While there are countless ways to grow your money, investing in real estate is definitely among the most profitable option. Among the most financially rewarding income properties are residential ones like single-family or multi-family homes. If done right, such a venture is perfect for individuals who want to take charge of their own business and earn great revenue.
While owning rental properties can offer amazing financial benefits, staying in business can be more challenging than anything else. Here are useful tips for you to help you make the most of your rental properties and generate great revenue.
Don’t raise the rent
If you can’t guarantee to raise your rent strategically, don’t do it yet. It’s a fact that raising rent has been a continuous trend in the market, but it comes with several unintentional consequences that could hurt your business badly. For one, the renters are more likely to move to another rental that’s more affordable. In fact, raised rent is the number one reason for this.
Also, bear in mind that tenant turnover costs can get pretty expensive. By keeping your rent as-is for as long as necessary, tenants will stay longer. The longer they stay, the lower your maintenance costs will be since they complain less.
Offer short-term renting
One of the most popular trends in rental properties is short-term renting. Tons of rental property owners have opened their doors for travelers and explorers. Allowing people to rent your place during the weekend can give you an extra revenue source for your tenants. In turn, you can also get additional profit on the side by letting them sub-lease their rental living space. You can charge them a fee of $50 to your tenants.
Apart from the monthly fee of 50%, note that some requirements must be taken care of. For instance, there’s renter’s insurance, wherein a deposit is required to cover damages, and short-term occupants should agree to the property’s terms. Failing to inform you of a short-term lease has an average penalty of around $500. Make sure, though, that you or your property manager still review and approve every short-term occupant staying in the place or units to minimize any problems.
Improve the rental property
While some improvements are readily essential expenses, some could result in more profit and greater interest from potential renters. The most important improvement is having an aesthetically pleasing exterior, from a clean yard, new backyard fence to great curb appeal.
Of course, the inside of the home is also crucial. New carpeting, fresh paint, and good insulation are some improvements that can make the house feel new. Only work with a reliable residential improvement contractor to ensure you’ll get the best quality of work for the money you shell out. A good contractor can even recommend more beneficial work to increase the value of your property.
Take advantage of late fees
There’s a good reason why late fees are in place, and that is to earn extra income. Among the most common mistake of property managers or landlords is that they often choose to receive the late payment without demanding late fees in the agreement.
If you’re someone who’s not comfortable collecting late fees in person, you can use automatic invoices or online rent payment tools to make it easier for your tenants as well. Landlords who began using such online payments saw a 14% increase in late fee collections, which can average to about a revenue increase of $125 per year.
Add convenience services
Offering property-related services that can help make your tenant’s life easier is key to reducing vacancy and maximizing your revenue. These could be housekeeping, landscaping, or lawn-mowing services. Whether you’re a small business or a solo operator, it’s best to find and partner with a reliable local service. You can promote their services to your renters or in your rental listings in exchange for a cut.
This strategy doesn’t only work with large multi-family properties but also single-family rentals. The net profit might be small but is very helpful in keeping the renters happy and the entire property well-maintained. Other convenience services you can offer include dry cleaning, dog walking, and babysitting.
Investing in real estate does give you a chance to take advantage of fantastic things such as high leverage and ROI, diversify assets, high appreciation, and even tax benefits. Take our tips into account, guarantee better returns from your investment, and meet your financial and life goals much faster.