- I knew I wanted to rent my first house, so I intentionally bought a house in a desirable neighborhood and school district because I knew it would increase the rental value.
- Then I made renovation choices for a more upscale appearance.
- Professional cleaning and the inclusion of some utilities have made the property even more attractive to tenants.
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There are many ways to maximize your potential income from a rental property. It is important to rent it consistently and find reliable tenants. But raising the rent is the best way to increase your margins and have higher profits.
Currently, I am the owner of a 900 square foot three bedroom home in a small town in New Hampshire. I rent the house for $ 1,550 per month. While it’s hard to get an average rental price in our area, it’s safe to say that most homes of comparable size in the city rent between $ 1,000 and $ 1,200.
I can rent my house well above market value, which increases my profits up to $ 3,600 per year. However, being able to rent the house at a higher rate took a bit of thought and planning. Here’s what I did and why my tenants are willing to pay more than the going rate.
Choose the right rental property
My family and I rent out the house in which we lived for three years. Even though this was our first home purchase, we chose it not because it was particularly attractive for us to live there, but because we recognized its potential as a high value rental property. .
To begin with, the house has the most important real estate quality: it is very well located. It’s on a street corner in an area that has almost no through traffic. It is within walking distance of the best elementary school in town and a park that has miles of hiking trails. These are perks that I appreciated living there, but I also knew it would increase the rental value of the house in the future.
In addition to looking for a great location, I specifically looked for a tiny three bedroom house. Fewer rooms than this would limit my future tenant pool, but more rooms could lead to many roommates, which in my opinion could create more tenant drama.
The small square footage essentially limited the tenants who would apply; the little house wouldn’t appeal to large groups, but would be perfect for singles or small families, making my tenant pool self-selected.
Create a high-end appearance
In the three years we have lived in the house, my husband and I have renovated it almost entirely. Along the way, we made choices that made the home feel more upscale than other homes in the area rental market. We knew this because we were keeping an eye on what was available in order to stay on trend.
This meant choosing a very deep tub for the bathroom, synthetic hardwood floors rather than carpet and intricately designed doors rather than cheaper doors that were just a flat rectangle. We installed a washer and dryer and chose stainless steel kitchen appliances. We were able to enjoy these updates while we lived there, and when we listed the property these touches made it stand out.
Finally, we have invested in making the property top notch before the viewings. We gave the whole house a fresh coat of paint (about $ 150 in materials) and hired professional cleaners (which cost us about $ 200). While it took time and money, it was well worth it to make a good first impression on tenants.
Decide what is covered
In order to make the rental more attractive, I decided to include some utilities. I pay the water / sewer bill (around $ 75 per month) and garbage removal ($ 72 per month). It costs $ 152 more per month, but also allows me to charge a higher rent.
More importantly, it reassures me. I know garbage is picked up weekly and doesn’t pile up on my property. I also know that the city’s water bill will be paid on time, keeping the property in good standing with the city.
When I listed the property at $ 1,550 per month, I was nervous to ask for too much. It was the most expensive list available at the time, but also the most beautiful (in my opinion). I posted the ad and went to bed.
The next day I woke up with almost 30 inquiries. The downpour of immediate interest told me I could have set the rent even higher than average. Next time I might.