The idea behind owning investment properties such as apartment buildings in San Antonio is, quite simply, to make money. You can increase your earnings with your San Antonio properties either by boosting the income or by lowering expenses.
Below are some effective ways to increase the cash flow on your current San Antonio investment properties. Give some of these a try, and let us know what you think!
Sometimes you may buy an apartment building with extra space here and there that can be used to add units. For example, an apartment building in San Antonio that an investor bought had laundry rooms spread throughout the building.
The investor made three new studio apartments from those spaces. That allowed for monthly rents to rise by a total of $1800, and the total value of the property grew by $300,000. The investor is also in the process of adding units to other San Antonio properties from space that previous owners had neglected or believed were useless.
Another smart move is to convert rooms currently used for storage into rentable units. Many small apartment owners let their units get run down, then fill the empty ones with supplies.
It’s less expensive to run out and purchase a shed at Home Depot than to take three rooms off your rent rolls, which costs thousands every month.
Not everyone gets excited about doing laundry. But you should think about this: Coin- or card-operated laundry machines can be a cash cow in an apartment building.
Having good laundry facilities also helps to keep good tenants. You could hire a laundry service company to handle the heavy details. The service will provide new machines, and possibly a bonus if you sign a long-term contract with ideas to maximize revenue.
Offer Storage Spaces
It’s common to buy apartment buildings that have garages and other storage areas filled with junk. If they’re garages, you can empty them, put locks on the doors, and charge $50 or $75 a month for tenants to use them.
It’s wise to look for San Antonio properties that have closets or garages that can be rented. Once the tenant fills the space with his or her stuff, your renter may be less likely to vacate because of the prospect of having to empty and move everything.
Don’t Forget Late Fees
Every landlord or property manager should charge a hefty late fee if tenants fail to pay rent after a certain date. This is effective because the tenant doesn’t want the fee, but if they’re not timely, that’s extra income for your business.
Once the tenant has paid late once and shouldered the extra fee, it probably won’t happen again. Just make sure you treat everyone equally and insist anyone who is not on time pays the late fee. Don’t play favorites, because the word will get around.
Use Utility Bill Back
Ratio utility billing system or RUBS allows you to bill the tenants when they use water, electricity, cable, garbage, and sewer. This can be a vital component of an investment property business and may add tens of thousands of dollars to the building’s value.
Use Application Fees
Landlords need to do background checks and review all potential tenants before taking them on. Remember, you’re giving control of part of your property to a potential problem. You should screen every tenant and charge the market rate.
In the San Antonio market, it’s common to charge $30 for the application fee. You might be able to buy background reports at a discount and make money on your application fees.
Apply Move-In Fees
Many property managers use security deposits, but another option is to charge a move-in fee. Some believe that using a security deposit can create stress between the tenant and owner, and getting around this uneasiness can be helpful.
Also, it helps the bottom line if you can take that fee up front and keep it, regardless of whether the property turns out to be damaged at the end of the lease or not.
Some landlords and property managers insist that tenants have renter’s insurance. If the renter’s property is damaged, the landlord’s insurance policy doesn’t cover the tenant’s belongings. There are renter insurance policies out there for as low as $9 per month. You can comfortably charge each tenant $15 per month for renter’s insurance and make money doing it.
Many property owners are opposed to short-term leases, but allowing them can be a way to make more money. You can charge about 25% more for a 3- or 6-month lease, so it’s worth your time to do so. Also, more people have been staying in rentals for shorter time periods (some of them may be waiting on their own home purchase to close!), so you’re providing a needed service.
Use Your Property Amenities
If your apartment building has a clubhouse that doesn’t get much use, consider renting it out to your tenants for graduations, birthdays, and the like. Does the fitness center sit empty most of the week? Rent it to personal trainers. Tenants like these added conveniences, and you will make more money from your property.
Built-In Rent Increases
You can have an automatic increase in rent built into the contract when the tenant renews. It might be only 3% more per month, but when you multiply, it adds up by 10, 20, or more renters.
This also ensures your apartments keep up with market rates and provides a hedge against inflation. Rents have gotten a lot higher in recent times, and many small landlords are sacrificing money by staying on top of things.
Watch For Expense Creep
When you manage a large apartment building, you will contract for many services to keep the place humming. It’s worthwhile to let all the vendors know you will evaluate their services at the end of every year.
Expenses can creep up over time. You want to be sure you are still getting a good deal. Some of the service contracts you should check for their price each year include:
- Insurance policies
- Cell phone and Internet
- Bug control
- Cleaning services
- Carpet and floor cleaning
- Trash removal
- Painters (check prices every month)
Keeping the above ideas in mind will ensure that your property continues to be profitable over the coming years.