One of the questions that perplex landlords are how they can maximize their rent in the current market environment. 2020 was an extremely eventful year for homeowners across the nation, with individuals leaving city cores for the suburbs, market prices skyrocketing and US mortgage rates falling to new lows. Here are 5 tips that can help you get the most out of your rental property in 2021.
- Property Amenities
You can consider providing additional services such as cleaning/housekeeping, landscaping, and mowing services. If it is a single-unit home with a pool, then pool maintenance. You can reach out to individual providers and the costs will be minimal as compared to the potential benefit.
Now you might think why you would want to spend additional funds on these services, well there are two reasons. First, it shows quality service which can result in higher rent and second, it helps maintain your property for the future ensuring the home is well-maintained and clean for future renters or a quick sale. This way you can earn a little bit extra money but also be content that your property is well taken care of and there is no risk of an infestation or damage!
Renting out a home furnished or semi-furnished can help you increase the rent especially if the furniture is already available at home. Rather than getting the furniture out, guests can be given the option to keep the furniture if it is convenient for them.
There is a small risk of damage to the furniture, however, this can give you the opportunity to take a slightly larger security deposit which is refunded following the end of the contract. You are not required to buy new furniture, renters expect used furniture, so you can get great deals on furniture online or a second-hand seller.
- Storage Space and Parking
If you have additional storage space such as a basement or an attic, you can rent it out! People love keeping their belongings even if they are old and obsolete so additional storage space can be a great place to earn some extra rent. If the basement is cool throughout the year, this can be another advantage that you can list when you are trying to rent it out. The best part about renting storage units is that it is much easier than renting out residential units, with no wear and tear, regulating, or hassle.
Parking is another great amenity to rent out to earn some additional funds. If you have parking and it is not offered to the renter, you might be able to get a higher price in the market. If you live in an area where there are lots of events, you can even choose to rent the spot on an ad-hoc basis giving you the flexibility to earn money during high-traffic times.
- Sell Utilities
You can install solar panels on the roof to become the utility provider for your renter! Solar panels are getting cheaper, more efficient, and are environmentally friendly. You can charge renters the bill for the electricity that they use and can sell the excess to utility companies. The rental property can be marketed as a green property which can attract a different crowd of health-conscious renters. Although it can cost you some upfront investment, in the loan run it will pay off with additional savings from not having to pay utilities.
- Save Income Tax
The mortgage interest rate can be claimed as a tax deduction, therefore, if you are getting a steady rental income, you should be in no hurry to pre-pay your mortgage. The rental income will cover the mortgage and you can claim mortgage interest up to $750,000 of the mortgage amount. This can also allow you to avoid any prepayment penalties that are incurred when you try to pay off the mortgage sooner than planned.
Therefore, there are several strategies that you can use to maximize your rental income. If you have not purchased a property yet, you should look into the capitalization rate of the investment to see if it is worth the cost. In each decision, always consider the long-term impact on your financials rather than the short-term expenses. If you can manage to implement these tips with a moderate upfront investment and have large savings over time, it is definitely worth thinking about!