The main reason why many people decide to enter the real estate business and become real estate investors is to make money by buying, renting out, and selling investment properties. Even so, this doesn’t mean that your rental income for the next 5 or 10 years is set in stone after buying a rental property. On the contrary, there are plenty of ways to make extra money from investment properties that you already own. Who would argue against the statement that earning extra dollars without a lot of work is an attractive business proposal?! So, let’s take a look at ways of how to make extra money from your present real estate investments.
Essentially, there are two methods of how to make extra money to raise positive cash flow in real estate investing: either to bring up your rental income or to bring down your costs.
How to Make Extra Money from Your Investment Property by Spending Less
Reduce Your Ongoing Expenses
Try to spend as little as possible – within a reasonable limit – on your rental property in order to make extra money from it. For example, you don’t have to hire a professional property management company to take care of your income property; you can do all the property management work on your own. This will save you lots of money and also ensure that your rental property is in an excellent shape as you (as the owner and the manager) will take the best care of your real estate investment. Using an investment property calculator will prove the results of this way as it calculates the ratio between the investment property’s cash flow and the amount of cash spent on the investment.
Make Use of Tax Deductions
One of the first things that every real estate investor should study carefully in any location where he/she decides to invest in is the local legislation on tax deductions in the real estate business. You may not be aware that interest on mortgage, depreciation, insurance, legal fees, repairs, income property supplies, and losses are all tax deductible items. These tax deductions will help you decrease your tax bill, and save extra money.
Choose Good tenants
Choosing good tenants and making sure that they pay the rent on time and do not destroy your rental property is actually really hard. A real estate investor should keep in mind that taking enough time and putting sufficient efforts into choosing the right tenants is going to pay off eventually. The best rental properties are the ones rented out to good tenants because when you make sure that you’re renting out your investment properties to tenants who will not damage them, you are in fact minimizing the need to conduct major repairs, which is a great way of how to make extra money as a landlord.
The next ways of how to make extra money in real estate investing focus on how to increase your rental income.
Related: 8 Things That Make a Good Tenant
How to Make Extra Money from Your Investment Property by Earning More
Add New Amenities
One of the easiest ways of how to make extra money from your rental property is to do some fixes around the investment and add new amenities that you didn’t have before. This will not only make you able to charge more rent to tenants, but it will also keep your tenants satisfied. Conduct investment property analysis and ask your tenants for their recommendations before you consider what new amenity to add.
You do not have to go overboard with the new amenities. Just add something simple and that would be enough. The increase in rent will not be drastic, and tenants will most likely welcome this slight increase if the amenity fills their needs. The gain may not seem large, but it will make a huge difference in the long term.
Provide Additional Services
As a real estate investor, not only can you push your rental income up by adding amenities, but you could also provide tenants with services. You can provide services depending on investment property analysis and the type of investment property and tenants. One example is cleaning services; tenants like senior citizens will likely approve of the idea. On the other hand, if you’re investing in residential properties, tenants would pay for a landscaping service.
Real estate investors with the best rental properties offer tenants something special which others in the area do not offer. In this way, the investor will be able to increase the rate for each additional service and still be ahead of the competitors.
Consider Short-Term Rentals and Airbnb
Another method of how to make extra money in real estate investing is to rent out a small part of your house. This option does not only apply to rental real estate investors as residential properties’ owners can take part in this as well. If you are an owner of residential properties thinking of how to make extra money, why not try out renting out a room to someone who is interested and make some rental income out of it? Potentially, you could make a significant amount of money and build up a substantial income stream if you’re in a highly trafficked tourist location.
Moreover, trying out Airbnb and similar short-term rental websites is not a bad idea, as major cities and even smaller towns offer much higher rental income and generate more positive cash flow from Airbnb renting than from traditional rentals. Try Mashvisor’s investment property calculator to calculate cash on cash return and cash flows for Airbnb and traditional investment properties.
Implementing fees in the lease is also among the ways of how to make extra money as a landlord. There are two purposes of these fees: allowing tenants to do something risky and penalizing them.
In allowing something risky, we’re referring to pets. While some pets like a cat may not be risky, others like a snake may not sit well with neighboring tenants. A lot of real estate investors actually ban pets in their rental properties. However, some consider allowing pets with a pet fee which is a feature of the best rental properties that attracts more tenants, and thus makes more money.
Another way to incorporate lease fees is to charge fees to penalize tenants. This might seem like an extreme thing to do, but sometimes these fees are necessary when dealing with unpaid rent, for example. When tenants have not paid rent, landlords can charge them an additional fee for the late rent. However, this is possible only if this was agreed on in the lease, and also depends on your location’s laws concerning how much can be charged in the late fee.
Real estate investors work towards growing and generating positive cash flow at all times by adding more and more properties to their real estate investment portfolio. However, one should not forget that there are ways of how to make extra money from the income properties he/she already has. To know more about how to make extra money and what method is the best for you, visit Mashvisor: it provides you with detailed investment property analysis in the city of your choosing, and don’t forget to check Mashvisor’s investment property calculator.