Realestate rentals are a terrific way for an investor to realize some serious revenue. Usually these profits come about from the renting of property to people who would like to use it for either commercial or residential purposes. Land and property owners often have excess property, which they would like to exploit for commercial gains, and therefore they allow others to use this property in exchange for money. Real Estate rentals therefore involve the loan of property to people for a price, otherwise referred to as rents.

Here are the 3 crucial steps to maximize earnings from realestate rentals.

Realestate Rentals Action Step #1: Raising Rents.

So how can you increase rents? Well, that’s the beautiful thing about real estate. Legally, in most every municipality you’re allowed to jack up the rent on an annual basis. The amount in which you can increase the rent may be regulated by local governments, but is also influenced by market prices. You should make certain you understand the government regulations before implementing any increase.

Having said that, you shouldn’t be afraid to raise rents every year, at least a little bit. When you add it all up, even the slightest increase in monthly rent can significantly increase your revenue, as well as the value of your property. You should do a little research on your competition to determine market values.

If for example, your units are $100 below the going rate, you can raise the rents and not lose your renters. Increasing the rent $100 for four apartments means an additional $4,800 of annual revenue for you.

You should also consider making improvements on the property as a way to increase rents. Does the rental property have an old roof? Are the kitchen cabinets showing their age? Perhaps the kitchen floor has a few too many nicks and scrapes. Any of these improvements will offer sufficient reason to increase rents while simultaneously increasing the value of your property. Here,too it’s important to have a firm grasp on the local regulations, if any.

Here’s another revenue generation idea: Storage sheds and/or garages can be rented to tenants or perhaps coin operated washers and driers could be installed. And with a larger income property, you could install soda machines.

Realestate Rentals Action Step #2:  Reducing Expenses.

Reducing expenses is something that should be addressed at lease twice a year. So how do you go about it? Well, your mortgage is a good place to start. ID the interest rate higher than the going rate? If you consider a re-finance, make sure you take into consideration all factors such as the cost to refinance compared to your break-even point. This break-even point will be at some point in the future when you’ve saved as much money from your refinance as you actually spent on refinancing. If the property will stay in your hands for the immediate future, and your break-even point will occur in less time than you plan to own the property, then refinancing, could be an attractive option.

Your insurance premium might be taking a large bite out of your operating budget. Maybe it’s time to shop around for a better deal. To be clear, you shouldn’t skimp on coverage, but you may find identical coverage from a provider that is offering a substantially lower premium. A good insurance agent will be able to prepare a comparison for you without much effort on your part. This exercise could be time well spent if you’re able to save 10 or 20% on your premiums.

Is there any action on your part that would reduce your property taxes? The fact is that the majority of properties are actually overvalued. It’s estimated that 60% of properties are overvalued for their tax assessment. Check with your municipality if you suspect that your evaluation is too high. They have procedures in place to appeal your tax assessment.

Lastly, consider all other expenses such as maintenance, garbage removal, electric costs, repair fees, heating costs, advertising costs, etc. This step will require you to put on your thinking cap.. What steps can you take to reduce expenditures on any of these items. Doing so will ultimately lead to more profits and more money in your pocket.

Realestate Rentals Action Step #3:  Additional considerations to keep in mind.

Will adding insulation positively affect heating costs?
Will upgrading the windows also reduce heating costs?
If you’re paying $100 per month on lawn care, will one of the tenants do it for fifty bucks?
Could you buy cheaper insurance?

Conclusion:

Determining how to improve revenues from rental properties isn’t an exact science, and of course appearance and other factors matter. Increasing the net, though, is the surest way to get more for your rental properties. Of course an additional would would be to sell off the property. If this is an option for you, make any cosmetic changes at least several months before putting the real estate on the market (a year before, if possible).

The bottom line is that you need to think through how you’re spending your money and how you’re receiving your money. With a little inspiration, you should be able to find ways to increase your bottom line profits for all of your rental properties. Make sure to address this topic at least twice a year and you’ll maximize your results.