Every landlord dreams of increasing the rent to bring in a little more cash. It’s not impossible, but it does require some extra work on your part.
Here are 6 of the best ways to increase the value of your Houston rental property:
1. Rent to tenants with great credit and solid rental history
High rent won’t necessarily create more income if you’re renting to bad tenants. For example, say you raise the rent by $100/month. At first, it seems like you’ve just pocketed an extra $1,200 each year. You’ll end up losing a good portion of that extra rent to fees, lost rent, and court costs if you have to evict your tenant.
It’s better to have a vacant property for a few months than rent to a bad tenant. Quickly renting to a tenant just to get your space filled could cost you tens of thousands of dollars in damages. You can sue for the damage, but good luck collecting on the judgment. Even if you do get a wage garnishment, you might receive such little money that it may not be worth it.
Check out your potential tenants in every way possible. Perform a criminal background check, a credit check, follow up with the rental history they provide, and call their employment references. Don’t accept anyone with an eviction on their record, and make sure they make at least three times the rent.
2. Make changes that will rent your property faster
You don’t have much time to make a good first impression on a potential tenant. Statistics say you’ve got seven seconds to make a first impression. When someone views your rental property, what do they see in the first seven seconds?
If your property looks trashed or outdated on the outside, you’ll have a hard time renting it out. First impressions of the outside, even if it’s fixable, can spoil the experience of a nice interior.
Don’t rely on interior aesthetics to make up for bad external aesthetics. Fix everything external you can. What does your unit look like when you drive up? Do the window shutters look odd behind the windows? Do they match? Is the front door in good shape? Can you see the address numbers? Is the lawn overgrown with weeds? Is the driveway cracked and full of oil? Is your siding peeling off or faded?
Hire a professional landscaper to fix the front yard. Get the driveway fixed. Repaint or replace the siding. Paint the exterior. Replace the front door. Work on creating a pleasant external presentation and you can ask for higher rent.
3. Prevent repairs by performing regular maintenance
Broken appliances and busted walls will make the value of your home go down. Don’t wait for a tenant to tell you when something’s broken before performing maintenance, and don’t forego annual inspections. Some appliances – like HVAC systems – require regular maintenance that tenants are unlikely to perform.
Don’t rely on tenants to replace filters, clean air conditioning compressors, and gutters. Even if yard maintenance is in your lease, your tenant will probably forget about the gutters.
Regular inspections (at least once a year) will preserve the value of your property and prevent things like dry rot from leaks that went unreported for too long.
Providing outstanding maintenance and repairs for your tenants will make them think highly of you. When your tenants like you, they’ll be more likely to renew their lease at the end of the term.
4. Increase the rent when leases are renewed
The smart way to handle lease renewals is to always raise the rent. Your tenants will be happier if you don’t, but it’s going to cost you more in the long run. Tenants actually expect landlords to raise the rent each year, and you’re unlikely to see a tenant move out just because of a $15-$50 increase.
To be fair to your tenants, let them know up front that each year you will raise the rent. Don’t forego the rent raise just because the market hasn’t gone up. Start training your tenants to expect a yearly rent increase, even if it’s just $15/month.
5. Rent for a higher price from the start
Avoid getting into a situation where you have to reduce the rent or use discount incentives to get paid on time. If you’ve followed the previous four tips, you’ll have good reason to rent for a higher price from the start.
Aim for tenants who can afford your rent, not tenants who need discounts to make it work. If your tenants need discounts to pay you on time and in full, you won’t be able to increase the rent when they renew their lease.
Speaking of leases, you should also charge more for month-to-month rentals than leases. Month-to-month is more convenient for the tenant, but it’s riskier for you as a landlord. You might start all rentals as leases, but if you move anyone to month-to-month after their lease is up, it should cost them more.
Give people three options: month-to-month, a six-month lease, and a year-long lease. Shorter leases should be higher priced per month.
6. Hire a property management company
Don’t feel like checking anyone’s credit, doing maintenance, and dealing with tenants directly? Still want to earn income from your units? Hire a property management company to do it all for you.
At Green Residential, we provide 24/7 maintenance, utilizing the area’s best contractors at the best rates possible. We take care of everything from tenant screening and advertising vacancies, to property inspection and eviction.
We’ve been in the Houston property management business for over 30 years. We have an experienced CPA on our team overseeing the day-to-day management of each property we manage. You can rest easy knowing the income and expenses related to your property are accounted for by an experienced professional.
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Contact us today for a free property analysis and find out how we can help you manage your Houston rental property. Don’t wait. Let us help you generate passive income from your investment today.