14 Clever Ways to Maximize Revenue From Your Rental Property
1. Manage your own property.
If you can manage your property at all, this is a huge savings. A property manager will get up to 10% of the rents just to take and make calls. You can do that from anywhere in the world as long as you have cell service. You need to be able to take a call and make a call. Save this 10% of gross rents and increase your total profit by as much as 20%+.
2. Do as much maintenance as you can.
If you live close to your property, do as much as your own maintenance as possible. Maintenance shops get $50+ per hour, often over $100 per hour.
Most maintenance items are not rocket science; if you can fix items at your own home, you can fix them in a rental. Just verifying the problem before calling someone to repair it will save quite a bit. Troubleshooting and fixing the small stuff can save thousands.
3. Avoid vacancies.
Filling rentals is one of the most difficult parts of being a landlord. It is much easier than it used to be. The rental market is very strong, and the free online marketing tools are plentiful. Paying $200+ for an ad that runs only a few days is obsolete marketing. Any quality renter will have a way to view online ads.
No one cares more about filling a property than you do. If you live close enough to your rentals, consolidate the effort by showing your place just three times a week. If you live farther, align all the showings about 20 minutes apart, and get your place rented in a day. Make sure all applicants are pre-screened and that they confirm before arriving.
Hiring a property manager to get a tenant will cost you a month’s worth of rent, which is 8.3% of revenues. Then add another 10% a month for their ongoing services.
If you are concerned about finding enough renters, you can always increase demand by lowering price (or increasing marketing). Likely, you will still make more money than using a property manager.
4. Add a coin-operated laundry.
In a multifamily building, you can add coin-operated laundry if you do not already have in-unit laundry facilities. Even if you have built-in apartment sized laundry equipment, you can provide larger machines in a common area for an added price. No tenant wants to load up their laundry and go to a laundromat.
If you have coin-op equipment already, make sure it is working properly. I see many tenants of properties I do not own with coin-op laundry go to a laundromat. That is easy money to get, and makes it better for your tenants. If you have coin-op equipment, be sure to provide a change machine. It’s a lot easier to have bills to take home than a bucket full of quarters. And tenants do not like to beg at the bank or gas station for quarters.
Keep in mind, quality tenants will list in-unit laundry as their top rental amenity. Many will not even consider a rental without in-unit laundry. If you can add laundry in the unit, you can raise rents, get better tenants and faster rentals.
5. Implement pet fees.
Virtually all tenants have a pet (or two+). Adding extra pet rent, such as an additional $25 per animal, can greatly increase revenue. Virtually all rentals charge for pets. I charge $25 and do not have an additional pet deposit. Remember, solid renters control their pets. A great renter will have a great pet.
If you do not allow pets, remember this: Quality renters can go anywhere, but most would rather sleep in the gutter with their pet than the Taj Mahal without it. Many renters would have a difficult decision to make if they could only bring their pets or their kids.
6. Sell partial months.
Typically, when a tenant leaves my rentals, they leave at the end of the month. I have been very successfully with one day turns, but sometimes it doesn’t work out that way. I can often find a great tenant, and their existing lease ends a month later than I like. Here is the solution.
Sell a half month. Offer to prorate the last two weeks of the month. The renter will technically be renting two places for the last half of the month. You will take a two week vacancy rather than a month and not lose the quality renter. You get additional rent, and the renter gets time to move and clean out their old place at a more relaxed pace. They get cheaper moving trucks and should be able to get all of their deposit back from the old place with the extra time for cleaning.
Get the first two weeks of rent, then collect rent on the first. Never collect on anything other than the first of the month. When you have multiple units, it will be impossible to keep track of otherwise.
7. Offer satellite TV.
Give your new renter your satellite TV referral code on their move in or just prior to it (assuming you have satellite TV). I have been successful in getting discounts on my own TV service, and the renter gets a great deal, too. There are ways to make additional money in larger 5+ unit apartments with exclusive provider contacts and reselling the satellite or TV service.
Adding in a “free” wi-fi service will help you get rented and may also be a way to increase rents.
8. Get a real estate license.
If you have tenants, get a real estate license. At some point, if you have good tenants, you can be their realtor. That can put a few dollars in your pocket fairly quickly. Not all your tenants will use you, as everyone knows a realtor. If you can get just a few, it could increase your earnings now, as well as when they send referrals later. I sell homes to my tenants when they leave and offer easy lease terminations and a $500 bonus when they close. Or refer the tenant to a realtor you know and get a referral bonus. Often, you need a real estate license to get a referral.
Factor in built-in discounts when you buy additional property, and you have another cash cow.
9. Make your own keys.
I give one set of keys to every adult. If a set of keys gets lost, it’s $5 per key. All my locks have a Schlage SC-1 keyway, and I use “Do Not Duplicate” key blanks. I purchased my own key maker, and I make my own keys. If I buy a new lock, I can make extra keys without a trip to the locksmith. The key cutter was less than $400, DND blanks are ~.40 each, and I have saved easily more than that. Factoring in the convenience of skipping the trip to the locksmith, and the savings are exponentially better.
You never have to worry about giving up your last key to a renter.
10. Implement lease termination fees.
When a renter wants to break a lease, there is little you can do. You can enforce the lease, or let them go. Have a lease termination clause in your lease to make the matter plain. I charge two months’ rent for a lease termination. I sometimes lower the amount depending on how long the tenant has lived there. If a tenant is getting moving expense paid by the employer, the employer will consider that part of the cost of moving the tenant.
Of course, if they buy a home through me, there are no lease termination fees.
11. Charge holding fees.
When a renter drops off an application, they need to put money down to hold the unit – assuming they pass the background check. Call it a deposit, and it might have to be refunded. Call it a fee, and it is a sunk cost. You still need to do a background check, but a $1,000 fee will lock in the tenant. If the tenant fails the check, give the money back. If they find a place across town, keep the money. It will save you the expense of a new tenant if the tenant continues to “shop around” after they apply to your place.
12. Collect application fees.
You need to do a background check on all tenants. It costs money; my background checks typically cost me ~$400 or more if the applicant lived outside of my state. It includes credit reports, past landlord checks, employer checks, and county level criminal checks for all states the applicant lived in for the past seven years. I charge $40 to each applicant 18+ for the checks.
13. Enact extra occupant fees.
For some reason, tenants often neglect to tell you about people who will be moving in after they sign the lease. When they move an extra adult into the rental, they have broken the lease. Do a background check on the person, update the lease, and add an additional rent amount for the new occupant. I charge $50 extra.
14. Put in vending machines
I have not yet done this, but I know vending machines in a multi-family property could be a great additional source of revenue. Kids like to spend money on junk, landlords like to get money. It’s a perfect fit. Even a $75 gum-ball machine can make a ton of money. Selling a $0.02 gum-ball for $0.25 is a great profit margin.