Let's be honest. Every landlord wants to rent his or her investment property as high as possible, especially in a market with a lot of rental competition. Rental properties have a certain level of fixed expenses that go along with them such as mortgage payments, taxes, insurance, repair and maintenance costs, legal, and accounting fees. These fixed costs don't change. No matter what you rent the property for, every extra penny you receive beyond these fixed costs goes straight to your bottom line.
Let's say you have a property you are currently renting for $1,000 and the expenses average out to about $800 per month. You are cash flowing about $200 per month. Think about this: if you raise the rent, does that change your fixed costs? No. Let’s say you use these tips and end up renting for $1,200 on your next lease. It may look like you've increased your income by 20 percent ($200), but actually you just increased your cash flow by 100 percent (or double)!
Keep in mind: this may not be possible if you are completely hands-off or if the rental management company wants to dictate the rent price. Even if this is the case, I would still take these tips seriously; it will pay off big time!
1. Have professional photos taken of the property.
Now, I like to minimize expenses and save money as much as the next guy. However, if you can double the cash flow by splurging on professional pictures, sign me up!
If you hop on Zillow or Hotpads and look at some houses for rent around your area, you will notice the majority of properties either have no pictures, a few pictures with very dark quality, or they have dozens of horrible pictures. They have all of the current tenant’s belongings in them as well as the muddy holes in the back yard from the tenant’s dog. None of these are desirable!
If you have professional quality pictures taken of your rental property, you will automatically put yourself in the top five percent of rentals available in the area!
Pro Tip: Take pictures after your first rehab when everything is new and fresh. It may cost around $150, but you can reuse those pictures time and time again to market the property.
2. Thoroughly inspect the rental, even if the contractor said it was done.
It took me a long time to learn this lesson! I think a part of me always wanted to trust contractors; unfortunately, you just can't. We lost dozens of tenants at rental open houses because of an obvious rehab issue that wasn't addressed.
3. CLEAN YOUR PROPERTY!
We use professional cleaners and then inspect the property once they are finished. When you have a potential tenant walking through a house, they assume its current condition is what they will be moving into. No one wants to move into a filthy property!
Here are some more examples:
- Filthy window blinds that should've been replaced
- Floor registers that are rusty and don't fit properly
- Closet door tracks that are gone, bent or simply don't work properly
- Dirty or smudgy windows and mirrors
- Backyards filled with trash, glass, broken fences, out of control foliage, etc.
- Interior doors that are hard to open or squeak
I really want to stress that if you wouldn't want to move in to a property, this may be the case for everyone who shows up to the open house as well!
Market the heck out of it and then only show it once!
We adopted this strategy last year and have been very pleased with it. We feel it gives us the largest pool of renters with the least amount of time involved.
Here is how we do it:
- List the property on Zillow, Hotpads, Craigslist, Facebook, Instagram, Trulia, and Realtor.com two weeks before it will be ready to show
- We send all voicemails to a call forwarding voicemail service and all rental form submissions to an email address. We capture all of these in our Podio system.
- When the property is ready to show, use a mass text messaging service to notify potential tenants of a one-hour showing.
- Create a cheap postcard on Vistaprint that you can hand to every person who views the property. This postcard has our rental requirements (income, credit score, etc.) and the website address where they can go to apply for the rental.
Pro Tip: Have a tablet ready at the open house so people can apply on the spot. You could even wave the application fee for those who apply this way. This gets people to apply before they have a chance to look at other properties.
It’s that simple! Follow these tips for increasing rents and finding higher quality tenants!