Renting property is a great way to create passive income. However, it isn’t the same as sitting around watching a successful ETF gain value or waiting for a bond to mature.
Landlords need to put in a decent amount of effort to keep their properties profitable. This can take the form of both sweat and brain equity.
Even if you’re renting consistently, there are other ways to increase the value of your rental. If you rent a space to tenants, here are several tips to help you maximize your profits.
1. Replace Inefficient Elements
One of the simplest and quickest ways to reduce your overhead is by replacing inefficient elements throughout your rental. Fixtures, like showerheads, sinks, and toilets, that use too much water can be a quiet drain on your resources.
Electricity is a big concern here. Old appliances are inefficient. Even lightbulbs can rack up your energy bill. Replace appliances when you can and use energy-efficient LED, CFL, and smart light bulbs wherever possible.
2. Streamline Your Utilities
Swapping out efficient fixtures and appliances in your home is a good first step. If you really want to cut down on costs, though, you should also consider how you’re sourcing your utilities to keep these areas of your rental functioning.
If you have an oil furnace, consider swapping to a more efficient option like propane or natural gas. You can also improve your electricity by swapping to more sustainable sources. Solar is a popular option, and companies like Posigen are reducing the barrier to entry by leasing solar power systems that remove those daunting upfront installation costs.
3. Allowing Pets on the Property
Many landlords don’t allow pets in a rental. This is understandable. Pets can be loud, can make a mess, and can put a lot of wear on a living space. They’re a liability.
However, you can also turn pets into an asset. Consider the costs involved if you allow pets on your property. Sure, it might be an inconvenience at times. But if you make sure you mark up rent enough, it can more than compensate for any costs your renters’ four-legged friends might incur.
4. Rent Out Extra Storage and Parking Spaces
Just because you have renters doesn’t mean every part of your property is required to host them. Often, a landlord ends up with extra space in the form of land, parking lots, external structures, and even attached storage spaces.
When you have extra space like this, you can rent it out separately. Apps like Neighbor make it easy to list your spaces, turning them into a quick source of bonafide additional income.
5. Keep Your Paperwork Organized
An organized rental remains a lucrative rental. As a landlord, you want to maintain a clear and precise picture of the circumstances of your property at all times. When you run a tight ship, you can do things like:
– Avoid unnecessary vacancies due to foreseen changes between renters.
– Set up late fees for missed payments.
– Claim deductions on your taxes that you otherwise might have missed.
If you want to maximize your profits, you need to optimize your organization.
6. Do Things Yourself
If you own a property, chances are you’re a driven person. Your go-getter personality might mean you’re involved in ten things at a time and don’t have the time to personally take care of your property. That’s fair, and if that’s the case, you can skip this tip.
However, if you’re in a lull or your schedule lightens up for a bit, you may want to consider taking on some of your property maintenance responsibilities yourself. Mowing the lawn, fixing a plumbing leak, cleaning out gutters, prepping the furnace for another heating season — these are all things that cost you money. Doing them yourself can keep that cash in your pocket.
7. Keep the Property in Good Shape
Finally, remember your renters have their rights to privacy and how they can use your space. But at the end of the day, you’re the one who owns, pays for, and can sell the property. That means if you go to sell the rental in the future, you’re the one who will benefit from the sale.
However, you can only expect to get what it’s worth. If you let things deteriorate, you can expect that valuation to fall. If you perform routine inspections and maintain appliances and other equipment on a healthy schedule, you can expect your property to maintain more equity down the road.
Maximizing Your Income as a Landlord
Owning property is one of the oldest investments in the book. Not only is a rental valuable due to the paychecks coming from your tenants. It’s full of potential forms of supplemental income, too.
From replacing appliances and streamlining utilities to hosting pets, renting extra space, conducting proper maintenance, and more, there are countless ways to clean up your rental and make it more profitable than ever.
The first step, though, has to be evaluating your situation. Use the tips above to analyze your current rental properties. Look for the spots where you’re letting cash slip through the cracks, and then take steps to address it to keep your investment at peak value moving forward.
