When you invest in rental property, you’re essentially investing in a business. While lucrative, even the most passive income investments will require some attention over time. Just like any business, it will take some creative thinking and forward planning to retain continued gains as the industry moves, shifts, and changes.
So how do you ensure you’re maximizing the revenue you’re receiving from your rental properties?
5 Ways to Maximize Revenue from Your Rental Property
Adjust The Rent!
Just because you originally listed a property after purchase at a set rental amount doesn’t mean you can’t adjust over time. If you haven’t raised the rates on your investment property in a few years, you’re most likely leaving a large sum of money on the table as cost of living increases and rising market values will have amplified the average rental costs surrounding you. Keep an eye on the going rates in the neighborhood and stay competitive.
Know Your Tax Breaks!
Tax breaks are great ways to lower outgoing costs on a property, thus increasing the actual return on investment. Nobody actually enjoys paying taxes, so knowing and understanding all available legal tax breaks will help to lower your outgoing tax bill.
Available tax breaks include mortgage interest deductions, purchasing costs, maintenance and repair costs, and other expenses associated with managing the property, such as insurance, business related travel, and more.
Implement Monthly Pet Fees!
Instead of charging a one-time pet deposit, consider an alternative option—a monthly pet fee. Charging an additional $25 a month per pet will increase your yearly revenue by approximately $300. If the renter has two pets then you’re looking at an additional $600 annually instead of a one-time pet fee of $250. As first, last, and security can take a lot out of a tenant, waiving the upfront pet fee for a small monthly fee is generally pretty enticing to them.
Offer Additional Services!
This trick works particularly well if you have multiple properties, but can work with just one as well. When you sign a new lease, offer the tenant the ability to add additional services to the monthly rental price. These services could include lawn care, pest control, pool cleaning, or interior cleaning.
If you have several properties, negotiating a lower price with a third-party company will be easier and allow you to include a fee for the service being provided by you. For example, if you negotiate a $75 a month fee for a house cleaner, you can charge your tenant $85. This gives you an additional $120 a year for making one phone call.
This may sound like a no-brainer, but there are few small things you can do to ensure your tenants stay longer, thus decrease the amount of vacancies a property sees. When tenants feel at home, they’re likely to stay longer. If they’ve been allowed to make small changes to the property—such as painting the home or adding a garden—they’re going to develop a deeper attachment to the home making them less likely to look elsewhere.
Rental Property Revenue Tips
While all relatively small adjustments to how you’ve been operating, these five tweaks will help increase the revenue your rental property puts out over time. Get inventive as your length of ownership increases. Making small alterations to your business model over time is a great way to keep a profitable relationship with your properties.