How to Increase Your Income Without Raising Rent
Every investor purchasing real estate and converting it into a rental home seeks to generate income. Creating financial freedom is often one of the goals.
Self-managing your rental comes with many responsibilities and risks. You need to handle the marketing side, rent collection, property maintenance, and more while seeking to maximize your earnings. One of the ways landlords meet this goal is by raising the rent. But is this right the move?
Drawbacks to Raising Rent Prices
It seems easy to raise the rent for your property as means of increasing your income. However, there can be plenty of downsides when choosing this as your sole option.
Here are some of the risks associated with rent increases:
Possible Legal Issues
There are rentals laws that limit the frequency and amount by which you can increase rent by. Setting it too high or failing to abide by federal and provincial rental laws can put you in legal hot water.
Loss of High-Quality Tenants
Having a top-quality tenant can be rewarding in and of itself. You get to enjoy prompt payment, a well-maintained unit, loyalty, and someone who respects the leasing policies.
If you raise your rent, you may find yourself in the exhausting position of having to look for a new tenant with whom you have to rebuild said trust. On top of that, you need to spend money on marketing, hire professional cleaners, prepare your unit for new renters and go through tenant screening again.
The benefits from a higher rent rate can sink significantly in the face of all the effort of finding another quality renter.
Increase in Late Payments
Even if the rent increase is only slightly higher, your chosen demographics may have less disposable income. They may have a hard time paying the rent on time.
Property Becomes Less Desirable
Similar properties in the area can offer lower rental rates. Your turnovers would result in prolonged vacancies because prospects are going to your more affordable competition. This counts as an income loss.
But if similar properties in your neighbourhood are charging higher compared to yours then it’s logical to raise your rate while ensuring that you match competitor's prices.
Ways to Increase Your Income
There are ways to generate increases in income without necessarily changing the rent price . This can be dependent on several factors such as property location, available amenities, and the property type.
Consider the following tips to increase your income without needing to adjust the rental price:
Collect Late Rent Fees
Specify in your leasing agreement that late rent payments are subject to additional fees. You can then enforce this policy since this is a signed contract. Be firm so all tenants will adhere to the condition. Otherwise, your tenants can bend the rules and pay anytime they like.
Extra fees also encourage tenants to pay on time to avoid shouldering the additional cost. Remember that at the end of the day you’re running a business and that the rent payment ensures the success of your investment.
Allowing your tenant to sublet can earn you a neat $50 or more each month. You can charge your renter extra or a percentage of the sublet amount.
You of course need to add a provision to your leasing agreement to clarify the terms of the subletting agreement. Make sure to meet the new renter to verify the identity since to prioritize the safety of your other tenants.
Collect Pet Rent
Being a pet-friendly rental increases your income by charging your renters with an additional pet rent monthly. This is a recurring amount and it also serves as protection if property damage results from keeping a pet.
If you have a multi-family rental with several units occupied by tenants with pets, it can be a substantial amount collected together. Consider opening your rental to pet owners since these types of renters also tend to stay longer.
Charge for Parking and Storage
Parking is always in high demand, especially in populated city centres. If you offer reserved parking for residents in your rentals consider charging a parking fee. You can collect a fixed monthly parking fee from tenants with vehicles.
Storage fees also work the same way. If you have an extra room, garden shed, or storage unit, somewhere on the property you can allow tenants to use it as storage for additional income. This could be an added benefit of renting your Regina property as renters value storage when looking for rentals.
Consider Using Airbnb
If you still haven’t found a suitable tenant, don’t despair. You can always try Airbnb and put your vacant unit up for short-term guests. Temporarily renting out your vacant property can produce income.
In some cases, short-term Airbnb units can even be more lucrative. Take advantage of the Airbnb opportunity if your rental property is located near popular attractions of the city centre. You’re bound to find interested tourists looking for more affordable and comfortable options.
There are many creative ways to generate more income without having to raise the rent. Raising the rent can create a backlash from long-term tenants and can result in longer vacancy periods. Offering convenient services may even make you more money down the road.
For more advance and help manage your investment properties contact the experts at Leenan Property Management today!