There are two ways to increase the net profits from your income property: 1) bring in more money, and 2) spend less.
Many landlords focus on reducing their expenses, but that can be a mistake. There is a limit to how low you can go. If you have a loan payment, you’ll have to keep paying it. You need insurance and put yourself at financial risk if you don’t have enough. Taxes are out of your control. Limiting utility use would require micromanaging.
On the other hand, there is no real upper limit to how much money you can bring in—you just have to make it worthwhile for your renters to pay the higher rate.
We’ll show you 6 ways to invest in your property as you would in any other business, so your product offers more value to consumers and can justify a higher price tag.
Table of Contents:
1. Make the Most of Your Outdoor Space
It’s the first thing a prospective tenant sees on a tour, and the first thing they’ll see when they come home each day. It sets the tone of the home and implies care or lack thereof. The yard and the exterior of the home are critical aspects of your rental property. Here are a few improvements to consider.
- Maximize the view. If tall trees block the front or back of the house, trim the branches so tenants can see beyond—especially if you’re in an attractive location. For short-term rentals, vacationers prize beautiful views, so don’t hide the scenery. If your property is a long-term residence, use your best judgment to draw attention to positive features and screen unattractive ones.
- Beautify and maintain the yard. If it’s not the tenant’s job to maintain the yard, make sure it’s done regularly. Hire a service to mow the grass and shovel the drive to make sure these tasks aren’t missed. Research low-maintenance flowers and shrubs that will make the yard look finished and cared for.
- Add an outdoor living space. Give your tenants the feeling of another room to use by setting up a seating and table area. Add walkways, lighting, and even a grill to give the space even more function.
All of these improvements will make the home more appealing from the outside and from the inside, bringing in more potential tenants with higher budgets.
If you currently have 100% occupancy, you may increase your current tenants’ satisfaction with the home, leading to better reviews, fewer complaints, and less resistance to price increases.
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2. Welcome Pets
According to a survey by the American Pet Products Association, about 67 percent of households in the U.S. have a pet. Yet landlords often ban dogs and cats, expecting them to cause disturbances and damage to the property.
If your property disallows pets, it’s time to reconsider. After all, you’re losing out on a huge number of potential tenants.
How can you make your rental pet-friendly? First, when remodeling, replace carpet with solid floors. Tile and high-quality vinyl are durable and won’t hold onto pet dander, odors, or accidents.
Next, make sure to have a designated space outdoors for dogs to go. To win brownie points from your pet-owning tenants, add a spot for waste bags and a bag-lined trash can.
Allowing animals into your rental unit does not mean letting go of all control. If dogs are too much, you can allow just cats and small animals. You can exclude dangerous dog breeds or dogs over a certain size (although you’ll lose some goodwill with these restrictions). You can also limit the total number of pets and collect an extra damage deposit.
What’s in it for you, besides a wider tenant pool? You can charge pet rent—a small monthly fee as an add-on per dog or cat. Additionally, pet owners may be willing to pay a higher base rent for the ability to bring their companions with them.
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3. Consider an Addition (or Division)
If you have extra space on your property, one of the best ways to increase the amount of rent you can charge is to add another bedroom. It doesn’t have to be large. While an addition requires a significant outlay of capital, it can pay big dividends in the long run—especially if you plan to rent out the property for at least 10 more years.
What if you don’t have space (or the budget) to add on? You may want to remodel the home to make an extra room from the existing footprint. For example, you can turn a master bedroom into two small rooms, or use the attic or basement to create additional rooms.
When reducing room size, though, pay attention to who your renters are. If you have college students, create as many rooms as you can; but if families are your most common renters, leave the master bedroom intact. Be sure to research the market to determine what will work best for you.
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4. Remodel the Kitchen and Bathroom
The kitchen and the bathroom are two of the most important rooms in any home, and they have a disproportionate influence on prospective renters’ opinions. Renovations in these rooms can be costly, but they will have an enormous impact on the overall feel and taste level of your space.
