If you’re a real estate investor who owns multifamily properties, you might think that the absolute best course of action for increasing your revenue involves raising the rent. In reality, maximizing your earning potential is all about balancing the finances with your building’s reputation. Below are five expert tips for improving your earnings – including tips for raising rent – that can benefit almost every investor.
#1 – Raise the Rent (Carefully)
While there is certainly a time and place to raise rent – such as when the costs associated with maintaining the property go up, as an example – it’s important to consider your location and the tenants’ average income before committing to an increase. Many investors are finding it difficult to fill vacancies after recent rent increases pushed some of their tenants out. Before you raise the rent, consider the average rents in your city, your specific neighborhood, and your tenants’ average incomes. Then make decisions accordingly.
#2 – Make it a Desirable Location
Market value fluctuates drastically based on the desirability of your property. Simply put, if a lot of people want to live on your property, the rules of supply versus demand apply and you can charge a higher rent. If your residents feel safe, if the location is clean, and if the rent is reasonable, that’s usually all it takes to make a particular apartment building or complex a desirable place to live.
#3 – Provide Amenities
Some of the amenities that tenants love (and will pay extra to have) include well-kept playgrounds, swimming pools, dog parks, laundry facilities, workout facilities, and more. Of course, these are all investments, and they won’t all fare well in every area – especially in places where vandalism is a problem. The more amenities you can provide, the happier your tenants will be. People often feel proud to live in a place where extras are provided for their comfort. The happier they are, the less likely they are to move out.
#4 – Vet Your Tenants and Take Complaints Seriously
One bad tenant in an apartment building can ruin the experience for dozens of others, so it’s important that you carefully vet your tenants and take multiple complaints about one apartment seriously. For example, if five different tenants complain about loud music coming from 40B, you may not want to evict 40B because the rent has always been paid on time. However, if 40B is violating the terms of the lease with excessive noise, and if evicting 40B keeps the other five tenants happy, that’s one rent versus five rents to consider. Furthermore, if those five tenants complain about the noise and your lack of response on social media, it can negatively affect the building’s reputation.
#5 – Treat it Like a Business
If you manage your multifamily property yourself, it is vital that you treat it like the business it is. Yes, these are people and families, but the apartment building is your source of revenue first. It’s wonderful if you can work with tenants to help them through rough times, but far too many investors let their tenants take advantage of them, and that can have a drastic impact on your business’s profitability. If this is something you struggle with, consider hiring someone to serve as the building manager or superintendent other than yourself.
Making your multifamily property investment more profitable is all about balancing your building’s rent cost and reputation. It may sound tricky at first, but by providing people with a safe and comfortable place to live with rents that are fair and competitive in the local area, you are already one step ahead of many investors.