Many property owners look for new ways to generate more income. However, far too often property owners start purchasing additional properties instead of looking for ways to make more money with their existing properties.
Here are the top five ways to keep your rental property a well-oiled profit machine.
Tip # 1: Reduce Vacancy
Finding the ideal tenant is easier said than done. Once you find a good tenant, keeping them in the property is the challenge. Vacancy can be reduced by keeping the turnaround time to a minimum.
East Bay Property Management handles all the challenging aspects of finding and keeping tenants, thereby maintaining a positive income stream. Every month of vacancy will cost 8.3% of your profit margin, so it is best to start advertising for new tenants the moment you learn another tenant is ready to leave. Identify the characteristics of the property that help to set it apart from others in the industry to know how you can advertise your property as a prime location.
Tip # 2: Maintain the Property
For a property to be a prime location people want to rent, you need to continue adding value to the property. It is important to make upgrades to the property over the years, and focus on the landscaping to boost the curb appeal. When tenants know they can reach you quickly if there is a problem, they are likely to continue paying rent and staying in the property. New appliances and flooring can make a significant difference to a tenant and their decision to renew their lease.
Tip # 3: Increase Rent Correctly
If you have satisfied tenants, you might be concerned about increasing their rent. However, without regular rental increases, it can be hard to maintain a steady income stream as other expenses continue to increase. Remember, it will cost tenants money if they have to move, so if you do a slight increase on the rent, the tenant may not be too concerned about moving. If you need to increase costs, always discuss this with the tenants. Increasing costs for utilities and amenities are common costs that renters will assume will increase yearly or at least every other year. Major upgrades to the property are another common reason why rent will increase. The best practice we have found at EBPM Eastbay is to increase the rent with a lease renewal. It is a wise idea to discuss the costs with the tenant and to ask them if there is anything you could do for them that will improve their living conditions.
Tip # 4: Follow Up on Late Fees
Another tricky area to deal with is late fees. When a tenant starts to fall behind, landlords are often lenient the first month or so, but they can fail to collect the late fees when a tenant does finally pay. Late fees are set in place to let the tenant know they will need to pay the fine for being late. If you constantly dismiss the fees, the tenant can quickly start abusing the system and they will not pay on time. Collections are a necessary part of the job, and one that you need to follow up on in order to make sure you are getting the income you deserve. One trick to use is to tell the tenant that late fees are due with the rent and their rent check is not considered paid until they pay all the fees associated with their account.
Tip # 5: Include Additional Services
Do you want to see your income stream increase? Consider adding on some other services such as the inclusion of laundry machines or vending machines. Some landlords negotiate exterior work such as landscaping as part of the lease agreement. A tenant has the option to perform the landscaping work on their own, or they can opt to pay a fee for the landlord to perform these duties.
With these tips, a landlord can easily find ways to start generating more money from their property while also focusing on finding ways to maintain their current revenue. For more tips and tricks pertaining to your rental property, contact East Bay Property Management today!