Are you looking to squeeze extra profit from your property portfolio? Then here are 5 things you can do that will do just that.
1) Furnishing your property.
Now usually around the world furnished property will rent for more money than unfurnished property. Because there’s been additional expense of furnishing that property.
A lot of investors that I see make the mistake of clubbing that furnishing cost with their investment cost and then saying “you know what? it doesn’t really make much of a difference I’m not going to furnish my property” whereas what I’d like you to do is separate those two costs.
You have the purchase cost of the property and then the furnishing cost.
If we look at the furnishing cost individually we usually see it has a much higher ROI than the investment cost and therefore it makes it worthwhile.
For example, let’s say it costs me $2,400 to furnish a small property and that results in an increase of rent of $100 a month or $1,200 a year.
So basically, we’re seeing a 50% return on our investment of $2,400 dollars.
Of course, at some point that furniture is going to depreciate, and we need to replace it, but at 50% ROI that’s a pretty good return and something I would usually do every day of the week. (If your returns that you’re making are more than 50%, then you might turn up your nose at 50%).
So furnishing property is one of the easiest ways you can increase the rental income from your current portfolio.
2) Changing your model.
Now most people get stuck in the way that they’re renting their property.
They might be renting it to a single family when they could be renting it maybe to multiple families or multiple people renting their property or corporate lets or renting it to a business.
There are many different ways and you could substantially increase the rental income.
For example, corporate lets (where you’re furnishing your property to a very high standard) are usually much more money or you make a lot more money than if you would renting that same property to a single family.
So just thinking about “hey what am I doing here” maybe research in the market and look at what other people are doing and other rental incomes achievable, and then you can go and change your letting model.
Now of course in some properties you can’t do that.
That’s another reason why I hate apartments and I love buying houses or villas.
Because you have more control over how you can actually rent the property.
So just keep that in mind as well when you’re investing “am I able to change how I rent this property later on if I need to”
3) Split by days.
If you think about a property you can actually rent that on a month to month basis but by splitting up the time you rent the property: maybe you could rent on a daily or weekly basis.
You can usually increase your rental income.
Now in all of these situations, there might be increased costs, there might be increased management. However, going back to our furnishing example, provided you get a substantial ROI it makes sense to do so.
4) Split by Volume
Another way of increasing your rental income is to split by volume (or maybe even split by volume and days).
Splitting by volume is all about changing how you rent your property.
So rather than renting the whole place to one person you can rent out the parts to different people.
Now a typical example of that is a hotel.
You know people don’t rent the whole building they rent one room or in a serviced office where people rent short-term spaces in a big office because they don’t want to sign a contract for a long term (and they just want flexibility of moving and moving in and out), so therefore they’re willing to pay a higher price for that.
So, one of the common ways that you can do that with residential property is to maybe sublet the rooms or rent the rooms individually in a house.
Whether that’s the students or even to professional people, you can substantially increase the amount of money you make from the property that way.
Now usually there’s extra regulations around that and of course you have to take care of that, there will be increased costs as well… but we’ve sometimes seen rents double by splitting by volume and is a very effective way to actually rent a property.
Now when I’m buying a property I’m actually keeping these things in mind when I’m looking at it I’m saying “How can I increase my rental income if I need to in the future… would I be able to change it to a business premises? would I better rent the rooms? how many rooms could I rent?” It just keeps my options open.
5) Providing additional services.
Which is all about asking your tenants or finding out what they want.
If a tenant wants to have let’s say lunch and dinner provided, or subscription to a premium TV service, Xbox or a laundry service… so long as the increased rent is more than the cost of providing that service ( with a nice healthy profit on top) then why not do that?
In fact, I see this as a mistake a lot of landlords around the world make… Not offering these additional services.
If a tenant is very happy to pay for an additional service, then they’re very happy to stay for a long time and that means less work for you as a landlord and better gains.
Success in investing is all about holding property long term, and increasing your cash flow means you have lower risk.