Raising rents and decreasing vacancies are great ways to increase your rental properties' rental income, but they aren't the only ways. As a real estate investor myself, I am consistently surprised at how many landlords are leaving money on the table by not utilizing certain strategies to increase rental income. Whether you plan on owning rental real estate or are simply looking for ways to earn more from your rental property, take a look at these six creative strategies for increasing your income.
1. Allow pets
One of the great debates for rental real estate is whether to allow pets or not. While some landlords opt to restrict pets in their rental property, allowing pets does open up the possibility of earning more money by collecting a nonrefundable pet fee or monthly pet rent. For example, if allowed by state law, you could charge a $250 pet fee upon move-in with a monthly pet rent of $10 per pet per month.
As minimal as an extra $10 to $25 a month may seem, over time it can add up. If you own a 15-unit apartment complex and seven of the tenants have a pet, you've just created an additional $70 to $175 a month, or $840 to $2,100 in additional income each year, just by collecting a pet rent. There are risks with having pets, so make sure it's the right move for your property before allowing them.
2. Be strict on late fees
Leases include late fees for a reason. Many landlords are lenient with their tenants, waiving late fees or not taking the time to collect them when the tenant is a day or two late. But doing so means you're leaving money on the table. Be strict with your late fees, or possibly use an online rental property management software to automatically include late fees into your rent collection system.
3. Rent out extra space
If your property has extra space, such as a dedicated parking space, garage, or larger utility closet, give the tenants an opportunity to rent the space for an additional monthly fee. In Chicago, the average cost for an unreserved parking spot is $265. Even if you aren't a residential or multifamily property, you may be able to capitalize on the additional income by renting out parking space for large events that happen near your property.
Depending on where your property is located, the size of the space you are offering, and how high the demand is for additional parking space in that area, you can earn an extra $10 to $300+ per month renting out extra space on the property.
4. Provide on-site laundry
This strategy is best for real estate investors who own a multifamily property -- one with at least two units or more. If space allows, include an on-site laundry facility using coin-operated machines. You can lease units, or, for larger facilities where it financially makes sense, you can buy the laundry units outright. It's important to price out the additional utility and electric cost for adding on-site laundry. Price your units to ensure you don't just cover your costs but earn some extra money as well.
5. Sell products
In another niche strategy, some commercial real estate, like self-storage facilities, has the opportunity to offer products to prospective tenants such as locks, packing supplies, or boxes. Even if the product has a marginal mark-up, the profit margin is additional income the property is now producing that it wasn't earning before.
6. Offer services
Many landlords elect to offer certain optional services that add value to their rental property, receiving a small kickback or commission from the service provider. For example, if you own a storage facility, you can offer the tenant optional tenant insurance and receive a small portion of the monthly fee they pay from the insurance provider. If you own an apartment complex, you can offer dog walking services and receive a percentage of the dog walkers' income for each client they get from your complex.
Research local companies like maid service, babysitters, pool service, or lawn care companies and reach out to them to see if they are willing to offer affiliate referrals or a cut of any new service that you refer to them from your property.
Increasing rental income should be a priority for all landlords. Not only does it mean you earn more money now while you own the property, but you also add value to the property, making it more competitive when the time comes to sell without having to do a ton of extra work.