We are in a time where we are faced with a lot of pressure around rent control. At the same time expenses like water, insurance & maintenance are sky rocketing, many governments are implementing forms of rent control. If you have somebody living in a place and you have already provided some of the items I am going to suggest, you will likely not be able to take them away. On the flip side, if you have a vacant unit, or one about to turn over, I want you to think about some of these potential items before you rent the property. During these unprecedented times, make sure to check your local tenancy laws, rules, and regulations around rental increases, before you attempt to increase a tenants rent or remove / add any amenities.
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Amenities
First let’s talk about amenities. I think of amenities in broad terms. Often times we take amenities for granted and don’t realize how they can make a difference. Amenities can include access to various parts of the property, like a back yard, decks or items like fitness equipment, laundry machines, clotheslines, BBQ’s, fire pits, cleaning supplies, putting greens, driving ranges, pools, tennis courts, other gaming courts, basketball nets, guest suites, party rooms, access to common areas of other properties you may own in the same area. All these items have a value that a person will be willing to pay.
Free amenities that can benefit your property are things like close by parks (especially dog parks), beaches, restaurants, shopping areas, as they say in real estate it is all about location, location, location.
What is important is that when you determine market value for your property you consider all things your property has to offer. Place a value on everything that is over and above standard shelter.
Storage, Outbuildings & Parking
This is interesting; one property I purchased was a side by side duplex, and apparently the previous owner did not allow access to half of the basement (they were using it for storage). When I took over the property I created a recreation room out of the space, which allowed me to increase the rent by adding value by way of something that was already there. This property did not have a walk out basement, so the owners would have had to come through the house anytime they wanted access. Storage lockers in unfinished basements of your properties. Much better if you have an unfinished walk out basement. Storage is big business, many people would love to have a storage locker to store seasonal goods, like clothes, winter tires, tools, painting supplies, gardening supplies, or furniture they want to keep that does not fit in their current location. I looked at a Triplex one time and part of the appeal was 4 storage lockers were built with plywood in an unfinished part of the basement, they were rented for $75 per month each (4 X 75 = $300) for basically doing nothing. I have a friend who has a large commercial property and he placed an old shipping container on the property that he rents for $300 per month to a general contractor. It can also come down to something less complicated, perhaps you have a tenant that needs to store some furniture or other items that won’t fit in the space you are renting them. You can work side deals to perhaps store the stuff in the basement or attic of another property, even could be mixed with other items for a small price. If you have the room anyway you could make a win win situation and pick up an extra bit of monthly income for doing nothing.
Outbuildings are often over looked as income opportunities like sheds, garages, and barns. These can be great revenue generators, just make sure it is clear when you rent the main house that the outbuilding is not included, to avoid disappointment by your tenants who may expect it. Barns can be great, since you can usually rent the land around it, or by the stall (if it is a horse barn).
Tiny home space, this is becoming a hot topic as the tiny home movement is growing, and people need places to park / set them up. You will have to check with the zoning by-laws of your property, since this is a hot topic with plenty of grey areas right now. You can also rent out your own camper or tiny home on your property. Many people who own camper trailers leave them sitting beside there house most of the year, and do not realize the Air BNB potential. Another option that is similar to tiny homes is small camp sites or tents on a property. This could be as simple as a tent in the back yard in an urban area (with access to an out door shower / water) and portable outhouse, or something like a yurt with access to the main house for showers & washroom facilities.
Parking is an amazing additional revenue generator. You can rent parking spaces to your tenants or people in the area. Do not forget about people who may have a boat, motorhome, or trailer they need to store / park. This add on generally works best in urban areas. You may surprise yourself on how great of a revenue generator this can be.
Allowing Pets
Allowing pets can be a great way to increase revenue without increasing the rent of a property. It can be an add on. I always do a separate application and agreement for pets, mostly dogs and cats. The agreement includes items like any damage caused by the pet is to be repaired immediately, flea control is the responsibility of the pet owner, and all vaccinations have to be kept up to date. Let’s face it pets are destructive. It is good practice to charge a pet damage deposit, and a separate amount for rent.
Utilities
I always think the less utilities you can include the better off you are. I know this is not always possible based on the layout of the systems in a particular building. If I buy a property with included utilities, I look for ways to separate them. This might include a significant about of renovation cost, such as dividing the electrical or heating system, or converting the property to electric heat, or it might be as simple as just charging for utilities. You likely cannot do this in the middle of an existing lease without reducing the rent to compensate, but it would be a good idea to do this on a tenant turn over. You can also flip this theory on it’s head and include some utilities. This can often be a win, win if the person you are renting to is on a fixed income. They may benefit from an all in price. What you can do if that is the case, is to take an average and add a buffer to your benefit. If the power bill is historically $150 per month, charge $200. Then make sure the property has a way to regulate the thermostat. It needs to have a maximum level. If you live in an area that will allow you to put water bills in tenants names, that is a good idea as well. When tenants are paying their own utilities it involves risk. I have been burned a few times over the years. Once time I had a tenant stop paying rent and there power bill. I was set up to have the power switched into my name if a tenant disconnected service. This is good for tenant turnovers, however, in this case they disconnected the power and stopped paying rent, so in the end I got stuck with a power bill and back rent.
Appliances
Coin operated laundry machines can be a good source of revenue. I will warn you they can be a hassle as well, sometimes folks will pry them open to steal the money, or they break down. You can usually find companies that will do a profit sharing arrangement with you. They will often provide the machines including all maintenance and repairs, in return for a 50/50 revenue sharing arrangement.
On the flip side of this by providing in unit laundry machines, or free laundry machines you can charge additional rent. Washing clothes is something everyone has to do.
Dishwashers can be an additional reason to charge more rent. You could offer the opportunity to install a dishwasher in a rental unit, in return for increased rent.
Heat pumps can also be a great revenue generating add on (not sure if this is an appliance, but for this article lets say it is). You can offer to install a heat pump (which will increase the value of your unit) for an increase in rent. You can usually lease to own heat pumps, so this can be a win / win for you and your tenant.
Conclusion
I hope these ideas will make you think critically about what your property has to offer. It is important that you maximize revenue while providing exceptional value and customer service to your tenants.
Until next time,
Design Your Landlord Experience,
Michael P Currie
Landlord by Design
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