How to Make Your Rental Properties More Profitable

Excerpt from Millionaire Real Estate Mentor by Russ Whitney

Having income producing property is good. It becomes great when that property is producing the maximum amount of income possible. Here are some ways according to Russ Whitney to make sure your properties are reaching their full profit potential:

Raise the rent. This is a very basic concept, and it amazes me how many landlords are reluctant to raise the rent. Your rents should always be in line with the market. Of course, it's easy to raise the rent for a new tenant, but you also need to consider rent increases when leases come up for renewal. Put the notice in writing; an oral notice of increase won't hold up in court. Explain that the increase is in line with the market or that you have enhanced the property or whatever. Will some tenants move? Probably, and when they do, you'll replace them with tenants paying a higher rate. Most tenants, however, understand that prices go up on everything, and their rent is no exception.

Reduce your tax assessment. You don't have to accept the value the tax assessor's office places on your property. Challenge the assessment; in many cases, you'll lower your tax bill. All you need to do is write a letter offering a logical reason for reducing the assessed value. For example, one of my students had a single-family home with a drainage problem that had been caused by nearby development. Because she couldn't sell the property without disclosing the problem, she rented out the house. When her tax bill arrived showing a property value increase, she wrote to the tax assessor, explaining that in the current buyer's market, the drainage problem made the property virtually unsellable. The tax assessor dropped the assessed value by $10,000. The reduction in value reduced her taxes, but didn't reduce the amount of rent she was collecting. This is an especially important technique to use on properties you've just purchased, because you can use the fact that the property has been mismanaged and is rundown when making your claim for a lower assessment. According to Russ Whitney, many jurisdictions limit the amount assessments can increase each year, so getting the value knocked down before you fix the property up can save you on taxes for years to come.

Add a laundry and vending machines. If you own a multi-unit property, consider installing a coin-operated laundry along with vending machines dispensing detergent, soft drinks, and snacks.

Provide storage. If there is room on the property, install aluminum storage sheds and rent them to tenants for an extra monthly fee.

Charge for extras. If the unit has washer/dryer hookups, offer to provide those appliances for a monthly fee, such as $25-$30. You can even charge a nominal fee for extras such as ceiling fans or bathroom grab bars.

Do maintenance as needed. Delayed maintenance can be expensive. Pay attention to small things that need repair before they turn into major problems. Remember that proper maintenance can extend the life of mechanical items such as air conditioners and appliances. Also, look for subtle money-wasters, such as dripping faucets or leaky toilets that can drive up your water bill.

If you found this excerpt from Millionaire Real Estate Mentor valuable, you'll want to read the entire book. In his always practical, easy-to-understand style, Russ Whitney explains how to achieve financial freedom through real estate investing.