Advanced Landlording: 5 Insider Tips for Higher Rents
Congratulations! You’re a landlord. Fully equipt with a rental property, tenants, and hopefully rent.
So, we’re all done here right? Not exactly.
Yes, it’s true that many landlords stop at that point but the good ones who realize that owning income property is a business and should be treated as such understand that beyond providing a quality living environment for paying tenants, generating a return on investment is the goal.
These 5 Insider Tips for Higher Rents will offer options for novice and experienced landlords on how to effectively increase rental rates and generate a better return on investment (ROI) for their rental properties.
1) Shocker Alert! Raise the rent. Yes, train your tenants to expect and receive yearly rental rate increases that may or may not be tied to the CPI (consumer price index). If not tied to the index then impose what’s called a “Nuisance” increase. A nuisance increase is a minimal amount that typically won’t force the tenant to relocate but still allows for a rental rate increase. Most tenants would rather absorb a small $15 to $25 per month increase in rent then deal with the hassles, stress and cost associated with moving. A small increase such as $25 is an annual increase of $300 which increases the net operating income (NOI), Return on Investment (ROI) and can offset expenses.
2) Parking: If you have a multiunit property you may consider charging for additional parking or for covered parking spaces. Owners of multifamily unit properties may include 1 parking space with the rental unit but offer additional parking for tenants with two vehicles for a monthly fee. In some instances offering “premium” parking such as assigned covered spaces or garaged spaces can also be a great way to increase monthly rental proceeds.
3) Storage: Just like with parking, storage units or storage areas can be separated from being included in the lease agreement and offered as optional for a monthly fee. Depending on the size, availability or even scarcity this rental option can increase monthly and yearly proceeds.
4) Pets: Property owners that allow pets can consider charging a monthly “Pet Fee” in addition to the rent in lieu of a pet deposit. In most cases “Deposits” are considered refundable whereas “Pet Fees” aren’t and can be considered income.
5) Water: Many duplex, fourplex & multi family properties are single metered for water. This results in landlords paying higher than necessary water utility bills and being at the mercy of tenant water usage. Using as system such as the Ratio Utility Billing System (R.U.B.S.) can allow for a landlord to allocate the cost of water usage to each tenant and reduce a major utility expense. Anytime a landlord can reduce expenses they effectively raise the net operating income (NOI) of the property.
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