Don’t take any risks without researching smart business moves first. Read about these six ways to increase rent and add value to your rental property. They might fit your budget better than what you have in mind, which is always a win.
Many people have discovered the benefits of investing in a rental property or becoming a property manager. They can rent out a property and make money on the side while maintaining a full-time job. They might also leap into renting full-time if their property generates enough income.
Once you start renting to tenants, you discover the costs of being responsible for the property. It leads to a quick financial learning curve that may leave you wondering how to increase your profit margin.
1. Spruce up the Property
Consider the last time you worked on your property’s landscaping or exterior design. If it wasn’t within the last few years, it might be time to freshen things up.
Talk with a landscaping professional to see how you can turn your property around. Repaint shutters and front doors or replace the siding on your building. An attractive property draws in more tenants, which increases your total occupancy. Once your occupancy is around 90%, you’ll have a justified reason to increase the rent.
2. Lease Month to Month
When someone signs a 13-month lease, they often pay the cheapest rent possible. Shorter leases are more risky for business, leading to higher rent for short-term tenants.
Think about offering month-to-month leases for multi-unit properties or vacation homes. You can increase the rent competitively with properties around you that have similar leases. People are willing to pay a bit more for a shorter lease, depending on how long they plan to stay in the area.
3. Increase Rent During Renewals
Tenants renew their leases if you’ve provided quality housing and service. That usually means the cost of running your business increases, like if taxes increase or you expand your management teams. Most tenants expect a rent increase when they renew, so don’t be afraid to price their rent a bit higher. Once you find the balance between increasing the rent and charging too much, you’ll have more cash to reinvest in your property.
4. Renovate Your Homes
You might be one of many rental owners who has several houses leased out. If those houses are older, it might be tempting to buy a new home and replace it, but that costs money and time you might not have. The home could be in a desirable area as well. It’s always hard to give up a property in a good location.
Instead of buying more property to make up for one that loses money, renovate older homes to make them better places for tenants. With the right planning and contractors, you’ll enjoy stress-free projects that result in significant profits in the long run.
5. Replace Old Appliances
Rental properties that offer new kitchen appliances are more likely to gain tenants than those that lack the same updates. People don’t want to pay for a living space that looks neglected. Offer an updated appliance package to your tenants for a small charge or an additional monthly fee. You’ll add value to your property and increase the rent at the same time.
6. Include a Washer and Dryer
Another easy way to add value to your rental property is to include a washer and dryer. Long-term tenants don’t want to deal with the hassle of renting them from a different company and take time off work to get them installed. They’re also a bonus if you rent your property to vacationers who stay longer than a week. Find an updated unit pair and include it in your property to increase the value and potentially charge a bit more in rent.
Consider Your Tenants
Think about what your tenants want from their renting experience. Do they want a peaceful place to live for the next year or a comfortable place to escape to on vacation? Tailor your changes to meet their needs, and they’ll happily pay a bit more to stay on your property. Small changes like landscaping or a renovation project could be all that stands between you and a more successful rental property.