Increasing your rent is one of the best ways to maximize what you earn on your rental property in both the short term and the long term. How can you bring in more from your tenants every month?
Start by researching where your market is, currently. You’ll need to know what your range looks like, depending on where you are in the East Valley. Then, you’ll need to think about some ways that you can earn more by making improvements, adding value, and possibly restructuring your lease terms.
The best way to maximize your rental income will depend on your particular property and your own unique investment goals. However, there are some strategies that are proven ways to earn more money on your rental property.
Let's take a look at what those are.
Make Sure the Market Supports a Rental Increase
Before you can increase your rental income, you need to know what comparable properties in your area are renting for. Conducting a rental market analysis can help you determine if your rent is below market rates, and if so, by how much. This analysis will also help you identify any trends in the rental market that could impact your rental income. Once you have this information, you can increase your rent accordingly.
Based on the data you collect, you’ll have to decide how much of an increase is reasonable. You also need to think about the timing. Typically, the rental increase on existing tenants goes into effect at renewal time.
Most tenants expect that their rental amount will go up from year to year. The trick is to set it at an amount that gives you both an advantage. Tenants are going to do their research just like you are. They’ll know what the market demands, and they won’t be willing to pay more than they have to.
Raise your rent according to market factors, but keep that increase just below what you’re finding the average rent is on a home like yours.
- Your tenants are not paying as much as they’d have to pay if they moved out and rented a similar property.
- You’re still getting more rent.
- You’ll avoid an expensive turnover and vacancy period.
- Your tenants will feel comfortable that they’re still getting value by renewing the lease agreement.
Rental rates have risen across the East Valley over the last year, and while they are finally reaching their peak, you’re likely going to charge more rent than you did when your tenants initially moved in. That’s good news for you. But, you have to balance those extra earnings against the needs of your tenant and the competition on the market. Well qualified tenants will not stay in a place that they cannot afford.
Make Improvements that Add Value to Your Property
The best way to maximize what you’re currently earning in rent is to make your property more valuable. When you can offer something new, modern, and unique, you’re increasing the rental value of that property.
Adding value to your property is one of the most effective ways to justify a rent increase. This could include making upgrades to the property such as installing new appliances or renovating common areas. Other ways to add value include offering additional amenities such as a gym or pool, or providing maintenance services such as snow removal or landscaping.
Again - the best improvements will depend on your property, but there are a few proven updates and upgrades that always bring in higher rents:
- New Floors and Paint
A fresh coat of paint is an easy upgrade and should be made whenever possible. While the price of paint has increased, giving your walls a fresh coat is a worthy investment. Not only does it increase your rental value, it also attracts good tenants. No one wants to move into a property that has chipped, worn, stained, or scratched walls.
A recent flooring survey found that tenants prefer hard surface flooring to carpet. This is no surprise. Hardwood, tile, or laminate flooring is easier to keep clean. It doesn’t trap odors and stains and it’s actually easier for you to clean and maintain during turnovers. Trade in that carpet for hard surface flooring. The investment will result in higher rental values for your properties.
- Improve Your Rental Property Kitchen
Your kitchen appliances should match and be clean. When the finishes on your oven, stove, fridge, and dishwasher are the same, the kitchen will look modern and well-designed. If the appliances are old or you’ve had to repair them more than once, consider installing new ones. You don’t necessarily have to buy high-end models, but something energy-efficient will be a great selling point when you’re marketing your property, and stainless appliances will likely increase what you can charge in rent.
There’s probably no need to install new cabinets and counters, but make sure they look clean, modern, and welcoming. You can sand and paint the cupboards to give them new life and add shiny new drawer pulls and faucets. If your counters are stained or chipped, replace them with something durable.
Invest in easy and inexpensive features like backsplashes and new switch plates on your walls.
- Check Your Lighting
Lighting is another renovation that’s well worth your money and your effort. Upgrade your indoor and outdoor lighting if necessary. Outdoor lighting is critical for safety purposes, and you want your tenants to feel safe in the parking lot, the parking garage, and around the grounds. Inside, tenants will want light fixtures that match the hardware you have in each room. This type of attention to detail will help you earn more on your investment property.
Allow Pets in Your Phoenix Rental Property
One easy way to maximize what you’re earning in rent is to allow pets into your property.
Pet-friendly properties are likely to earn more money for their owners and have lower vacancy periods. You’ll also retain tenants much easier when you allow them to have their pets living with them.
If you study the statistics, you’ll quickly learn that more than half of the tenants in the East Valley have at least one pet. That means that if you don’t allow pets, you’re eliminating a large chunk of your potential tenant pool. Longer vacancies will be the result. That’s costly.
In addition to avoiding long vacancy periods, you can also collect more income when you have tenants who move in with pets. Charge a pet fee, which can be $200 or $300 per pet. When you have someone moving in with two cats, that’s a few hundred extra dollars.
Pet rent will help you earn more on a monthly basis. Some pet rent is as much as $50 per pet. This extra rent can be tucked away in case there’s pet damage that you need to repair after the tenant moves out. If you have a good pet in place with a great tenant, however, you likely won’t have any damage to repair, and you’ll have earned extra money for the duration of the tenancy.
A good pet policy will protect your investment property and tell tenants what you expect in terms of behavior, maintenance, and cleanliness. Establish limits and guidelines in your pet policy as well. Pets are a good idea; you’ll attract more tenants, earn more income, and likely retain the residents who don’t want to go searching for another pet-friendly rental home at the end of the lease term.
Focus on Retaining Tenants and Earn More Rent
Tenant retention always helps you earn more money.
Vacancies are expensive and disruptive. Turnovers are even more of a drain on your money and your time. When one tenant moves out, you need to pay for maintenance, cleaning, and marketing before a new tenant moves in. Often, those upgrades we’ve been talking about need to be made. You have to pay for utilities and landscaping and security.
Retaining tenants means more rent, especially when you can raise the rental amount as the new lease is signed. Here’s how to make sure you keep your tenants and your consistent income.
- Provide a Positive Rental Experience for Tenants
The best thing you can do to keep good tenants is to provide a pleasant and stress-free rental experience. Create and maintain a healthy, positive, and professional relationship with your tenants.
- Provide Conveniences
How can you make your tenant’s life easier? Provide online rental payments. Give them an introduction to the property when they first move-in so they know how to set the thermostat and where to find the circuit breakers. Set up air filter deliveries. Share resources.
- Maintain Your Rental Property
An important part of retaining tenants is being responsive when it comes to maintenance. When you respond quickly to maintenance needs, tenants feel like you’re taking their needs seriously and that you care about their comfort and happiness. One of the main reasons that tenants leave rental properties is because repairs were not taken care of in a timely manner. Don’t lose tenants this way; make the repairs quickly. Not only does it retain tenants, it also protects the condition of your investment.
If you’d like to talk about what you’re earning and how you might earn more, please don’t hesitate to contact us at TCT Property Management Services. We manage homes in the East Valley, including Mesa, Gilbert, Chandler, Scottsdale, and Phoenix.