14 Tips on Maximizing Your Rental Property Income

Do you collect rental property income and wonder how to maximize its potential? Whether you own a single-family rental property or run a large apartment complex, Ramfeld, the property management experts in Montreal, can teach you to optimize the money you earn from your rental property. From the best methods for collecting rent to screening your tenants, the following 14 tips can increase the profit you take from your business.

1. Screen Potential Tenants

The damage caused by bad tenants is only a fraction of their toll on your property’s income potential. Regardless of whether the security deposits cover the extent of the damage, you’ll also have to deal with legal fees trying to evict them and open yourself up to liabilities if they harm other tenants.

You can avoid most of these expenses by properly screening your tenants before they sign the lease. Use the following five tips to ensure you can effectively screen your potential renters:

  1. Interact with the tenant one on one through in-person or live digital showings.
  2. Require a detailed application that examines their rental history and lifestyle.
  3. Verify the renter’s income and learn to detect fraud.
  4. Ask for and follow up with references from previous landlords.
  5. Run a credit report and background check from reputable providers.

These might seem like obvious steps to take when considering a new tenant for your property, but you would be surprised how often people skip some or all of them. Doing so could be catastrophic for your business.

2. Offer Parking Spots and Storage

You can add two easy upgrades to your property: dedicated parking spots and storage opportunities. These amenities will increase how much a tenant pays without requiring expensive property upgrades.

While offering a general parking lot or driveway is an upgrade from street parking, you can take it a step further by providing covered parking spots, as well as premium spaces reserved for tenants willing to pay extra. You can make storage as simple as a large closet, close but separate from the rental unit, or even long-term rentals from a mobile storage company.

3. Require Insurance

Renter’s insurance benefits the property owner and tenant by covering specific costs, such as fire or burst pipe damage. It’s quite affordable for the tenant and can protect you from paying thousands in property damage. When a renter has insurance, they’re less likely to ask you to pay for damages from faulty wiring, theft, vandalism, and more, whereas uninsured tenants might ask you to pay for the damages, which may create legal fees, too.

4. Allow Short-Term Rentals

Considering how much Airbnb and Vrbo make from short-term rentals, you’ll realize how much income you’re missing out on by not doing the same. While it’s true that short-term rentals come with greater risk and higher vacancy rates, if you set aside a small portion of your units for short-term rentals, you can make a significant amount of money in minimal time.

You can rent out your units for a day, week, month, or any period shorter than your normal lease, and the less time the renter stays, the higher the price you can charge. If you expect you’ll have vacant apartments anyway, consider renting them out in the short term to avoid losing money.

Another way you can boost the value of these rentals is by providing them fully furnished. If people travel or stay in town for only a few months, they don’t want to supply their own furniture. If you’re in an area with a high turnover in long-term rentals, you can also fully furnish your other units.

5. Fortify Your Units

Even conscientious and responsible tenants are hard on apartments, and the unit’s walls, floors, and doors will experience the wear and tear of someone living there. Ensure your apartments can better stand up to living conditions by implementing the following best practices:

  • Prohibit wall-mounted televisions and mention it in your lease agreement.
  • Install door stops behind every door.
  • Securely fasten towel bars.
  • Instead of carpets, install low-maintenance flooring.

Whatever you can do to make your apartment more durable will save you money after a tenant leaves. 

6. Seek Creative Funding

Whether you’re looking for tips for new landlords or need money for an additional property, consider creative ways to fund your operating expenses and other costs. While seeking to maximize your profit, consider the benefits of improving your return on investment. For example, even if you have the cash on hand to purchase a new property, you can increase your return by obtaining a loan.

Also, consider the perks of a hard money loan or seeking a private investor.

7. Mitigate Risk

To help prevent losing your rental property income to careless tenants, minimize your risk against property damage and liability issues. The following easy practices can significantly reduce your expenses when something goes wrong:

  • Adequate security deposits: While it’s true that high security deposits can discourage some renters, it’s an important way to protect yourself and your property for the sake of future renters. Charge a security deposit that covers the average repairs after a tenant checks out.
  • Liability insurance: This insurance can protect you from losing significant money if a tenant brings a lawsuit against you, and it can even pay for legal counsel.
  • LLC formation: Forming a Limited Liability Company for your real estate holdings can protect your personal finances if you encounter a liability issue.

