Stop Leaving Money On The Table: How To Manufacture A Rent Increase
If you own an investment property, you are a business owner - and your business is your investment property.
Therefore, like a business, you should always be looking for ways to increase the income you receive from your property.
There is, of course, the standard rent increases that your property manager should be issuing in accordance with the market, but here I’m talking more about how to manufacture rental-income growth.
Manufacturing income growth from your investment property will move the needle for you in terms of the income you receive from your investment property, getting you closer and closer to being able to retire earlier or buy that second or third investment property.
Some examples of manufacturing a rent increase could include:
- Being pet-friendly: This is a rarity in the market in most areas. Fulfil the needs of A-class tenants with a pet, and charge above-market rent for the privilege.
- Level-up your car parking facilities: Can you offer an off-street car space to a tenant who does not have off-street parking? Can you build a carport? Can you make your existing carport secure, or add room for storage?
- Give the tenant more space: Physical space, that is. Can you reconfigure the floor plan? Can you landscape the garden to increase the amount of flat area? Can you obtain exclusive use of a section of common property that is next to your apartment/townhouse?
Why wait for market rent increases?
Yes, some manufactured growth strategies cost money, but you can immediately recoup this expense - and then some - through the rent increases. PLUS you can write off the cost of the update at tax time (and possibly in the following years due to depreciation).
But always do your calculations first: Work out the total cost of the update by obtaining quotes etc. Then, find out what you’d need to increase the rent by (per week) to at least recoup this expense. Ask your property manager what comparable properties are renting for to do this.
Let’s say you want to install a carport for your property, which currently has no off-street parking facilities.
You obtain a couple of quotes for this job from your selected builders, and they come back at $2,500.
So, for you to at least recoup the cost of this update, you will need to be able to increase the rent by $50 per week ($2500 / 52 = $48).
So before you proceed with the job, make a phone call to your property manager and ask them what comparable properties with a carport are currently leasing for in your area.
Then ask; ‘Could I achieve $50 more per week if I were to install a carport on my property?’
Then you can make an informed decision on whether you build or not.
Be creative and stop leaving money on the table. Manufacture a rent increase to change your investing life.