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Choosing to invest in a rental property is a great way to generate a regular income and build equity in a relatively safe and easy manner. There are many ways for real estate investors to see exceptional returns on their investment, especially with the right know-how and a careful eye. Monitoring your investment’s performance and making changes as you go is the best way to maintain profitability and achieve your financial goals.
Here are five simple ways to help you increase profits at your investment properties:
1. Increase The Rent
Raising the rent on your investment properties is an obvious way to increase profits. Rent increases keep your property priced within market value, help you stay on top of expenses and give you the means to reach profitable rates on your properties.
The trick to a successful rent increase is getting as little pushback from your tenants as possible. You want a rent increase to meet market demands but make the increase manageable on your tenants budget so you don’t out-price them, resulting in a vacancy. The easiest way to present approachable rent increases is to build regular rent increases into your lease agreement. By including a small annual rent increase into your lease agreements, your renters will be prepared for the raise in living expenses and budget accordingly. It’s much easier for a renter to budget a $50-per-month increase once a year than a $250 increase every five years.
2. Provide Additional Services
If you own a multifamily property, triplex or fourplex, you might have the option to increase profits through coin-operated laundry. If the property does not provide an in-unit washer and dryer, offering onsite laundry facilities can make your property more appealing and has the added bonus of giving you more income each month. Colleagues of mine have shared that adding two coin-operated washers and dryers can generate up to an extra $100-$250 per month.
You have options to lease machines through major appliance companies, in which profits are split but maintenance is taken care of by the company. Or you can purchase the machines and retain 100% of the profits, while also taking care of maintenance. You will also want to consider water costs in your town and access to other local laundry facilities to make sure onsite laundry will work for your tenants.
3. Allow Pets
It’s been well established that a great many renters have pets, but pet-friendly housing can be hard to find. Investors have the opportunity to capitalize on this need for pet-friendly housing by allowing pets, with clearly established rules and an increased rent amount.
Consider charging a monthly pet rent if your tenant chooses to have a pet on the property, which will be easy additional income for your property. If the pet causes damage, you can still take the required amount for repairs out of the security deposit.
Keep in mind that service animals and emotional support animals are not considered pets and you are not allowed to charge pet rent or additional fees to tenants with these types of animals.
4. Stay On Top Of Maintenance
Every homeowner knows there are routine maintenance jobs that must be addressed each season to ensure the property stays in tip-top shape. Home maintenance tasks can include seasonal chores like clearing gutters in the fall or preparing pipes for winter, appliance maintenance like servicing HVAC systems or checking sump pumps, and other regular tasks like changing the air filter.
Staying on top of routine maintenance is one of the best ways to extend the life of the property and avoid expensive repairs. Investors have to be extra diligent about maintenance since they are not always at the property making sure routine tasks get taken care of. Landlords need to communicate to their renters the importance of tenant-required maintenance. Your lease agreement should outline all the renter responsibilities and the consequences (such as any fines) should maintenance tasks be forgotten.
Even if it might seem obvious to you, you should include it in your lease. Tasks like taking the lint out of a dryer vent, changing air filters and leaving a dripping faucet during freezing nights.
Staying on top of routine and seasonal maintenance is far less expensive than sending over a contractor to fix an appliance or property feature that could have lasted longer with some TLC.
Make sure to conduct seasonal inspections and discuss any opportunities for improvement with your renters if needed. If you work with a property manager, ask them how they ensure tenants follow maintenance requirements outlined in the lease.
5. Work With A Trusted Team
Despite yours and your renters’ best efforts to stay on top of routine tasks, there will be instances where a professional will need to be hired to fix something. Having the right contractors and vendors on hand will help you keep costs down when a maintenance issue pops up. Establishing a good relationship with plumbers, electricians, painters and other home maintenance-related vendors gives you quick access to quality services when you need them.
If your renters calls with a maintenance emergency, you know that when you call your preferred vendor, you will be getting the right service at a price you are prepared to pay. You don’t want to be calling around trying to find someone based on availability to handle an emergency — this is when maintenance can get extremely expensive.
Final Thoughts
Investing in real estate is a long-term process; you have plenty of time to learn new techniques and try out new strategies. Even small adjustments to your property can increase value and be more profitable in the long run. Taking the time to evaluate where you can improve will not only help you keep your property rented but will allow you to ask top dollar and maximize your profits.