Running your own business is difficult even when times are good; when things take a turn for the worse, keeping your business afloat can seem impossible. The economy might have experienced a sudden dip, neighborhood competition may be on the rise, or perhaps you’re having a hard time retaining tenants in your real estate rental business. Whatever the case, you’re looking for help on how to keep your business in operation before it sinks into the red—and you’ve came to the right place. We’re here to offer our best advice on how to keep your rental business in business by using these top strategies for getting more money out of your rental property.
Every day your rental property or apartment unit sits vacant is a direct loss of profit, which makes decreasing vacancy priority number one. In order to make money and stay in business, you need to find renters—as soon as possible. Don’t wait until the property is vacant to post an ad; create a property listing immediately once you’ve learned about the intended move. Sites like Craigslist are a free resource, but consider paying a small fee to list on services such as Apartments.com. You could attract more serious renters who are willing to pay to access the best listings, meaning they’re more likely to stay long-term.
Another way to incentivize renters is to offer certain perks and bonuses that your competitors don’t offer. Selling points include a first month of free rent, on-site laundry facilities, assigned parking spaces, and pet-friendly properties. If your property doesn’t have a to-die for kitchen or prime location, be sure to market it as the best deal in town.
In your quest to rapidly fill empty rentals, don’t let the need for speed force you to allow just anyone through the door. Screening your applicants is an essential part of the rental process which cannot be glossed over or rushed past. Failing to perform criminal background check for tenants can be dangerous for both yourself and any other renters if an incident occurs—which you could possibly be held accountable for. Having to evict someone over suspicious behavior or criminal activity will result in profit loss through vacancy, cleaning services, and recruitment costs. Worse yet, if said tenant disputes an eviction and remains in the unit while refusing the pay rent, it can take the courts a significant amount of time to have him or her possibly removed, resulting in expensive legal fees on top of a loss of profit. Never fail to check a potential tenant’s references, rental history, income statement, credit score, and background report.
To retain your (good!) tenants and keep turnover to a minimum, be sure to diligently follow through on repair requests, relay any relevant property information, and make yourself available to your tenants without being overwhelming.
Raise Rent (Strategically)
There’s no shame in raising the price of your rental property if you need to stay in order to stay in business, as long as it’s done so fairly and within reason. If you’ve had a tenant around long-term, it’s not unfair to slightly raise their rent to reach it closer to the new market value. Remember that moving costs tenants money as well, and if their current rental offers a better value than a new rental, security deposit, and moving expenses, you’ll still have the upper hand. Having the respect of your tenants and explaining the reason behind the rent raise (such as offsetting HOA fees, wanting to upgrade the property, etc.) doesn’t hurt, either.
Be sure to research rental prices in your area to avoid setting an arbitrary price by using sites such as Rentometer. Some states impose fair housing laws which prohibit increasing rent beyond reasonable rates, but you may find that you have enough room to increase your revenue a small amount each year (1%-3%) while still remaining competitive.
There are plenty of ways to increase your property value to get more money out of your rental business, from sprucing up its curb appeal to adding revenue streams such as vending machines. Start with these three tips for keeping your business in the green, and once you have a strong footing, begin adding additional features to further increase your profit margin.
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