When it comes to building a rental portfolio that can fund your ideal lifestyle, there is an art and science behind netting more from properties you already own. It has always been my focus to net a certain amount of cash flow from my rentals versus owning a certain number of units. In this article, I’m sharing 8 creative ways you can increase the income on existing properties.
1. Increase the rental rates to just below fair market value
Keeping vacancies low is one of the most important things you can do for your rental property. On the flip side, keeping the rents too low will have you leaving money on the table. I’ve found that doing rental increases while keeping the rental rate $50-$75 per month below fair market rent makes it a win for the tenant and a win for me.
Want to learn more about what fair market rent is for your property? Check out this post on the topic.
2. Utility bill back
For multi-family properties that have shared utility meters charging a flat fee is the easiest way to get compensated for the bill. Rather than increase the rent and include utilities, I charge fair market rent plus a $50-$75 utility payment to the rent. I’ve never had a tenant complain about doing it this way, and it’s much easier than having to review the monthly bill and go back to the tenants to split with a different amount each month.
A fellow landlord in our closed Facebook group just shared a company that installs submeters for multi-family properties and this is another way to pass along the utility costs to tenants.
3. Pet Rent
Pet rent is an additional monthly charge to residents that have pets, this extra charge insures against damages related to pets. While many landlords do not accept pets (for very good reasons) the reality is that over 30% of households own pets and most tenants who have pets take good care of them. To create a win-win I still charge a refundable pet deposit ($300 per cat and $500 per dog) and I charge a $25 per pet per month pet rent. This covers any extra damage that might be caused by the pet. The extra income helps too.
There are exclusions when it comes to service animals and companion animals. Be sure to understand the laws on this.
4. Storage rent
When I see storage space that is detached from a building, I immediately consider that rentable storage space. My duplex in Greenwood, IN has a detached shed strategically placed in the middle of the backyard which one tenant rents out for an extra $35 per month. It requires no maintenance and the tenant was happy to get extra storage.
Investors in our community have put this idea to good use, one, for example, purchased several storage units from Costco and rents each for $50 per month, earning a double-digit return on the purchase.
5. Garage/Shop rent
Detached garages are even better then sheds, especially when they open to an alley. We own a single-family home where the house is rented separately from a detached shop, which we rent for $500 per month. The main house tenant had no use for the detached shop and with the install of a divider fence, we created an additional $6000 per year revenue stream.
6. Rent the property short-term for more
As Airbnb and VRBO have gained popularity, more and more travelers are using these websites to find short term housing and housing while on vacation. Owning vacation rentals is a goal of mine, and picking the right area seems to be more important than the right property because modifications are easier than changing locations.
In some big cities like San Francisco, Anaheim and Seattle there are not enough long term rentals because owners are choosing to use Airbnb/VRBO instead and in some cases are earning double or triple what they would with a long term tenant.
There are software programs that you can use to determine what a good nightly rate would be for your property.
7. Build a billboard or sell an easement to a billboard company
For the right property in the right location, adding a billboard could be a huge moneymaker.
For example, years ago I made an offer on a single-family home on a commercial lot that was heavily fire damaged for $25,000. It also happened to come with a giant billboard on the side. I did some research and found out that the previous owner had sold the rights to the billboard for 8 years for $50k, and that each side of the billboard was paying $2,000 per month. There were 5 years left on the lease before the new property owner could either resell the rights or sell ad space themselves.
I was headed out of town so I asked an agent in my office to write a cash offer for me, he did and the bank verbally accepted but needed some changes. I hadn’t checked my email all weekend thinking the bank wouldn’t get back to us until Monday, and since they didn’t hear back they went with another buyer. I drive by that property at least once a week and think of all of that cash flow I missed out on and have yet to find another billboard opportunity since.
Moral of the story, if you ever find an opportunity to buy a property with a billboard, do it! If you happen to own a property with the right zoning, you should seriously check to see what it would take to get a billboard permit.
For more info about billboard investing and building check out www.obuniversity.com
8. Lease to a cell phone tower company
Here is another creative idea for the right property, cell phone towers.
We all want great cell phone service and fast internet, but no one wants to see those ugly cell phone towers, let alone have one on your property. Now, what if I said you could earn six figures by giving several year leases for allowing a cellphone tower on your property, would you be more interested? Sure you would!