8. Take Advantage of Tax Breaks

Many landlords don’t realize the full extent of what counts as an authorized expense and thus miss out on valuable tax reductions. You’re eligible for various tax breaks, so partner with a qualified accountant familiar with tax law. The most common tax breaks include:

  • Deductions for mortgage interest
  • Depreciation on your rental property
  • Improvements and repairs you’ve invested in and associated travel costs
  • Property taxes on rental properties

9. Fine-Tune the Rental Agreement

You can help maximize your income by fine-tuning your rental agreement to avoid the most common mistakes and potential legal issues. Some landlords don’t require leases for rentals less than a year, but this is usually a mistake. Confirm your rental agreement contains the following information:

  • Information about the renter
  • Consequences for cancelling a lease
  • Dates and term length of the agreement
  • Rental amount
  • Additional costs covered by the renter
  • Signatures from all involved parties

With your terms clearly outlined in the rental agreement, enforce the rules for every tenant. You may occasionally make exceptions based on circumstance, but remember you’re running a business, not a charity.

10. Regularly Check Your Property

When performing regular inspections around your property, you can identify any issues before they turn serious and expensive. You can easily inspect common areas for problems like water leaks, structural issues, vandalism, or fire risks. 

However, when inspecting a tenant’s apartment, you must balance respecting their property and privacy. Depending on the terms in your leasing agreement, you should give them ample warning. However, that doesn’t mean you should avoid regular inspections for bedbugs, fleas, and water damage that could affect other renters.

11. Consider a Property Management Company

You could benefit from a property management company even if you only own one property. However, you’ll enjoy a better return on your investment across multiple properties.

A management company can coordinate your marketing, maintenance, and daily operations, freeing you to look for more investment opportunities, plan capital improvements, and even take time off to enjoy your profits.

12. Offer Flexible Payment Methods

You’re more likely to collect payments on time and in full if you offer tenants the choice of how they pay and make doing so easy. In a world where digital access is almost universal, many renters might think you run an outdated rental property if you’re not allowing payments through a renter portal or other digital platforms.

Consider offering the following rental payment methods:

  • Renter portals, which can also host the tenant’s lease agreement, maintenance requests, and more
  • Direct deposit from the renter’s bank
  • Credit and debit card payments
  • PayPal, Venmo, and other third-party payment platforms
  • Traditional payment options like checks, cash, and money orders

While some of these payment methods leave you more vulnerable to financial liabilities or fees, you can mitigate the risk by properly screening your tenants and enforcing the rules in your rental agreement. The benefits may outweigh the risks because they allow for more convenient payments and often faster processing.

13. Allow Pets

While pets create an additional risk for you and increase the likelihood that a tenant will damage the property, it also opens up a lucrative demographic. Responsible pet owners can control their pets and are often willing to spend significant amounts of money to ensure their pets are safe and comfortable. Many landlords won’t take the risk of allowing pets, but those renters will go somewhere.

You can charge a monthly pet rent in addition to a pet deposit to pay for potential damages. You can further increase your rent by making your property pet friendly, rather than just “allowing” pets. Creating a pet-friendly property includes designating a fenced-in space for pets to play, hosting pet-centered social events, and using durable finishings and flooring in the units.

To ensure you get quality pet owners, properly screen your applicants while considering the following additions:

  • Impose a weight limit on eligible pets.
  • Prohibit certain dog breeds known for aggression.
  • Limit the number of pets a renter can have.
  • Ask for written proof they’ve trained the pet.

Maximize Your Rental Property Income With Ramfeld

If you want to optimize your rental property income, Ramfeld offers a comprehensive solution for all your real estate challenges. From property management to asset optimization and lease management, we offer a centralized approach to enhancing your real estate investments. To speak with one of our team members, contact us or call 514-745-6106.

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