One of the best ways to earn passive income is by investing in a rental property. If successful in finding a tenant, you’ll guarantee yourself a passive source of recurring income.
Raising rent is inevitable in any landlord’s career. At some point, you’ll realize that you need to charge more in order for your investment to make sense. Some common reasons why landlords may need to charge more rental income include:
- To keep up with the market.
- Improvements in the neighborhood.
- A rising local economy.
- Need to do property improvements.
- To increase your return on investment.
However, raising rent is never ideal. Among other things, it may result in increased tenant turnover rates that may be counterproductive to your investment. Luckily, there is a myriad of other ways in which you may be able to increase your income without having to raise the rent.
Bigham & Associates goes over these different methods to increase your rental income below!
1. Charge a late fee for rent payments.
Most landlords have a clause on late fees in their lease or rental agreement. Nevertheless, some landlords rarely enforce it. And from a business point of view, that’s a huge mistake!
Enforcing a late fee for rent payments can be a great way to boost your rental income. After all, it legally belongs to you.
Hiring a property manager can be a great solution to enforcing such a fee. What’s more, a good property manager can help deal with the tenant on your behalf – freeing your valuable time.
2. Charge a pet fee.
Do you accept pets into your rental property? If you do, it can be a great way to make more money on your investment. According to a certain study, a whopping 67% of American households own a pet. And this number is only rising!
So, if you accept pets, chances are prospective tenants will find it more desirable. And besides having your vacancies filled quickly, charging a pet fee may also mean more profits for you.
Pet fees and deposits vary a lot depending on a myriad of factors. But generally speaking, fees ranging between $200 and $500 are fairly common. What’s more, Texas doesn’t put any restrictions on landlords charging pet rents.
Please note, however, that it’s illegal for landlords to charge any fees, deposits, or rent for assistance animals. The TexasFair Housing Law guarantees this protection, as disability is a protected characteristic.
If you aren’t knowledgeable about such laws, consider hiring an experienced property management company. Besides helping you on the legal side of things, a good property manager can help you charge fair fees and collect them, as well.
3. Rent out parking spaces.
Parking space is an amenity that renters are often on the lookout for during apartment searching. So, if you have limited parking space, consider looking for additional space elsewhere. But here’s the catch – you can use that as a means to earn more money.
4. Build a solid relationship with local vendors and contractors.
When renting out a property, repairs are going to be an inevitable part of the process. Whether it’s plumbing, yard maintenance, or routine maintenance tasks, repairs will need to be done. And these can end up eating a sizeable part of your revenue.
Building and maintaining solid relationships with local vendors and contractors can help you save on costs through discounts.
Hiring an experienced property management company can also prove useful. Due to the nature of their work, they will already have a network of reliable and dependable vendors and handymen. And that will generally mean quick turn-around times in addition to having issues resolved quickly.
5. Offer more storage space.
Offering more storage space can also be a great way to make money on the side. This can especially come in handy if you’re renting out a multifamily property or are renting in an urban area.
Depending on the size, a storage shed can bring you an additional income ranging from $35 to $200 every month. Also, may you be having a parking spot that you may be willing to share with a tenant? If so, that could mean an additional income of up to $200 a month depending on the location.
6. Allow your tenants to sublet their unit.
To allow subletting or not is usually a topic of debate among landlords. Subletting, just like everything else, has its own fair share of pros and cons.
Luckily, you may be able to minimize your risks by having a subletting policy in place. For starters, always require that tenants seek your permission before bringing in a roommate. Also, require that tenants wishing to sublet their unit pay a fee. Generally, a fee of about $50 usually suffices.
If you aren’t sure of how to go about creating the policy, ask for expert help from a property management company.
7. Consider leasing space for a billboard.
Is your rental property located near a busy street? If so, the prime property location could mean more money for you. You may be able to earn as much as $2,000 per side.
8. Provide a furnished rental.
This is a no-brainer. A furnished rental will earn you more money than an unfurnished one. What’s more, renting out a furnished rental may be able to reduce your tax bill. That’s because, according to the Internal Revenue Service, furniture is a depreciable asset.
On the flip side though, renting out a furnished rental does carry its own fair share of cons. For one, it’ll only appeal to a certain market segment. That is students, expatriates, and professionals. Also, there is an increased risk of property damage.
9. Turn it into an Airbnb
In the right location, Airbnbs may be able to make you more money than even a long-term renter would. A unit renting out for $1,300 a month might be able to make you around $150 a night. At that rate, it would only take you 9 nights to recoup the money and have 21 nights to earn profits.
The Bottom Line
Raising the price of your rental unit is risky because it could alienate potential prospects in your target market. Luckily for you, you may be able to increase your income through other ways as aforementioned. If you still need help, Bigham & Associates can help! Get in touch to learn more.