While there are many ways to maximize your rental income of your rental properties, I will outline some of the basics, as well as a few outliers. First, we will begin with residential properties and move onto some ideas for commercial properties to finish.
When looking to maximize your rental income from a residential property, the first place to start is before you own the property. Looking specifically at value-add properties is a great way to get ahead before you get started, although the up-front investment will be higher. This also applies to the properties you already own. If there are any major (new kitchen, laundry machines, bathroom remodel, etc.) renovations that need to be taken care of, this can dramatically affect the income produced by the property. The downside to major renovation is the cost of the upgrades, as well as the time lost to vacancy. While the renovations are going on, you may need to remove the tenants and replace them with new ones once the fixes are complete.
The next idea may be a slight rent increase, or more major depending on the terms of your lease agreement with the tenant. If you are paying any “non-essential” items, or items that the tenant could be paying, consider transferring those items to the tenant with your next lease agreement. While this may exclude some tenants from being able to afford to live at your rental, the outcome will be less money out of your pocket.
As far as commercial properties are concerned, there are almost endless ways to increase profitability if you are creative enough. You may need to be looking for a better or more established anchor tenant. A tenant like Starbucks or Dick’s will provide longevity as well as attract other more profitable tenants as well. When looking for an anchor tenant, it’s best to avoid companies who are shutting down many of their locations. If your commercial property is aged, or slightly run down, you may not be attracting as many higher quality tenants to produce better income. Consider giving your property a facelift to increase attractiveness to tenants as well as potential consumers. If the terms of your lease are subpar, your profitability may be as well. If you have a gross lease with a tenant, you could miss out on the shared expenses or profits of your tenant. Consider changing your lease agreement to a NNN Lease or in some cases a percentage lease for high performing tenants, which in turn would give you a fixed rent amount, shared common property charges or CAMS, and in the case of percentage, a portion of the profits of the tenant’s business. This can be a fantastic way to increase profitability.
In conclusion, if you are creative enough in your approach to your rental properties, there are endless numbers of ways to maximize your rental income. If you have any questions regarding this topic or any other, reach out to Kenmore Team Property Management for a consultation.