Making money in real estate and getting the most out of your rental income doesn’t need to involve a lot of work. You merely need to understand how to invest money wisely in real estate.
For beginner real estate investors, the first step to getting a property with a good potential return on investment is to calculate margins. Use a rental property calculator to calculate cap rate, cash on cash return, and much more. When you have this information available, you can begin to think of more creative ways to maximize your profit. Mashvisor provides you with a great rental property calculator as well as the following tips to boost your rental income.
Tip #1 to Boost Rental Income: Divide Your Rental Property
One of the best ways to utilize traditional rentals and increase rental income is to divide the property. You can rent each room in the investment property separately as well as renting out the garage or other storage spaces. You can even rent out your backyard! This is an optimal rental strategy for long-term rental properties especially if you are living in the property yourself.
Tip #2 to Boost Rental Income: Choose the Right Location and Demographic
One of the best ways to boost rental income is just to choose an investment property in a good location. The rental property doesn’t necessarily need to be near any amenities. A good real estate investor knows that you can charge more for rent if your property is in a college town. Most of the time, university students, especially international students, will be willing to pay extra to live in the town they go to school in.
Tip #3 to Boost Rental Income: Minimize Tenant Turnover
Making money in real estate is not just about charging more rent. It’s also about minimizing rental expenses. If you have turnovers happening often, you are actually costing yourself money. Turnovers use up your money by putting a halt to your positive cash flow for at least a few weeks. No tenant means no rent. Turnovers also cost you money when you need to pay for cleaning and repairs to the property. Furthermore, if you have hired a property manager, you’ll have to be paying them to deal with finding new tenants, advertising costs, and any other costs involved. Save yourself the extra expenses by choosing a good, long-time tenant.
Tip #4 to Boost Rental Income: Upgrade the Investment Property
Believe it or not, tenants are willing to pay a lot more for a rental property that simply looks nicer. Doing very minor fixups and renovations will make a big difference in how much you can charge for rent. Before embarking on replacing things, try first to fix them. For example, instead of getting new carpets, get them professionally cleaned. The best way to increase the value of your property is to have both an attractive kitchen and bathroom. Painting also goes a long way to keep your rental property looking fresh and brand new. Keep things clean, neat, and fixed so that you can charge the rent you desire.
Tip #5 to Boost Rental Income: ‘Luxury’ Appliances
One of the best ways to boost your rental income is to have ‘luxury’ amenities inside the property. For example, having in-house laundry as well as a dishwasher will allow you to charge a lot more for rent. You can add these amenities to your property without spending too much by buying second-hand appliances.
Tip #6 to Boost Rental Income: Increase Rent
The simplest way to boost your rental income is to simply charge more rent. In reality, people hate moving. If you are a good landlord and the property is comfortable for the tenant, then he/she is more likely to stay even if the rent is raised. Ask yourself: how much should I charge for my house? Use an investment property analysis tool such as a rental property calculator to find out the real rental value of your home. After that, discuss the subject with your tenant and ask around about how much you can raise your rent by. Odds are, you can increase your rent quite a bit without much issue especially if you have a very long-term tenant.
Tip #7 to Boost Rental Income: Landscaping
Another simple rental income booster is doing a little landscaping around the rental property. Families with children will be willing to pay a little more rent for a beautiful backyard or front yard for their kids to play in. All in all, everyone likes a nice view and to live in a nice-looking building. Become a hands-on real estate investor and look into planting some trees and flowers and keep up with the lawn on the property to increase the rental cost of your home.
Tip #8 to Boost Rental Income: Charge Fees
There are different types of fees you can charge on your investment property. For example, parking fees, landscaping fees, and even pet fees can be charged to long-time tenants. Even if it costs some tenants a bit extra, they are usually willing to pay it for the service or privilege they will be receiving.
Tip #9 to Boost Rental Income: Furnish the Property
Lots of long-term tenants will be willing to pay a whole lot more for a furnished property. Your target demographic here will probably be college students or young professionals who are just starting to rent their own homes. You can furnish your rental property with minimum cost by buying furniture from large retailers. Also, skip expensive items such as mattresses which tenants will most likely want to buy themselves anyway.
When looking to boost your rental income, think outside the box. Be a creative real estate investor and utilize your real estate investments in the most profitable way. To learn more about how Mashvisor will help you make faster and smarter real estate investment decisions, click here.