So, your property is empty, and you don’t have a tenant. You’re thinking of lowering your rents. Well, here are five things you can do before taking that step.
Number 1: Advertise more.
Spend more money on trying to get new tenants. It’s the reverse of what everybody else does, everyone else is trying to curtail their expenses because rents are coming down, you should spend more money to get more tenants and maybe even spend some money on your property to improve the value of your property because I can tell you, even when rents go down, there are still people willing to pay a premium for a better service. So, spend a bit more and advertise more.
Number 2: Find different ways of renting your property.
Let’s say you have a property that you rented to a family for a $1000 a month and rents have come down so it’s now $750 and no residential tenant wants to rent your property for a $1000. Well maybe you could rent it to a business for a $1000, maybe you could rent it to three businesses, rent each room to freelancers or solopreneurs.
Just thinking about your property differently is going to allow you to make additional income.
In some parts of the world you must get permission to change the purpose of your property – you’re going to have to talk to the local authorities to make sure you can rent your property in a different way but if you can, that could be a good solution.
Number 3: Value-add additions or value additions.
If someone is renting a property and they’re going to a gym then maybe, if you’ve got a spare small space, you could put a gym or some gym equipment in that space and suddenly now your property has a gym.
Property without a gym vs. property with a gym – which one’s worth more? Of course, the property with the gym.
Maybe you could put a barbeque outside or you could provide a cook or a chef or a cleaning service or a laundry service or put an X-Box in or whatever it is. Anything that you can do that’s low cost to you but high value to the client is going to mean that you can keep your rents the same or at least charge more than other people and I like doing that rather than reducing my rents, it’s a much better way.
Number 4: Look at what your competition is now doing.
When you started out investing, chances are you took a look around and saw what your competition was doing, when rents go down it’s time to re-look at that research and time to look at what everyone else is charging and what service they’re providing for the fees they’re charging so you can ideally do more than them and charge more money than them.
There’s always someone who’s willing to pay a premium. You just need to figure out what that premium is.
Number 5: Offer referral fees.
My last tip for ensuring your rents stay the same and you can find tenants is to offer referral fees to my existing tenants. It might mean that I end up making less money because I’m paying the referral fee, but it means that my rent is still the same and that’s an important psychological aspect when you’re running a business or property.
How can you increase your rents or keep them at the levels they were?
By providing value added services, asking for referrals, checking out your competition, finding different ways to rent your property and, at the end of the day, spending a little bit more money to get the results that you want.