Like any investor, every real estate investor’s ultimate goal is to make more and more money. Most real estate investors focus on acquiring as many properties as possible. However, the best and most popular one is to buy and rent properties of various types of real estate investments.
Real estate investment is one of the most profitable businesses when done correctly. However, like any other business, making money in real estate also means maximizing the ROI. Rental income is a great way to make money, and the higher the rental income, the more money an investor makes. For this reason, property owners keep looking for ways to boost their rental income.
There are numerous ways to make money off rental properties, and here we have listed the best strategies to raise your rental income.
1. Reduce Vacancy
Try to keep your property occupied, and the best way to do this is by finding a long-term tenant so that you don’t have to deal with turnover. Even if your tenants move, you can maintain the occupancy by posting ads as soon as you learn about their move.
If your property is at a prime location, demand will be high, and you will get new tenants in no time. In case your property is in an area with lower demand, you can think about offering lower rent to attract tenants. It is better than vacancy as every month of vacancy costs you 8.3% of your potential yearly revenue.
2. Use the right strategy to increase the rent
Remember, a lower rent doesn’t mean loss; in fact, it can lead to higher revenue. Although a lower rate is better than vacancy, you can increase rents on your longer-term tenants. It is necessary to increase your rent after researching your property’s value relative to your competition. Tenants are not going to leave until they find lower rent elsewhere.
It is advised to increase the rent only after researching the rents in the area to remain competitive. One trick to increase the rental is by painting walls or upgrade old windows at the time of lease renewal. This will give your tenant an impression that they are getting something out of the deal. This way, you can justify the rent hike while making improvements that are necessary for maintenance.
3. Learn about tax deductions
A smart real estate investor is well aware of various types of tax breaks and tax deductions. Rental property owners are eligible for several tax write-offs that reduce their taxable income. By applying for all the entitled tax deductions, you can make more money from your rental property. This will not directly increase your rental income, but you can cut down your expenses and end up with more positive cash flow by paying less tax. Some tax deductions include costs of interest on your mortgage, depreciation, and repairs on your properties, HOA fees, insurance premiums, etc.
4. Collect late payment fees
One of the most stressful yet essential parts of property rental is rent collections. As a landlord, it is your duty to be kind towards your tenants; however, sometimes, tenants take undue advantage of the landlord’s kindness. Therefore, make sure your tenants understand that this is a business, and paying late rent comes with extra fees. In case your tenants pay you to rent with late fees, don’t hesitate to tell them that rent is not considered paid until all fees are collected. Rental properties are a great way to generate additional income; however, the responsibility of running and managing the property is a daunting task. If you want to avoid the stressful tasks, you can hire a property management company for rentals with proven years of experience in residential rental property management.
5. Improve your rental property
Another way to boost your rental income from the existing investment property is by making some improvements to your property to make it look more lavish. By enhancing the kitchen or remodeling the bathrooms, you can rent out your property as a luxury rental and charge higher rent to your tenants.