Let’s Make More Money
Are you all out of ideas on how to maximize your rental income?
We may have some new ones for you.
When you are thinking about ways to maximize your rental income, you need to focus on increasing rent, but remember that you can also reduce your expenses, too. That will mean more money in your pocket every month. Instead of just automatically raising the rent every year, get creative. Even refinancing your mortgage can produce more income (not now. We definitely don’t recommend this now.).
Clearly, increasing your rent is one of the best ways to maximize what you earn on your rental property in both the short term and the long term. So let’s brainstorm some good, outside-the-box ideas on how you can bring in more from your tenants every month.
We’ll explore some inside-the-box ideas, too. Not everything has to be an innovation.
Obvious Starting Point: Knowing Your Market
Before we can talk about how and where to raise your rent, we need to back up and figure out if the rental market is even in a place where rental increases are possible.
What’s the competition like? Are there a lot of rental homes just like yours, vacant on the market? If so, we’re going to have to think about how to convince tenants to choose your property and then decide if they will be willing to accept a rental increase.
In the current market, you’re probably in a good position. There’s strong demand for well-maintained rental properties, and rents have been climbing reliably.
Let’s get an idea of what the range is for your rental increase. How much more can we ask before we have to add some value?
Adding value is the key point, here. The market is always the most important factor in where your rental value falls. But, when you have interesting features to your rental home, amazing amenities, or recent upgrades and renovations, you can charge more.
These aren’t the only strategies. There are actually a lot of proven ways to increase what you earn by bringing in more rent.
Here are some of them.
The Easy Answer: Make Improvements that Add Value to Your Property
First things first. You know that the easiest and best way to maximize what you’re currently earning in rent is to make your property more valuable. When you can offer current and prospective tenants something new, modern, and unique, you’re increasing the rental value of that property, and you can ask for more rent. Tenants will be willing to pay it, and the market will support the increase.
Adding value to your property is one of the most effective ways to justify a rent increase. This could include making upgrades to the property such as installing new appliances or renovating common areas. Other ways to add value include offering additional amenities such as a gym or pool or providing maintenance services such as snow removal or landscaping.
The best improvements will depend entirely on your property. Your renovations will be different for a one-bedroom unit in a multifamily building versus a three-bedroom single-family home in a gated community. However, we can recommend a few proven updates and upgrades that always bring in higher rents.
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PAINT A fresh coat of paint is one of the first upgrades you can make without even thinking about it. This should be a checklist item on every turnover list, anyway. Many of our owners have complained that the price of paint is no longer reasonable. That’s true – it has gone up, like everything else. We’re also going to recommend that you invest in durable, high-quality paint. That will add a few more dollars to your out-of-pocket costs. Still worth it. Giving your walls a fresh coat is a worthy investment. Not only does it increase your rental value, it also attracts good tenants. No one wants to move into a property that has chipped, worn, stained, or scratched walls. While we’re on the subject of paint: don’t forget to evaluate your exterior paint. By giving the outside of your property an update, you’re also primed to earn more money in rent. This impacts curb appeal and makes you and your property look good. |
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FLOORS Floors provide you with a huge opportunity to increase your rents. A recent flooring survey found that tenants prefer hard surface flooring to carpet. This is no surprise because there are a number of benefits to hardwood, tile, or laminate flooring. For starters, it’s much easier to keep clean. It doesn’t trap odors and stains and it’s actually easier for you to clean and maintain during turnovers. There are fewer allergens, and that’s becoming increasingly important to tenants. Trade in that carpet for hard surface flooring. The investment will result in higher rental values for your properties. You don’t have to choose expensive hardwoods. The laminates and even vinyl products are really attractive and affordably priced. |
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KITCHENS Tenants care about kitchens even more than they care about bedrooms or outdoor space. This is why you should focus any improvements or upgrades on your kitchen. This is a great space to increase your rent. Start with the appliances. We’d love to tell you to upgrade to all stainless models. If you can, do it. But, that’s not entirely necessary. All appliances should simply match and be clean. When the finishes on your oven, stove, fridge, and dishwasher are the same, the kitchen will look modern and well-designed. If the appliances are old or you’ve had to repair them more than once, consider installing new ones. Focus on energy-efficient models. This will be a great selling point when you’re marketing your property. Unless they look dated, you probably do not have to install new cabinets and counters, but make sure they look clean, modern, and welcoming. They can be painted. Finally, invest in easy and inexpensive features like backsplashes and new switch plates on your walls. |
Here’s one more update recommendation that’s both aesthetic and functional: your lighting.
Lighting is another renovation that can easily increase what you earn. Upgrade your indoor and outdoor lighting if necessary. Outdoor lighting is critical for safety purposes, and you want your tenants to feel safe in the parking lot, the parking garage, and around the grounds. Inside, tenants will be looking for overhead lighting and light fixtures that match the hardware you have in each room.
This type of attention to detail will always impress tenants and help you earn more on your investment property.
Pets are an Easy Way to Increase Your Rental Income
Pets are a proven money-maker.
Especially now. This is an easy way to maximize what you’re earning in rent. Pet-friendly rental properties make more money in a variety of ways. There’s less vacancy loss. There are fewer turnovers to manage and budget for. You also earn extra income.
The Humane Society reports that 72 percent of renters have pets.
They also report that those renters often have trouble finding a home because of their furry family members.
We say that rental property owners who don’t allow pets are barking up the wrong tree.
You’re leaving money on the table when you don’t allow dogs and cats who are carefully screened. As long as you have a pet policy in place that you’re willing to enforce, you don’t have to worry about excessive damage or expenses. And, you’ll collect a pet fee and pet rent to mitigate that risk.
When you don’t allow pets, you’re eliminating a large chunk of your potential tenant pool. Longer vacancies will be the result. That’s costly.
