Throughout my career, I’ve helped to manage hundreds of homes, and I’ve owned rental properties myself, so I’m well aware that rental income incorporates many factors that property owners need to consider. Here are three key items to think about in terms of producing income from a rental property:
1. Tenants are impulse shoppers. Typically, renters will select a home much quicker than someone who is in the market to purchase a home. Often, renters will only look for a few weeks to a couple months, whereas homebuyers may search for several months before finding one they’re willing to make an offer on. That in mind, if you present a property that is clean, has nice appliances, and has good photos to review, you can get 20% more in rent than if you don’t do those things. Don’t underestimate the emotional experience of seeing a home—that impulse is so important. You don’t want anything that will detract from people diving in.
"Typically, renters will select a home much quicker than someone who is in the market to purchase a home."
2. Good management is key. Once you have a tenant in place (or at least an applicant), make sure that they have access to someone who is easy to pay rent to, treats them with respect, is easy to communicate with, is honest, and has good reviews online. Additionally, it’s a myth to say that a landlord has no rights and that if a tenant doesn’t pay their rent, there’s nothing the landlord can do about it. As a landlord, you can absolutely do everything to get the money you’re owed.
3. Monthly rent fluctuates with the market. Because of inflation, the improvements you make, the economy, and the housing market, rents do go up. Now, we encourage people to be homeowners, and we help people to save money to buy a home, but 70% of the population rents. Those people are signing up for something that is increasing in price. It’s usually the case that rents go up every year, sometimes by 3% and sometimes by 10%. But when you’re a landlord, don’t focus on 12 months—focus on the next five years. Using this period to do your projections is a key element to doing improvements for rental income.
If you have any other questions about real estate investment, either in New York City or nationally, I’d love to speak with you soon. Don’t hesitate to reach out to me.