5 Creative Ways to Increase Rental Income
There are different strategies to making money in real estate. Once an investor has decided on a strategy and started to invest, there are still creative ways to make extra money here and there. Look at these five tips to get inspiration on how to maximize rental income.
1. Vending Machines
It might sound silly, but vending machines make money. This applies to commercial and multi-family properties. One trip to a wholesale grocery store can you get a stock of candy bars, chips, and sodas and then you sell each item for at least $1.50. It’s an easy strategy to increase passive income.
We know one teacher that keeps a vending machine in their classroom and uses the money to buy more classroom supplies. The same concept can be used for real estate investors.
How much does a vending machine cost? Usually around $3,000. However, you can buy a used vending machine for around $1,000 or less online. Keep in mind, going through the trouble of buying the machine and re-stocking will only pay off if there are many residents or consumers using the building.
2. Laundry Machines
Again, these kind of machines can be used in a multi-family building. Many units don’t have their own laundry machines so providing a common laundry room will not only increase rental income, but will be greatly appreciated by tenants. No one likes going to a laundromat.
To make your tenants even happier, use a card-operated machine to eliminate the need for spare change.
3. Free Rent To Get More Rent
Avoiding vacancies and turnover will increase rental income. How can you find a new tenant right away and avoid having to renovate the place? Ask your current tenant for help. If they’re planning on moving out, ask them to recruit another tenant before their move-out date and in exchange, they can get free rent for that last month, or at least half the rent. It’s better to lose half or one month’s rent than to lose potentially a couple of months worth of rent.
While you should reward tenants, it’s also important not to mess up your own cash flow. If a tenant is late with the rent, does that mean you’ll be late paying the mortgage payment? Definitely not worth it. Charge a late fee. Consider doing this if it happens more than once.
By setting a firm rule about late fees, tenants will be compelled to make their rent priority. This might seem like a given, but some tenants are willing to take care of other costs before their rent, in hopes that their landlord will give them a break.
Related: How Much Can I Rent My House For?
There are a couple of different ways to benefit from parking. If you own a single-family investment property that does not have off-street parking, you can add a driveway which will allow you to raise the rent and get a return on your investment.
If you own a multi-family or commercial building, charging a fee for a parking pass can pay off. Tenants value having a designated parking space, especially in bad weather. In cities with limited street parking, such as Chicago, some tenants pay $30,000 per year just for a parking space!
Go Further With These Ideas
There are many other ways to increase rental income, and different ways to use these tips. For example, there are clearly other fees that can be charged. The idea is not to be an annoying landlord, but to provide for your tenant without hurting cash flow. Some other fees include charging the first $50-$100 for a repair. You can also charge a cleaning or gardening service fee so that tenants don’t have to deal with it.
Of course maintaining and updating the property automatically allows you to increase your rental income and get a return on your investment. Simple renovations can go a long way.
You can always get an idea about potential rental income by searching your neighborhood on Mashvisor. Take a look at the rental comps to see what other properties are making in rental income.
Originally published at www.mashvisor.com on January 13, 2017.