How do big companies generate income? McDonald’s has its biggie size. Apple has Apple care, chargers, keyboards, data plans, and storage. Ford offers a leather interior, four-wheel drive, or a stereo system.
We’re all familiar with Amazon’s trick to suggest items that are frequently bought together. And we’ve all had that moment when the vacuum we Googled three days ago suddenly shows up on ESPN.com. But what can you do as a real estate investor to make sure you’re squeezing the most you can out of your fruitful property? Here are FIG’s top tips and tricks to maximize rents and profitability.
Tax Breaks
With Robert Kiyosaki’s Cash Flow Quadrant, he explains the difference between passive and active income. As an investor, you make passive income; you let your money work for you. And one of the biggest upper-hands of living on the passive side of the cash flow quadrant is that you get to take advantage of many tax breaks, as opposed to the tax-heavy active side of the quadrant.
When owning property, you are entitled to claim all maintenance and repair costs. You can deduct your mortgage interest and even costs racked up from purchasing your property. What’s more, you can deduct the expense of insurance, business travel, and contractors. There are so many ways to reduce your taxable profit and thus your overall tax bill. So to build true wealth and passive income you want to move your assets (money and talents) from the E & S quadrants to the B & I quadrants over time. It’s not uncommon for us to have some of the multiple quadrants as well.
Add-Ons
When you offer all-inclusive options, you will lower your call volume and leave money on that table. Add a tech package for $50-$100 a month. Offer parking (covered or garage) for $25-$100 per month. On-site storage can add a fee of $25-100 a month. Have a utility split of $25-$150 per month. Charge a check processing fee if the payment isn’t auto-pay into the account in the amount of $25 per check.
You can also require that the first $100 of all repairs be paid by the tenant. Pet fees are rather standard with a $300 non-refundable deposit, plus $50 for the first pet and $25 for every additional pet. There could even be a roommate fee if more than one family is on the lease. The more additional services you offer, the more opportunities you have to profit from all the bells and whistles on your foundation investment.
Rental Management Strategies
Good management strategies that streamline your management system will greatly reduce any chance of bleeding expenses. Here are some golden rules of management:
- You should stay 90 days ahead of your vacancy
- Always use professional photography to present the best possible side of your property.
- Make a habit of responding immediately to maintenance requests and always expect on-time payments.
- Never allow a late payment; this would open a slippery slope of management discrimination you want to steer clear of.
- When placing a tenant, it’s a good idea to look at their car as an indication of what kind of tenant they would be. It’s not the cost of the car, but the care of their car. Those McDonald’s wrappers and diapers on the passenger seat will soon be your rental property if you accept a messy renter.
- Always verify applications.
- You must do a pre-lease walk-through checklist.
- Get on social media platforms! And list your property on Rentler as well as Postlets (always a la carte your pricing).
- It’s amazing how keeping a tight grip on your rental management can directly impact profitability.