We truly live in a time where possible rental property income is lucrative when property management is done right. There are some tricks of the trade that I’m going to disclose to here that will be very helpful if you don’t already know about them. There are some key ways to increase rental property income and they all have their time or season. Timing is often not appreciated as much as it should be during property management. With these next few tips I’m about to give you, timing is everything!
First, try to increase rental property income during the time of renewal. I start off with rental renewal because I think this one is the most obvious of the three, but so often done poorly. There are several ways to truly increase rental income besides just upping the rent $50 bucks and calling it good. First of all, several landlords would rather keep a tenant in the rental than face vacancies so they don’t increase rent for years until the rent is so tragically below market that they then hit the unsuspecting tenant with a HUGE increase that hurts. Wouldn’t it be wiser to do small incremental increases that hurt the tenant’s finances less and teaches them to understand and expect a pattern of increased rent indicative of the market? Also, rental increase during renewal can happen in more than one way.
You can slap an increase on the rent renewal proposal that seems in line with market rents and be just fine. Or you can do lease renewals like a boss and come up with great renewal structures that allow you to increase the rent more than you may have originally thought by giving the tenant options. I like to offer possible upgrades that I know the property could greatly improve from for a higher rent price as one option. I also make sure that I’m looking at ancillary fees at this time. Maybe I only increase the rent itself by $35 but then I increase parking and storage by $20 each. Remember market rent goes up but so does the cost of things like parking in a highly dense area or needed storage if the only storage rental company in town just went out of business. Everything has a value and you want to know what that value is and also make sure I am recuperating enough money for utilities if there are any that the tenant doesn’t pay directly themselves and readjust that amount if needed. You’d be surprised how often flat rate utility bills goes unchecked for years only to discover that the owner or the management company is paying 40% of a utility bill that was supposed to be covered by the tenant.
Vacancy Can Be A Time of Increase!
Second, try to increase rental property income during the time of a vacancy. If a tenant who was paying $1200 a month for rent moves out and the market hasn’t budged, you still better rent that sucker out for $1210 the next time around. Never settle for collecting the same rental price as the previous tenant if at all possible. I know that in some cases it is unavoidable but if you go into every vacancy with the mindset that you can increase its value with minimal cost and increase the rent then you usually can. The only time I had issues with this particular goal during my own career was during a time when we chose to rent something for a very short term and in response, we hiked the rental price much higher to accommodate such a short lease term. The reason why you can always find a way to increase rent even if the market hasn’t budged or if you are in the slow winter season is that you can almost always find cost-effective improvements or advertising strategies that can allow you to recuperative the cost of then some. For example, I had one apartment that became vacant due to a job transfer after only two months of being in the rental. However, I tried to rent it just an additional $25 more then before I wanted to see if I could. After a week of very low traffic, I decided to take better advertising photos by staging the apartment with items we already owned and sure enough, I got the desired rent I really wanted. Another time I was able to get $50 more in rent on a 12-month lease by put installing a backsplash in a rental that only cost us $300. It made the kitchen look a lot nicer, and we more than recuperated the cost of that expense in the lease we signed.
Keep An Eye On Things
Finally, try to increase rental property income during the time of your annual or bi-annual inspection. Essentially, this is the best time to find an increase in rental property income by focusing on maintenance. You will save the owner or yourself (if you’re a DIY landlord) a lot of money if you take some time and identify the damages that are being done by the tenant right away. Often times landlords see a hole in the wall or a tear in the carpet and make the mistake of thinking that they will collect the cost for those damages upon move out. Often we assume that we can not collect funds for the damage until that item has been repaired. This isn’t the case and in fact, it is unwise to wait. If the damage is done, you can charge them in advance for the repair collect those funds and then make the repairs later on when the timing is best. You are far more likely to get funds for those repairs if you charge them right there on the spot when you discover the damage. If you wait to charge them for repairs upon move out and they end up having a large balance of repairs, you might lose out of collecting on those damages. If the move-out balance ends up going to collections then you have lost a percentage of that balance already. Also, if you aren’t actively trying to collect for maintenance issues from tenants then this is a cost that a property owner will eventually pay for themselves whether its in one or two weeks or in two years. The owner will have less rental income going back to their pocket because the cost for tenant caused damage was not collected. This is vital during any time whether it’s the annual, bi-annual, or move-out inspection.
When all three of these things are done right and these times as revered as money making opportunities, you can truly maximize the property’s value and reap the most profit. It is easy to go through the motions during all of these particular times but as a property manager or a property owner who is renting out their very valuable asset, a little hustle during the right times of the waxing and waning lifespan of a rental can truly pay off. Maybe you only really find profit increases during one of these three times. Well, now you know how to capture and maximize profit during all three situations.