At Northwest Atlanta Properties we are continuously seeking ways to help our landlord clients increase their rental proceeds. Below are a few ideas that you might consider to maximize your investment here in Northwest Atlanta:
- Put rent increases into the Lease
Write it in the original lease that the rent rate will increase by a percentage every year upon renewal. For example: “Because property taxes, maintenance costs and insurance costs increase every year the monthly rental rate will increase at 3% upon renewal or extension of the lease.” Its easier to increase rent gradually and still have the tenant stay vice increasing it $100 every couple of years. Have your manager visit the property with the tenant once or twice a year to go over any minor repairs needed and handle them. While it’s easier to pay a bit more than to move, a great landlord makes it an easy decision to stay.
- Watch the market.
Rents have gone up dramatically over the last 18 months in most of our market areas, yet many owners we speak with have not raised their rent when the option came up. Take advantage of every opportunity when it makes sense. Again, be kind in how you ask and give reasons for the increase. People are generally reasonable and understanding. Use resources such as Craigslist and Zillow to determine a fair market rent.
- Add rent increases to any lease renewal/extension
Upon renewal or in any lease extension add an increase of a percentage and add amend the agreement at that time (if it wasn’t done in the original) that at every lease extension or renewal rent will increase by a set percentage.
- Make the inside of the home as attractive as possible
In between tenants, patch and paint, shampoo or replace carpets, update the fixtures and/or appliances and have the home professionally cleaned. Not only will the home rent more quickly it will rent to higher quality tenants at a higher price; reducing long-term costs.
- Boost the Curb Appeal!
Before the notice of renewal deadline, make some improvements to the exterior. Improve or replace items like landscaping, mailbox, paint, pressure wash, etc. Upgrading the exterior will make the neighbors and the tenants happy, and increase the likelihood the tenant renews (even with a small increase in rent!)
- Price it right, and prove your price
Before marketing the home for rent, prepare a rental market analysis, showing that the rental rate you are asking is fair, this will help get you more from the start and deter lower offers. Pricing it right from the start will also help it to rent quickly, the extra time vacant trying to get above fair market rent, is almost never worth it! Use services like Zillow.com, craigslist, and your local professional to determine fair market rent. Have these comparable rentals printed out and available. Removing the potentials tenants doubt that they’ve found the right property at a fair price will cause the potential tenant to go ahead with a decision now without having to go research it on their own.
- Stage the home
Often a rental on the market is vacant, a light staging will make the house feel more like home to a potential tenant, pay attention to detail here, make sure the lightbulbs all work (and are nice and bright) and everything is in good repair. Add some small details that make a vacant rental feel more like home. Paper towels, toilet paper, pump soaps, keep temperatures correct, blinds or drapes, clean scents like “rain” or “fresh linen” (but not flowery or pie scents), fire in the fireplace if gas, flowers on the counter, and even some waters in the fridge and a bowl of apples. If it feels like home, they can’t wait to move in and pay top dollar.
- Group Showings
When a property is vacant, do your best to group showings. When potential tenants see others looking too, the best of them make offers (perceived urgency) and the ones with poor credit or other problems often give up without wasting your time.
- Stay on top of all maintenance to retain current tenants.
When a tenant has a maintenance issue, especially an emergency, responding to their concerns and taking care of it quickly will create a loyalty to you from the tenant and they will stay longer.
- Stay in communication with your tenant
Marketing a home and finding a new, good tenant is costly and time consuming, the longer a good tenant stays in the home the less expense you will have for advertising, vacancies and the maintenance items (carpets, painting, etc.) Good, regular communication is key, check in with them periodically, this will help to keep up with deferred maintenance issues and keep the tenant happy and loyal and in turn they will take better care of your investment.
- Visit the property at least every six months
At move-in schedule with the tenant the first visit, we suggest at least twice a year, visit the home, meet with your tenant, walk through the house be sure to ask them if there are any issues with the house that need attention and thank them for their time. In addition to creating a happy tenant this will alert you to any potential maintenance issues and lease violations.
- Consider buying a home warranty
If you have older appliances and/or HVAC systems the $50 to $60 a month charge to buy a home warranty is well worth it when you consider the high replacement costs these items can cost. Having the maintenance company as a buffer (they will tell you when the tenant is responsible for breakage etc) is a great service also.
- Hire a professional property management company.
Finding a good tenant that will pay fair market value means your property must be fully exposed to the market, look great, be available during working hours to show, have applications available and a professional process to check backgrounds, credit and employment. Many of the best tenants are working with an agent to find a home, and will be searching the MLS. A professional management company should be doing 1-13 as well to help maximize the return on your investment property!
- Be Proactive
Don’t let a property stay vacant more than a few weeks max and in a hot market not more than a week. If you’re asking too much, wasting a whole month’s income isn’t worth what you’ll make up on higher rent. Ask FAIR rent based on the recent comps and your competition. If your competition is beating you out, lower your price and call everyone that showed before, but get it rented in less than 1 month.
- Do a return on equity review at least every two years
Owners/landlords are often surprised by their actual return on equity even with higher rents. It is not uncommon for us to see owners earning only 1% to 3% return on their equity! We’ve helped several owners recently sell a current rental with significant equity and purchase two or three new investment properties (deferring all capital gains taxes by conducting a 1031 exchange) and dramatically increasing their return on equity.