When a property is marketed for rent, its curb appeal, neighborhood quality and location all affect the base monthly rate. Some homes do not require incentives to attract tenants, and some do. The difference between a home that will rent easier than another depends on several factors.
Although the location and home quality will set the general range for what a property will command, the rental price is never set in stone. A good landlord will take advantage of the opportunity to squeeze out every bit of profit that a rental home can generate. For example, appliance availability and the home’s structural and aesthetic quality are factors that can be adjusted to influence rental rate.
How Can I Increase Rental Rate
Sometimes, as investors, we stumble across homes with all the bells and whistles already installed – washer, dryer, fridge, stove, even a microwave! Consider situations like this a huge convenience, to you and your tenant, and each item will eventually become a bargaining chip for a higher rental rate. Tenants love the convenience of moving into a home that’s been outfitted with essential appliances. Washers and dryers are among the most highly sought-after appliances, and pre-owned, well-functioning machines can be purchased for less than half of most rentals’ monthly rate.
Should I always Keep Appliances In the Homes?
A great home in a great neighborhood might not require appliances and other features to attract a tenant. A less-desirable home that’s struggling to get rented out might become more competitive with the addition of an appliance that’s not usually offered. It is, therefore, worth considering the idea of transferring appliances from one nonperforming home to another.
How Can A Rental Rate Be Raised Between Lease Cycles?
I once had a landlord who offered to buy my furniture at the termination of my lease. I was still in college, and I had bought the furniture gently used. He, therefore, got a great deal on furniture, and I made some of my money back. Following my move out, my ex-landlord marketed his now-furnished property for about 30 percent above the price I was paying to live there. Within the year, the extra income he made from the increased rental rate had covered what he paid me for the furniture. It was a win-win situation. I didn’t have to worry about the cost of moving or storing my furniture, and the rental property’s attractiveness to potential tenants went up significantly.
Maintaining An Aesthetic Value
While it is not necessary to keep a home’s landscaping in great condition for a rental property to perform successfully, the landscaping quality could help you justify a higher monthly rent. If a newly acquired rental home has attractive landscaping, keeping it up will have many benefits. Some landlords will ditch shrubbery for a low- to no-maintenance substitute. But when tenants notice that the landlord truly cares about the home, it will incentivize them to respect the home a bit more. It might seem like an insignificant business cost, but a clean front yard is the first thing a person notices about a home, and this first impression can last a lifetime (or at the very least, a lease cycle).
Of course, the rent you are charging today is not going to hold steady for the lifespan of rental property ownership. This can be good or bad, depending on the appreciation potential of the home. If you feel a rental home’s income is stagnating, investing in some appliances for the property could help bring in higher long-term returns.
If you put the proper due diligence into your investment home before you purchased it, then you should expect its value to appreciate. An increase in value for a home should correlate with a general increase in the value of similar homes in the surrounding neighborhood. Subsequently, average rental rates should rise, which is good news if you plan to rent out for many years to come.
The central factors in any investment property’s rental price point are its location and condition. Larger rooms and proximity to schools and city parks will always have a strong influence on rental rate, but a smart investor knows that there is a certain standard deviation to a rental rate that can be taken advantage of. While a landlord should never make a decision to purchase a rental home dependent on artificially raised rental rates (via appliances and aesthetic improvements) being informed on how to utilize different avenues to increase rent is important.