Dreaming about financial freedom? Who isn’t? But if you’re counting how many rentals you’ll need to reach certain goals…let’s talk.
Imagine what would happen if you earned twice as much from each rental. You could reach your financial goal with half as many units, right?
With fewer rentals, you’d have fewer things to maintain, lower property taxes, and a decreased chance of getting sued. That’s a big deal! So, let’s talk about how to earn twice as much with your existing rentals.
But before we do, we’ve got to address the elephant in the room. May I ask…
Why is rent your only source of revenue? There are other ways to make money with a rental.
For years, I’ve encouraged landlords to demand more from their rentals. There is so much more money to be made. In response, people ask me these basic questions:
- How do you make a rental earn twice as much?
- What’s the process?
- What’s it going to cost me?
Start by discovering and harnessing the opportunities that you have. I can’t chart your journey, but I can tell you what worked for me and many others.
That’s why I created a simple framework for you. It’s a structured way of analyzing your rentals from different perspectives. It helps you discover more opportunities so you can make more money.
I call this plan: The 5-Day Roadmap to Increased Rental Profits.
5-Day Roadmap to Increased Rental Profits
What follows is my 5-day roadmap with a few examples. If you complete the 5 exercises, 1 every day, you’ll have some actionable ways to significantly improve your cash flow.
For best results, try to crank out lots of ideas without being critical. Collect your best thoughts after brainstorming, then take action. It’s a 3-step process that should take place during 5 days: 1) generate ideas, 2) harvest the winners, and 3) take action.
Day 1 – Reduce Expenses
Cutting your expenses is a fast way to increase your net rental income. Since your bank and credit card records tell you where your money is going, you can easily pull together a list of expenses to scrutinize.
For this exercise, I recommend you work yourself into an Ebenezer Scrooge-like frenzy.
Allow yourself to feel the angst of vendors “robbing” your family of resources. Then let that emotion fuel your concentration.
- Disagree with insurance premium increases
Don’t be so agreeable. You get what you accept and often a simple phone call will cause a vendor to renegotiate.
- Contest property tax increases
Whether you think your property has increased in value or not, push back on your assessment. Argue it’s not that great of a property. Explain how you lost value due to external factors they may have overlooked. This will help lower your baseline for years to come.
- Trim “fixed” expenses
You might consider services like garbage, landscaping, and pest control fixed expenses. But don’t assume you can’t trim their costs. Make sure you need everything you’re paying for and that your services are sized correctly. Scrutinize the frequency of each service. Ask if you could you get by with a smaller trash bin. See if you can reduce the frequency of pest control service or opt for fewer treatments during the times of the year when problem pests are active. What can you customize?
Day 2 – Eliminate Expenses
Nonessential expenses have a funny way of hiding in your blind spot. Spend some time thinking about simplification. Separate what’s really an asset from what’s actually a toy.
- Eliminate monthly subscriptions
More expenses that are being packaged as subscriptions get billed directly to your credit card. So, think about if you need the alarm service, rent aggregating services, or property owner lookup services. Turn off the cable service and use an amplified antenna. Cut out everything you’re no longer getting value from.
- Prorate common expenses
In multifamily situations, consider adding equipment or a billing service to divide up common expenses and bill tenants. For example, if there’s a common gas line, then install meters, and have the tenants pay for what they use.
- Make improvements to eliminate maintenance costs
Is there a technology or object you could buy that would quickly pay for itself? Some people have replaced their front yards with rock gardens to eliminate gardening services and reduce the water bill. Look for these types of smart investments.
Day 3 – Add Side Income
Grab coffee with your craziest friend. Spend a day dreaming up additional revenue streams you could “bolt onto” your rental.
- Operate a U-Haul business
If you have a place to park a U-Haul vehicle, then you can own a dealership. New kiosks are making it practical to operate these dealerships without on-site management. You should not automatically dismiss this idea.
- Add some storage units
Consider adding a storage unit in a way that you could do business with someone who doesn’t reside on your property. Since lien laws are different from landlord-tenant laws, it’s wise not to mix the two.
- Sell crops and advertisement
If your rental has the right exposure from sunlight or traffic, you can monetize your land by farming it or renting outdoor billboard space. If you have extra land, monetize it.
Day 4 – Optimize Your Tenant Rent
You want to adopt the practice of increasing your rents each year; however, that alone isn’t sufficient to tap the true potential of your property. Consider customizing your rental by:
- Differentiate with design
Your upper rent limit might be much higher than you think. If you’re not a gifted designer, then hire someone to add flair. Some people will happily pay more not to live in a cookie cutter rental.
- Align due dates with paydays
There’s no reason rent has to be paid once a month, especially when most people get their paychecks more frequently. Consider having a portion of your rent due on the date your tenants get paid. It could be more convenient for their budget and more profitable for you as well.
- Create a furnished rental
Creating a corporate rental may be the most profitable way to operate. It’s easy to use Airbnb to get started with short-term tenants. It’s also wise to have at least one furnished monthly or short-term rental in your portfolio. After all, you don’t know how profitable your place could be until you try to serve a more profitable market.
Day 5 – Improve Your Neighborhood
When it comes to the neighborhood surrounding your rentals, ask yourself, “Am I an investor or just a consumer?”
If you’re willing to invest into the fabric of your neighborhood, then the sky’s the limit. Even if you own the smallest rental on your block, you can dramatically influence your neighborhood’s reputation for better or worse. Rental owners profit just like everyone else when the neighborhood gets better.
It only makes sense that landlords should take on the cause. Come up with a neighborhood improvement strategy? Here are some simple ways to put your landlord power to good use:
- Own up to unassigned civic duties
Call in illegal dumping, report burnt-out street lights, and take responsibility to fight disorder. Be an advocate for your block. Make sure you’re getting all the services you’re paying for.
- Support annual celebrations
Hold or support annual social events to strengthen the neighborhood surrounding your rentals. Help neighbors feel like they belong. Not only will this improve safety on your block, it will also build demand for your location.
- Lead in orderliness
Let your rental lead a curb appeal campaign. Start a round of one-upmanship. Create a ripple that adds beauty for your current tenants and future prospects as well.
Plan a long-term neighborhood improvement project, and work on it each year. Before you know it, your property value will have increased more than it would have on its own.
- If you want your rentals to be part of your financial freedom, be intentional about it.
- Stop under-indexing your potential. You’ll get what you demand.
- Use this 5-Day Roadmap as a guide to discover new ways to monetize your rental.
- Like all good things, sticking to the roadmap requires work and discipline. But it’s worth it.
What’s your biggest discovery or improvement to your income?
Leave a comment below to let me know about the extra income you’ve discovered. Let’s have a discussion about financial freedom.