Let’s flip that script and talk about how to earn more money with pets.
How Pets Earn You More Income
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Less Vacancy Getting your property rented quicker will result in more rent for you. So, why turn away more than half of the tenant pool? You don’t have to make a blanket statement that you’ll throw the doors open to ALL pets. But, in your listing, if you mention that pets will be considered, you’re opening yourself up to more interest. You can evaluate each pet on a case-by-case basis. |
Pet Fees It’s easy income. You can collect a pet fee every time a tenant moves in with a pet. If you have a tenant moving in with two pets – even better. Your pet fee should be per pet. A pet fee can be $200 or $300 per pet. When you have someone moving in with two cats, that’s a few hundred extra dollars. This protects you against potential damage, but even better – it gives you extra income when you don’t need to pay for pet damage. The fee is non-refundable. |
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Pet Rent Like the pet fee, pet rent is non-refundable. It’s what your tenants will pay for the privilege of moving in with their pets. Pet rent will help you earn more on a monthly basis. Some pet rent is as much as $50 per pet. This extra rent can be tucked away in case there’s pet damage that you need to repair after the tenant moves out. If you have a good pet in place with a great tenant, however, you likely won’t have any damage to repair, and you’ll have earned extra money for the duration of the tenancy. |
Lower Turnover It’s not just about lowering vacancy. Allowing pets will also result in less turnover. Think about it: if you’re a pet-owning tenant and you just paid a $200 pet fee to move into your new home, are you going to want to pay another pet fee in a year to move somewhere else? Probably not. Pet owners know it’s not easy to find rental homes that welcome their animals. They’re likely to stay in place if they’re having a positive rental experience. |
Here’s the other thing about pets. Most of the people who take good care of their pets will also take good care of their property.
So, do some pet screening. Ask for vet records and look for verification that the animals are up to date on their vaccines and flea treatments.
Establish a pet policy, too. A good pet policy will protect your investment property and tell tenants what you expect in terms of behavior, maintenance, and cleanliness. Establish limits and guidelines in your pet policy as well. You can limit the number of pets you allow, the types of pets, and their ages and sizes. Talk to your insurance company about dangerous dog breeds that may not be covered. You don’t want to welcome those into your property.
Earn More Rent with Better Tenant Retention
Here’s something that will always maximize what you earn: holding onto your existing tenants.
This is a proven strategy because every landlord knows how much it costs to turn a property over. Vacancies that ensue are expensive and disruptive. The actual turnover process is even more of a drain on your finances and your time. When one tenant moves out, you need to pay for:
- Maintenance and repairs
- Cleaning and landscaping
- Marketing of the property
- Utilities
- Security
A lot has to happen before a new tenant moves in, even if your property is in excellent condition. We’ve talked about the upgrades that can bring in more money. Those are likely to be more than a strategy at turnover time; they’re a necessity.
Retaining tenants is better. It means more stability for your investment property. Fewer out-of-pocket costs for you. And, it means more rent, especially when you can raise the rental amount as the new lease is signed.
In this market, you have a better chance of retaining tenants unless they’re relocating or making other plans for their lives. They know that rents are higher. That moving is expensive. That there’s not a lot on the market, and competition among tenants is fierce.
That doesn’t mean you can take it for granted.
Here’s how to make sure you keep your tenants and your consistent income.
| Create an Exceptional Experience for Your Tenants
The best thing you can do to keep good tenants is to make them want to stay. If they love their home, why would they move? When you can provide a pleasant and stress-free rental experience, you can count on better tenant retention. Create and maintain a healthy, positive, and professional relationship with your tenants. This will help you earn more and have less frustration in your rental process. |
| Provide Conveniences to Renters They May Not Find Elsewhere
As you’re looking for things you can do to keep your tenants, think about making their lives easier. How can you make your tenant’s life easier? Provide online rental payments. Let them request maintenance online, too. Give them an introduction to the property when they first move in so they know how to set the thermostat and where to find the circuit breakers. Set up air filter deliveries. Share resources when something is happening locally. |
| Never Underestimate the Importance of Maintenance in Tenant Retention
We cannot stress this enough. An important part of retaining tenants is being responsive when it comes to maintenance. When you respond quickly to maintenance needs, tenants feel like you’re taking their needs seriously and that you care about their comfort and happiness. This is important to them, and it will keep them in place. Numerous studies have reported that one of the main reasons tenants leave rental properties is because repairs were not taken care of in a timely manner. Don’t lose tenants this way; make the repairs quickly. Not only does it retain tenants, it also protects the condition of your investment. |
What about Rental Increases at Renewal Time?
Rent increases should be expected when a lease is renewed.
But, you don’t want them to be too high.
How do you strike a balance between maximizing rent and retaining good tenants?
Here we go, back to the market.
Based on the data you collect, you’ll have to decide how much of an increase is reasonable. You also need to think about the timing. Typically, the rental increase on existing tenants goes into effect at renewal time, so your tenants will expect this increase. Don’t show up at the first of the year with a new rental amount. Not only is that a terrible surprise, it probably violates your lease agreement.
Set the new rental amount in a place that gives you both an advantage. Raise your rent according to market factors, but keep that increase just below what you’re finding the average rent is on a home like yours.
Rental rates have risen across New Jersey over the last year, and while they are finally reaching their peak, you’re likely going to charge more rent than you did when your tenants initially moved in. That’s good news for you. But, don’t be unreasonable.
We have other ways to make more money on your rental, and we’d love to tell you about them.
Please contact us at Realty Solutions if you want to talk about your next steps. We lease, manage, and maintain homes in Audubon, Collingswood, Cherry Hill, Haddon Heights, Blackwood, and the surrounding communities.
