Make More Money From Rental Properties

make more money from rental propertiesToday, I’ll discuss how to make more money from rental properties. More specifically, I’ll deal with an idea to maximum rents from apartments and single-family homes. I owned residential rentals for years and had never considered using this strategy. If I decide to invest in residential property again, I would strongly consider implementing this idea.

Here’s the background on how this idea was formed. I have a friend that owns a a triplex and a fourplex (let’s call it a sevenplex) that are side by side on the same lot. They’re townhome style units. They are located on a somewhat busy street (which in this case, is a positive for visibility) only blocks from a hospital in our city. The units are probably about ten years old and each unit has its own entrance, a fireplace, washer and dryer hook-ups and a detached single garage.

About a month ago, I was reading a magazine article about Airbnb, the company with an online platform that allows individuals to rent out a room or their entire property to people that will be in town, usually for a short stay. The upside for travelers is that they may get to stay somewhere that’s more unique, nicer, or homier than a hotel and possibly pay less than they otherwise would at a hotel.

I brought the magazine article into my friend’s office and suggested he look into the possibility of taking the next unit to vacate in his sevenplex and try posting it on to see if he can generate more rental income. He seemed open to the idea and we didn’t speak about the subject again until a few days ago. A unit did open up in my friend’s sevenplex and he said that he and his wife had purchased furniture, a television, a bed, dishes, etc. and had posted it as a furnished unit on and some other places.

They were shocked at the number of inquiries they received. Since the property was near a hospital, their units were perfect for travelling nurses or someone coming to town for a longer period than it would make sense to rent a hotel room for, but not long enough to make sense to rent an apartment. They also found out that most of the interested parties inquiring about the property wanted to lease it for several months.

My friend had been renting each of the townhome units for $750 per month before deciding to furnish it. Once he furnished it, he asked $1400 per month and the first unit was snapped up quickly by an IT consultant that had a contract to work at the nearby hospital for a few months. Since there was so much demand for the first furnished unit, he planned to ask $1500 per month for the next unit he converts over, that’s DOUBLE the rent he had been getting. If he ends up switching all seven townhome units into furnished units and is able to keep them occupied for an entire year, that’s an additional $63,000 of income per year.

Keep in mind that he’ll have to bear more of the utility costs (basic cable, electricity, and gas at a cost of about $150/month) and pay for cleaning more often as short term tenants move out. There is also an expense (he said about $2000-$3000) associated with buying the items to furnish the units and extra time dealing with tenants.

If you own rental properties near a hospital or business that employees consultants on short term contracts, or there is simply a strong demand for furnished rental units where you own property, you may want to consider this strategy of how to make more money from rental properties. If you have any ideas on “juicing” rental returns, please share them below.

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