to pay for rent on time too.
- Invest in preventive maintenance
Many investors often overlook the importance of preventive maintenance. As a responsible owner, don’t wait for your tenants to clean their own gutters and front road, clean off A/C compressors, or replace furnace filters. Avoid expensive maintenance expenses by doing regular inspections at least once or twice a year. Think about this, if your tenants ignore leaks on their units like you neglect performing routine maintenance, it can lead to major dry rot and water damage. Good property maintenance is also a good way to make your tenants stay longer. Surely, you want to avoid expensive turnovers as much as possible, right?
- Add revenue streams
Depending on the type of rental property you own, adding new revenue streams enables you to increase profits as well as your property’s value. For instance, if you are managing a single-family property, you can offer regular landscaping and house cleaning on the lease agreements. This way, your tenants don’t need to acquire outside services and as for you, you can negotiate with rates and boost revenue. In case you own a multifamily property, adding coin-operated services like vending and laundry machines is a great tactic.
For sure, good finance and property management can go a long way. You can easily increase retention, raise the rents, and potentially lower costs. Look at your rental properties as your main profit-making business and be proactive in finding ways to boost rental returns. In short, if you want to ensure your properties won’t turn into bad investments, practice good management.