Try to correct kitchen layout mistakes if there are any. Tenants should be able to move throughout the kitchen freely and have what they need within reach.
Next, upgrade appliances to new models. Matching, modern appliances look great, use less energy, and work better.
Finally, repaint the walls (and maybe the cabinets), change outdated light fixtures, and update the hardware (like drawer pulls and knobs). Flooring can be expensive, but a new floor can greatly boost the kitchen’s appearance while offering durability.
As for the bathroom renovation, keep in mind that it can be labor intensive and expensive to move fixtures. Keep the layout as-is unless it causes significant discomfort (like a too-small shower or a doorway that won’t fully open).
Upgrade dated sinks, toilets, and showerheads—replacing them with low-flow models will not only save on the water bill but also come across as more eco-friendly, a feature that younger renters in particular want to see.
Freshen the room with a new coat of paint and replace basic vanity mirrors with framed ones.
Today’s higher-end renters demand attractive kitchens and bathrooms, and they’re willing to pay more to get them. Invest intelligently in your renovations and the increase in quality will justify an increase in rent.
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5. Maintain, Maintain, Maintain
One of the upsides of renting is that someone else has to handle the maintenance and repairs. If you don’t take care of your property, your tenants won’t either.
Fix problems as soon as they appear, whether with plumbing, electricity, HVAC, or just superficial damage.
You may not be able to directly translate your higher standards into higher revenue, but you will prevent large problems in the future by taking care of them when they are small. You’ll also make your current tenants happier, which can improve your reputation.
Here are a few tasks to take on:
- Repaint stained or peeling walls
- Reapply silicone caulk in the bathroom
- Replace malfunctioning or hard-to-use doorknobs
- Fix leaky faucets
- Replace broken cabinet hardware
- Buy new window coverings to replace damaged ones
- If your rental is furnished, reupholster or replace stained and torn furniture
- Invest in better lighting
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6. Promote Safety
Safety hazards shouldn’t exist at a high-end rental—or any rental. Make sure your driveway, sidewalks, and porches are level to avoid tripping hazards. Cut down dangerously damaged trees. Install a good fence and repair any broken parts. Make sure front lights are bright enough to make tenants feel safe coming home.
Indoors, make sure your wiring and plumbing are up to code and have your HVAC systems inspected annually. Ensure that there is proper lighting in each space, that the locks on the doors are in good shape, and that carbon monoxide and fire alarms are placed as recommended.
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7. Raise Your Fixtures to a New Level
If your budget is not big enough for adding new rooms or renovating kitchens and bathrooms, but you still want to improve your rental profits, think about fixtures. They can also improve the value and the general appearance of your house. You can make these improvements in a weekend. For example:
- Paint the walls
- Apply new silicone sealant in the bathroom
- Replace doorknobs
- Change faucets in both the kitchen and bathroom
- Replace the cabinet hardware in the kitchen
- Get new window coverings and blinds
- Reupholster your chairs, couches, etc.
- Invest in lighting fixtures
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8. Interior and Exterior Safety
As a landlord, you are responsible for everything that is going on inside your house. If something gets broken or damaged, it is your responsibility to fix it or replace it promptly. So, if upgrading your household hardware, make sure you pay attention to safety.
On the exterior, make sure your yard is safe by having a good fence and paving stones. Cut down any dangerous trees and bushes. If there is broken concrete, damaged deck ceilings or nails sticking out, make sure to fix it all before your new renters come.
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You have to spend money to make money, as the old adage goes, and the best way to earn more from your rental is to make it more appealing to a variety of renters. A fresh, attractive home with modern appliances and well-maintained grounds will bring in a higher-paying set of tenants.
Make room for the things that matter (like their pets) and even for more people (by increasing the number of bedrooms) and you can charge more per month for the life of the residence.
In the best-case scenario, you’ll have prospective renters lined up to fill any vacancy, even at higher prices.
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