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Is Your Rental Property Fetching Top Dollar?
When an obscure upstate New York dairy farmer named Max Yasgur rented out his alfalfa field to some concert promoters in 1968 for $10,000, he unexpectedly welcomed 400,000+ hippies who attended the legendary Woodstock concert (400,001 if you count Joan Baez’s unborn child). They all but destroyed his farm. Yasgur sued for damages to his farm and eventually received a $50,000 settlement.
While renting out your land for a giant rock festival might be a little extreme, there are plenty of other opportunities to eke out some additional income from your property. All Property Management explored the current trends in rental pricing and ways to increase and optimize the market value of your rental property.
Rental Trends
According to new data released by real estate research company Reis, Inc., average monthly rent in the United States rose to $1,099 in the second quarter of 2014, up 0.88% from the first quarter. This marks the 18th consecutive quarter of rent increases. In fact, according to their study, rent was up 3.4% year-over-year.
All Property Management’s Q2 2014 Rental Ranking Report tells a similar story showing rental rates increasing or maintaining across the US. San Francisco saw the highest rental variance with year-over-year rent increase of 8.44%. Kansas City, Allentown, Hartford, and El Paso were close behind, with rent variances ranging from 8.18% to 5.99%
It is important to know these trends, and adjust your rents according to both national and local data. Has your competition increased rents on comparable properties? Is there a large supply of available housing in your area that may deter you from increasing rents? It is beneficial to talk to a local property manager who can offer local insight and market data as they are experts in:
- Knowing the neighborhood rental price sweet spot
- Marketing; getting applicants in the door faster
- Assuring tenant quality with effective screening processes
- Assisting with evictions and tenant compliance
See more about how a property manager can improve ROI.
Revenue Beyond Rent
1. Offer Additional Services: Don’t take for granted any space or local service that has the potential to generate income.
- Charge extra for premium parking spots
- Build and rent storage sheds or garages on the property
- Contract with a local pet-sitting service (receive a referral fee)
- Contract with a furniture rental service or local museum offering rent-or-buy fine art
- Create and promote a work-from-home package; showcase the potential for a premium office space by offering high speed Wi-Fi, meeting space, printing and FAX capabilities. Also, check into answering services.
2. Reduce Vacancy Rates: Charging market rates for your rent affects your bottom line, except when units are vacant. If you have a high vacancy rate, national average is 8%, then consider creative ways to attract tenants. Adopt a pet policy to attract tenants you previously would have missed, consider move-in incentives, or offer a new service or amenity. See your city’s average vacancy rate.
3. Upgrades for High-Profit Renters: Upgrades can help justify higher rents. Kitchens and bathrooms are often the deciding factors for renters; consider upgrading to granite counter-tops and stainless appliances. Definitely replace any brass-n-glass light fixtures or door knobs. What about adding a small home gym or herb garden greenhouse on the deck?
4. Decrease Operating Expenses: Take a look at your annual operating expenses and trim the fat. Every bit saved means greater profits. Doing proactive inspections and maintenance saves money on more costly and expensive repairs. Know what costs the most to replace.
When you’re ready to optimize your rental property income ROI, be sure to…
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