“Tips On Increasing The Revenue Of Rental Units” written by Mike Marko
Wondering how to maximize the revenue of your rental units?
Some people think the only way to do it is to charge more rent for those rental units. The truth is, there are other alternatives.
Property managers like you should look into your tenant’s perspective too. After all, most tenants wouldn’t welcome the idea of higher rent just because their landlord’s trying to improve his revenues.
Fortunately, there are ways to bring up rental revenue that sit better with tenants than higher rental fees. For example, you can increase the revenue of your rental property business by just giving the needs of your tenants.
Do you know how’s that possible?
In this blog post, I’ll talk about the many ways you can increase the revenue of rental units. After reading this blog, you’ll have a lot of ideas on how you can make your property more beneficial to your pocket.
How to Manage Your Rental Units Effectively
You don’t need to acquire additional properties or pay for costly renovations to increase your revenue. You just need to focus on your current rental units and think about how you can get more out of them.
You can do that through adding value to your offerings, of course. But you can also do it by reducing “wastage” in your assets, so to speak.
We’ll talk in more detail about the ways to do that below. To help you maximize the revenue of your rental property, take a look at these tips.
Prevent Vacancies in Your Property
You need to prevent vacancies in your property because a vacancy will lower the revenue of your rental business. That’s what I mean by the “wastage” I referred to earlier.
Rental units that are unoccupied are rental units that aren’t bringing in money. This is why seasoned property managers get antsy whenever they’re about to have a vacancy in a unit.
The best way to minimize vacancies is to find a long-term tenant. Doing this will prevent you from dealing with frequent turnover.
The tenant turnover process can be one of the most labor-intensive and costly tasks for a property manager. That’s because you’re going to have to prepare the rented property for the next tenant — while also looking for that next tenant!
If there’s already a vacancy in your property, consider posting an online advertisement about it. Posting an online advertisement is now more convenient than traditional advertising methods.
Online ads allow you to reach a lot of people at a cheap price. If you choose to post a traditional ad (like one in the local paper or a local radio station), it’ll cost you around $200 and it’ll only be active for a few days.
Have a Coin-Operated Laundry
Many property managers are now adding a coin-operated laundry to their residential rental units. This is a good way of adding value to your property.
Don’t worry about the cost of adding a coin-operated laundry in your rental units, either. Generally, it’ll give you a good return on investment.
The coin-operated laundry can also bring up your profits in more ways than one. For one thing, you can collect the profits of the laundry itself. For another, it can be a factor in raising your rent.
Aside from that, a laundry facility will be a convenience to your tenants and this will help you attract more potential renters. That means fewer vacancies!
Here are a few extra tips for this: if you have coin-op equipment already, make sure it is working properly. Also, be sure to provide a change machine so tenants never have problems using the machines.
Charge a Fee to Tenants with Pets
Today, many tenants prefer staying in rental units that allow them to move in with their pets. That’s why many property managers allow pets in their property — it allows them to attract more tenants.
Aside from that, property managers also allow pets in their property because it can increase their profits.
They can charge a fee to tenants with pets. Adding extra pet rent, such as an additional $25 per animal, can greatly increase revenue.
If you’re not yet allowing pets in your property, then take time to reconsider. Prohibiting pets can be a real disadvantage for your rental property and you could lose quality tenants because of this.
Minimize the Turnover Cost
One of your main responsibilities as a property manager is to keep the rental units in good condition. With that said, it’s necessary for you to only choose tenants who know how to take care of their rented property.
You could restrict certain activities inside a rented property to prevent it from taking excessive damage. To do this, make sure to add terms and clauses in your lease agreement regarding the allowed and prohibited alterations in the rental units.
In addition to that, consider improving your tenant retention to prevent vacancy and turnover. Provide the needs of your tenants so they wouldn’t have to move out of your property.
Increase the Rent Strategically
Increasing the rent is the most obvious way to increase the revenue of your rental units. However, you need to do it strategically.
You can’t just increase your rent because it can drive your tenants away from your property. Besides, there are also a lot of cases where lower rent is better for the property’s profits.
Contrary to common belief, you see, lower rents can lead to higher revenue. Your tenants will stay longer on your property if they’re paying cheap rent.
If you want to raise rents, consider allowing tenants with long-term agreements to pay for lower rent, then just increase it annually. However, make sure that the rent increase won’t be more than 8%.
Also, only increase rent if the value of the tenant’s current rent is better than the overall cost of moving to a new rental property. You can study the average rent rate in your area to avoid charging too much.
Charge Penalties for Late Payments
Don’t allow tenants to get away with late payments without the appropriate fees. That’s because late payments can cause financial problems that need to be offset.
If the tenant has late payments, consider charging an additional fee. But before you do this, make sure that you have a clause regarding fees for late payments in your rental or lease agreement for your rental units.
Aside from fees for late rent payment, also consider charging the following fees.
Lease Termination Fee
This will cover the cost of having a lease break. Usually, property managers charge two months’ rent for a lease termination.
You can use this fee to cover the cost of restoring the rented property to its original condition. Also, you can use the fee to make improvements to the rental units and for advertising the vacancy.
Shouldering the cost of ordering the necessary background and credit report will cost you a lot of money. The cost of each background check is around $20 to $30.
Fortunately, rental laws allow property managers to charge the cost of the tenant screening to the tenant applicant. You may want to take advantage of that.
Take note too that the tenant screening process includes credit reports, past landlord checks, employer checks, and county level criminal checks.
Final Thoughts on Increasing the Revenue of Rental Units
There are many things you can do to increase the revenue of your rental units.
First, you can try to lower the number of vacancies or their length. You can also make sure to provide added value for your tenants, such as by adding a coin-operated laundry.
Aside from that, consider allowing pets in your property because you can charge an additional fee to tenants with pets. Allowing pets also gives people added reason to consider living in your rental units, which reduces vacancy times.
You might as well set a lower rent rate on your rental units too. Doing this will help you attract more potential tenants.
Lower rent rates are also easier to increase annually, as the starting point is reasonable. You just need to do this strategically to avoid charging too much.
Lastly, don’t allow tenants to get away with late payments without the appropriate fees. Late payments can cause your business financial issues, so it pays to apply late fees to your rental units.
And that wraps it up for my tips on bringing up revenue in rental units. If you have more questions about how to make rental units more profitable, leave them in the comments below.
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