The key to success with a real estate investment is choosing the real estate investment strategy that is most suitable for you. One popular investment strategy, in particular, is rental properties, which is favored among both professional and beginner real estate investors who rely on rental income to make money in real estate. As a rule of thumb, a higher rental income equals higher positive cash flow and therefore more money earned. That’s why every rental property investor is in constant search for ways to improve their rental income. Here are 8 bulletproof methods on how to boost your rental income.
Related: Everything You Need to Know About Researching Rental Properties
1. Avoid vacancies
If you opt to invest in a long term rental property – a rental strategy in which properties are leased to tenants for a period typically longer than six months- reducing vacancy costs becomes your ultimate goal in order to boost your rental income. Let’s be honest, vacancy costs are not 100% avoidable. However, rental income loss due to vacancy can be reduced significantly by following these approaches. First, to reduce vacancies to a minimum you must market your rental property to the right tenants and screen your tenants before signing the contract. A common procedure is to ask for income proof and employment references. Second, by maintaining an excellent landlord-tenant relationship you would make sure your tenants are satisfied and they’re more likely to renew their lease when it’s up.
If your vacancies are consistently high, then you might have to review your price point and ask yourself “how much rent should I charge?” Lowering your rent can surprisingly increase your rental income by avoiding vacancy costs. Use rental comps to compare rent of similar rental properties in your area.
2. Minimize tenant turnover
The process of getting a rental property ready for a new tenant after the previous tenant moves out is called tenant turnover. Tenant turnover costs money in many ways and is considered one of the biggest cash flow killers in property management.
Costs associated with tenant turnover include administration costs, marketing costs, cleaning and repair costs and, of course, vacancy costs or lost income. To minimize these costs, start marketing your rental property as soon as the current tenant gives notices about moving out. In a perfect world, you would have a new tenant moving in as soon as the current one moves out. As a rental property investor, one of your goals should be to find quality tenants that pay consistently and take care of your rental property. A high tenant turnover would significantly lower your rental income.
3. Inspect the property every now and then
Checking on your rental property regularly and performing preventive maintenance during a tenancy lets you spot damages early. This way you can make repairs before they become more serious. For example, regular maintenance and checking of the water boiler can save you a lot of money if a problem is discovered early. Even though most tenants look after rental properties, accidents are unavoidable. Therefore, it is important to have an inventory to record the state of items and appliances in the rental property.
4. Review your rent strategically
Charging too much rent or too little can be a problem. If you charge too much then you put yourself at risk of losing tenants, and if you charge too little, you lose potential rental income. To avoid this risk, make sure you know the rents in your location for similar rental properties. Mashvisor’s rental property calculator can be a good tool to review your rent since it provides you with several real estate metrics including potential rental income.
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If you choose to increase rent, use this tactic: before renewing the lease, offer your tenants some basic upgrades, like new exterior paint. This way the tenants will feel they are getting something out of the deal.
5. Add revenue streams
If you own a multi-family rental property, a good strategy to boost your rental income passively would be providing services like vending and laundry machines or even renting out storage sheds to your tenants. If your rental property is a single-family home, you can offer your tenants extra house cleaning and landscaping services, where you would negotiate a deal with an independent service provider and collect fees.
6. Try out Airbnb
Sometimes opting for Airbnb rentals instead of traditional rentals can be a smart decision to boost your rental income. Before you switch to the short term rental strategy, use an Airbnb calculator to estimate how much your property can earn as a short term rental. Airbnb rentals have become one of the most popular real estate investing strategies due to the high amount of rental income they bring to a landlord.
To know more about how to boost Airbnb rental income click here.
7. Improve your rental property
Increasing the rental value of your property can boost your rental income in the long run. Here are some ways to maximize the value of your rental property:
- A new paint job
- Upgrade kitchen and bathroom
- Improve the exterior appearance
Such improvements will cost you money for sure, but the payoff is worth it. Improving your rental property will strengthen the landlord-tenant relationship and thus, minimize vacancies and high turnover rate.
8. Invest in another rental property
What is better than having a monthly rental income stream? Doubling that income stream! If you can handle the pressure of being a landlord and have the time and money to invest in another rental property then, without a doubt, you are looking at more rental income in the future. Starting is the hardest part in real estate investing, but since you’re already a landlord, you have the knowledge and experience and know the whats and dos in the business.
Related: Buying a Rental Property: Should You Go For One Expensive or Two Cheap Properties?
If you are a real estate rental property investor or just a beginner real estate investor looking for advice on how to boost your rental income, follow the 8 methods listed above.
Remember, Mashvisor’s investment property calculator can help you in your mission to boost rental income. Try us out! To start your 14-day free trial with Mashvisor and subscribe to our services with a 20% discount after, click here.
