Finding an ideal tenant is not easy, especially if you don’t want to compromise on the amount of your rental income. Here are some win-win strategies you can adopt to increase your cash flow without undermining your chances of finding the perfect occupant.
1. Reduce Vacancy
Finding a long-term tenant might be the most cliched way to maximise your rental income, but this age-old strategy is still the most efficient way to maximise your rent. The most effective way to focus on long-term tenants is by offering a price incentive, based on duration. But, if an inevitable situation of a vacancy comes up, your best bet would be to decrease the turnaround time. You can do this by making sure that you start advertising your property as soon as you get notified by your tenants. Statistically speaking, leaving your property empty for about a month costs you around 8.3% of your yearly rental income.
2. Add Multiple Revenue Streams
If you own an apartment in a gated community, consider adding other sources of income. You can do this by may be installing a vending machine, or setting up a small gym with a registration fee for the benefit of the residents in the community. This approach not only provides you with an additional source of income, but also increases the total value of your asset.
In case you own an independent house, you could try offering landscaping or cleaning services for a fixed fee. Your tenants will be more than happy to have the responsibility taken off their hands.
3. Make use of Tax Breaks
Renovating your property before putting it out for rent on the market is no small feat, but it is an important measure to maximise your rental income. Simple because doing so lets you charge a higher rent. Nevertheless, it takes an enormous toll on you in terms of time, effort and, of course, money. So, make sure you take advantage of tax breaks to reduce your overall spend. Claim all repairs and maintenance costs on your property and don’t forget to include the insurance costs, the cost of hiring a contractor and business-related travel if any.
4. Smart Pricing
Pricing is the most critical factor that breaks or makes your sale. So, make sure you add some finesse to your pricing to make it more effective. First things first, try to set price expectations early so that potential tenants are not caught unaware, and you too don’t have to spend time on false leads. One other simple psychological trick you could adopt is – set the price of your rental with a value just below the hundreds. For example, Rs 25,494 looks more attractive at first glance than Rs 25,500. Also, do keep in mind that it is better to price high than to price low, as you can always reduce your quote but you can almost never increase it.
5. Sell the vision
Like selling any other product, real estate too is about convincing your target audience. Some of the basic things you could do to give your property a makeover are – give it a good dusting and open up the blinds to make it look brighter and more cheerful. If the unit looks too empty, you could try staging it with furniture. You can also take things up a notch by going creative with a blank wall and adding some personality to the décor. When a potential tenant looks around the property, they need to be able to envision themselves living there. That’s when you can rest assured that you have clinched the deal.
(Varun Manian, Chairman & MD, Radiance Realty)