Looking to turn a higher profit from your rental this year? There are many ways to do this, if you implement your plans strategically and you are willing to invest. Below are five tips for making your rental profitable.
- Invest in Curb Appeal. The amenities within and outside of your property are an immediate turn on or turn off for potential renters. It’s simple—you just can’t raise rent unless the property appears worth it. For example, your building’s walls may need a fresh coat of paint. You could lose money and turn off candidates if they see that your walls are bright pink. Remember: what looks good to you does not look good to everyone. Always be safe with neutral colors because it allows the tenant to imagine their space without distraction. You want them to easily picture how they want to arrange their furniture and belongings. What’s more, potential renters will recognize if you are cheap. Do yourself a favor and invest in where it counts, whether it be the walls, flooring, kitchen and bathroom amenities, or cleanliness.
- Minimize Turnover Time. There are many ways to your properties occupied. The easiest way is to extend the length of your lease. Turning your property into a one-year lease instead of month-to-month will decrease the time and money it takes to advertise and show the property. Another way to do this, is to match the price of your area. If you do not have any features to offer that make your building unique and incredibly tempting—such as a prime location, or state-of-the-art kitchen—it will not be easy to draw in higher-paying tenants. Rental properties are always in demand it they come at the right price. Feel like you’ve gone too long without a single viable potential tenant? It may be time to lower your prices. Most landlords lower their rent to just below the market price in situations like these, and this could be the tactic to get your vacancy filled.
- Raise Rent. Contrary to the option above, there may be ways you can also raise the rent. In order to do this, you have to be strategic. One tactic is to raise the rent as the lease ends. If your current tenants are loyal and want to stay, they will pay slightly more. They may consider that the time it takes to look for a new rental is not worth it, or they may realize that moving may be too expensive. Over time, for instance, the fees of the Home Owner’s Association may force your hand to raise rent. You can also time the replacement or updating of certain features around the end of the lease. Doing so will encourage your tenants to stay, and persuade them to stay in their subtly renovated rental.
- Enforce Leasing Policies. This is especially true of late fees. This is important for two reasons: first, your tenants need to respect you as a landlord in order to keep your property protected; and second, you need to make sure you maintain your revenue stream so you do not find yourself in big financial trouble. One way to prevent this is to charge a late fee. Your tenants need to know that they are your landlord, not your friend. Be sure the tenants understand that they will be charged a fee if they do not pay on time. After all, they signed a contract that said they were financially able and responsible enough to pay, and they are bound to that contract. They need to know that this is a business, and they have a job to follow through on. The best way to prevent issues is to check if a tenant has ever been evicted. Past instances will be indicative of the behavior you can expect in the future.
- Offer services. If you own a single unit rental with a garden, offer a gardener at a higher rental price. Not only does it keep your rental looking nice, but it will appeal to tenants who want to live in a nice home. Or, if you own a multi-unit property, install washers and dryers—either stackable or coin-operated—and they will pay for themselves. Many tenants do not want to spend all of their time at a laundromat on a Saturday, so having washers and dryers on the premises or in the unit will be considered a luxury especially if these services are rare in the area.