If you have a rental property, your goal is to make money… and as much as possible. Going into 2023, you should resolve to make the most of your rental property income, especially as you navigate the yucky waters of inflation. But what can you do to ensure you’re making the most of it? We’ve been helping landlords since 1890 and, in that time, we’ve learned from them a lot about what to do when it comes to maximizing rental income. From thoroughly screening tenants to choosing the right insurance, we’ve got eight tried-and-true tips to help you get as much as you can out of your investment.
8 Ways to Maximize Your Rental Income
#1 Choose the Right Tenants
When it comes to making the most out of your rental income, nothing is more important than finding tenants who pay their rent on time and who take care of your property. While you need to get their consent first, it’s important to fully screen prospective tenants.
#2 Keep the Property in Good Condition
It might seem like a no-brainer but keeping your property in good condition is key to making sure your rental income isn’t going toward costly repairs instead of into your bank account. Doing preventive maintenance on your property – changing the air filters regularly, doing things like replacing worn-out appliances or old flooring, and fixing repairs quickly – can save you lots of money by preventing costly issues down the road and by keeping your tenants happy (in addition to stress and worry).
#3 Make it Easy for Your Tenants to Pay You
When was the last time you wrote a check? If you’re like most people, it’s been quite a while. It’s no different for your tenants. If you want to make sure you’re getting your rent payments on time, make it easy on your tenants. There are lots of tools to help you collect rent online, as well as everyday consumer apps like Zelle, Venmo or PayPal that help you lessen hassles.
#4 Take Advantage of Tax Breaks
Among the better parts of having rental property are the associated tax benefits. And? These benefits are a great way to boost your rental income. As a rental property owner, you may be able to benefit from deductions, such as:
- The costs of owning, maintaining, and operating the property
- Mortgage interest payments – up to $750,000 of a secured mortgage – if you have a loan
- Depreciation, which allows you to deduct your costs over the course of the property’s useful life
- Certain types of repairs and improvements
- Property taxes up to $10,000 ($5,000 if married, filing separately)
- Expenses incurred when traveling to the property
#5 Don’t Include Utilities
When it comes to things like electricity, water, gas, sewage, or trash collection, your tenants should be responsible for their utility bills. While it may have been commonplace at one point in time, not including utilities in rent is now a common, legal practice worldwide. You want to maximize your income, and excluding utilities is a simple way to do that.
#6 Get a Home Warranty
Murphy’s Law tells us that anything that can go wrong, will go wrong. It’s no different when you’re renting out your property. A home warranty for landlords covers home systems and appliances when they eventually break down, giving you and your tenants peace of mind, and removing the headaches associated with having to take care of things yourself.
#7 Make Sure You Have the Right Insurance
Choosing the right insurance policy is an excellent way to protect your rental income or avoid losses. When investing in a rental property, make sure you get the best insurance policy. A businessowners policy like Millers Mutual BOPprime covers damage to your rental property due to a weather event, fire, or other covered incident, and our Commercial Umbrella coverage provides an additional layer of protection for liability claims that exceed the limits of your general liability and commercial auto.
#8 Hang On To Great Tenants
Good tenants pay rent on time and take care of your property. On the flip side, bad tenants make your rental investment more costly and risky. With good tenants, there’s less risk of legal trouble, eviction, damage to your property, and the risk of not receiving rent payments. Renewing your lease with good tenants is a smart way to save time and money. After all, finding new tenants can be time-consuming: the time it takes to create a listing, screen new tenants, sign a new lease, plus taking care of things like repainting and repair work after old tenants move out, and so on. In short, keep good tenants and keep them happy!
It’s the little things that make the biggest impact, and these simple, everyday landlord actions can add up and make your rental business more profitable. From carefully screening tenants to changing air filters or selecting the right insurance, every action counts. If you put these eight tips into practice, you’ll be well on your way to maximizing your rental income.