Increase Income in Rental Properties, Small Steps Landlords Can Take

What’s that saying, “Big things come from small beginnings”?   To increase income in your rental properties, a landlord must focus on many small changes that add up to a nice return at the end of the year.  In this blog, we cover the most common ways to add more to your bottom line.

Increase Income

Raise the Rent

Seems like a simple concept but depending on the location of your rental property, landlords must be mindful of state and local ordinances that may have a max % increase. 

Try to keep your rental rates just a tad below market.  This gives you an edge when you offer a renewal and the tenant has to evaluate if moving is worth the expense and hassle.

Always be kind.  Give good notice, space out increases for your best tenants and work with them to avoid a vacancy.

To learn more about this subject, check out our blog: How to Raise Rents Without Sacrificing Tenants

Charge Fees

Add fees to your lease that include late fees, lockout fees, and fees to process their rent payment electronically. 

This is where you take a look at all the places you are being nickel and dimed and create a fee to cover it.  For instance, several rental property apps charge a fee for instant deposit on your electronically collected rents.  If you opt to do this feature, pass it along to the tenant.

Don’t miss out on late fees!  Our best tip is to charge $10 PER DAY after the 3rd of the month.  We give a couple days of a grace period, but that money adds up fast.  If only charging a flat fee, such as $25 for your late fee, many tenants will just pay the $25 so they can pay whenever they want within the month.  Which if this is happening to you, it also shows you that there’s room to increase rent. 

Charge for Additional Services

Add wireless internet service to your building and charge tenants for it.  It will be less than if they entered into their own contract, and you earn an extra $10-$15 per tenant per month. Everyone wins!

Hire a house cleaner to go in and clean monthly or each quarter and charge a monthly fee for it.  This keeps your unit cleaned up and you make a little extra each month.

Offer premium parking spaces if available.  Does your unit have a few covered parking spaces up front?  Charge a few tenants an extra fee for access to those each month.  COST YOU NOTHING!

If they do not want to be responsible for changing batteries in smoke detectors or air filters, charge a fee to go in and do this maintenance for them.

Own a multifamily rental property near a gym?  Work with the gym owner to give you memberships at a discount.  You can then offer these to your tenants for just below the gym offer price and make a small profit selling them to your tenant.

You can create “add on” options for your tenants to select which services they would like to include with their lease.   Treat it almost like a concierge service.  Your tenants will see you as a full service landlord and you can reap the benefit of increasing income in your rental properties!

Add Laundry

If you have hookups in your single family rental but no washer/dryer, RENT them with repair coverage.  Charge the tenant a few bucks over your rental fee for these units.  It will be way less than if they had to go out and buy their own.   If you already provide them for tenant use, you can opt to make the tenant pay for repairs if they arise or buy a repair coverage policy and charge the tenant.  

Add coin-op units to a common area.  Still beats the tenant having to haul laundry to a laundry mat.  You would be amazed what some landlords are earning by providing just one of these in the basement of their small multi-family rentals!

Add Storage – Single Family Homes

Single family homes which include a separate garage (common on older homes), landlords do not have to allow the tenant access.  This can be the case if they are using the space for their personal use.  However, if you so choose, you can charge separately for the use of the garage.  This can be to the tenant or to an outside person who needs a place to store their vehicle.

Add Storage – Multifamily

This one takes some thought BUT is a winner every time.  Add bike storage lockers.  For those units in downtown or busy areas, these are gold to tenants.  They are covered, secured, and not underfoot in the tenants unit. $15/$25 per month is a fair monthly rental fee. 

Find a common area in the backyard, the basement, or the sides of the property and build secure storage units.  Some tenants will pay upwards of $50 a month to use these units!  If building or providing outdoors, make sure they are water tight and to take measures to keep rodents from getting in.  Using basement space?  We have seen landlords who build floor to ceiling storage units using chain link fencing and gates.  Because the basement area is locked and secured access is only for the tenants, this is an inexpensive option that works well.  Landlords can easily make an additional $50/$75/$100 per month on each unit, depending on size.

 

Decrease Expenses

The other way to increase income in your rental properties is to evaluate your expenses and see where you can make some cuts.

Do Inspections

At minimum, once a year do inspections of your rental properties. Check for water line leaks, dripping faucets, and running toilets. If you’re responsible for the water bill, water leaks can add up fast!

Divide Expenses With Tenants

These days landlords are not always expected cover all of the expenses for a rental property. Especially for single family homes. For instance, if you require the tenant to maintain landscaping, they can choose to do it themselves or hire someone on their own. However, if you have large trees that need trimming from time to time, cost for that should be your expense. Make sure your lease details out what you cover and what you do not, as well as exactly what you expect to be maintained on behalf of the tenant. If you have a lot of lawn, explain it cannot grow higher than 4-6 inches. Have hedges that you know only should be trimmed once a year and cannot be cut below 2 feet? Make sure that is noted in the lease. The more detail you can provide the tenant, the better off you are.

For multifamily units, consider submetering water and electricity and equally dividing the trash bill instead of covering them all in full. There are companies out there that can maintain this process for you so that tenants cannot come back and accuse you of not dividing the charges properly. This does cost a fee, but in the end you could be receiving upwards of $50 per unit back in fees that you originally had paid for out of your own pocket.

Evaluate and Make Changes

One thing many property owners fail to do is keep up on the value of their property taxes. In California, property taxes are determined by the sales comps in your area. With prices leveling off now, evaluate property taxes and challenge the assessment if the market rate is off. We know one person who was able to save $2,000 one year by doing this!

Switch to energy efficient lighting. Change out old incandescent bulbs with LED’s and trade outdoor lighting for solar versions. For recessed cans, we converted all of our old, expensive incandescent trims to energy efficient, LED trims. They were super easy to install and most of them have been running strong for over 5 years now. Click here to check out and buy the ones we use.

Refinance your mortgage to a lower rate when the time is right.  This can be costly with closing costs so you really want to make sure this is a good move for you.  Additionally, its also a nice way to pull out some equity and start looking for your next rental property too!

Do what you can do yourself instead of hiring out. When we can, we paint vacant units, do the heavy landscaping like trimming trees and planting new flowers, clean the gutters and power wash the exterior. If you have a bookkeeper, maybe look into learning how to run a simple accounting program, like QuickBooks.

Lastly, we always place our own tenants. This alone can save thousands per year depending on the number of doors you have and the proximity of your rental property to your personal home. Although, we know many landlords who have been successful with placing tenants remotely. Let us know in comments if this is a subject you’d like us to write about!

Want to learn more about finding the right tenant? Download our FREE 10-Page Guide: How to Place Your Ideal Tenant.

Even if you only chose to implement one or two of these tips, you could be looking at an additional $100 per unit each month. As you scale and add more units, this can exponentially change your financial position. Having a business mindset of paying close attention to areas where you can decrease expenses and increase income in your rental properties will allow you to continue to grow, personally and professionally, as a landlord.