One of the most consistent complaints I hear from students in our course on creating passive rental income comes right after we go over how to calculate a rental’s cash flow accurately.
“What?! How will I ever find a property that still cash flows well, after deducting for vacancy rate, and repairs, and maintenance, and CapEx, and property management fees, and accounting fees, and gas and mileage, and every other expense you’re warning us about?!”
It’s true: finding a good deal is harder than most new investors think, when they start their hunt. They’re not strewn all over the MLS, just waiting for newbie investors to stumble across.
There are many ways to find good deals, but one oft-overlooked tactic is boosting returns to make an okay deal better. Start by asking a simple question: “How could I earn more money from this property?”
Glad you asked! Here are these eight creative ways to earn more money from your rentals; some work better for multifamily properties, others for single-family rentals, while some are expensive and others cheap and simple. But if you implement even one of these ideas to earn more money, you’re a leg up on your dull, paint-by-numbers competition!
1. Furnished (or Semi-Furnished) Rental Units
Katie and I lease our home semi-furnished, while we’re traveling overseas. We keep whatever the renters don’t want to use in the basement.
Leasing furnished and semi-furnished properties let you charge more for rent. Sure, there’s a risk of damage to the furniture… which is the perfect justification for a larger security deposit! You’re covered, and the renters get their money back as long as they take good care of your belongings.
The great thing about leasing furnished rental units is you don’t need to buy new furniture. Renters will expect that other people will have used the furniture already, so you can buy used furniture. Furniture does not hold its value well, which is great news for anyone buying used furniture – you can buy beautiful pieces for a tenth of their original cost.
If there’s a challenge, it’s coordinating colors and styles. But many people enjoy the challenge and fun of interior decorating, and when in doubt, just buy everything in black, or shades of brown.
2. Offer Property-Related Services
Have you considered offering housekeeping/maid services to you renters? What about landscaping or lawnmowing services?
Or if you own single-family homes with pools, perhaps pool maintenance services?
No, you don’t need to get down on your hands and knees yourself, if that’s not your speed. All you need do is arrange a profit-sharing agreement with a local housekeeping, landscaping or pool service. Often these can be arranged with individual service providers, rather than full-blown local companies.
Matt Nagy (of parking creativity above) has seen good results from lawnmowing and pool services. “While it only produces a small net profit, it ensures the pool and lawn are properly maintained, the property value kept up, and the neighbors happy.”
Which is more valuable than most landlords realize. Consider housekeeping services – you can ensure that your properties remain clean, rather than filthy, infested hellholes.
3. Offer Convenience Services
Property-related services might be a simple cognitive leap from offering, well, properties. But that doesn’t mean you need to stop there.
What if you offered dry cleaning services, or babysitting services, or dog-walking services, or even a concierge service?
Sure, you could walk the dogs yourself. Or, like above, you could find a local solopreneur who handles these tasks for you and splits the revenue.
This is exceptionally easy if you manage a multifamily building, but even if your rentals are single-family homes, you can still offer these services if your properties aren’t spread too far apart.
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Free Mini-Course: Passive Income from Small Multifamily Properties
4. Rent Storage Space
Have lots of storage space in the basement of your property? Or attic, or garage, or wherever?
Offer it as storage space for rent!
People hate to part with their belongings. Even when the stuff is 15 years old, functionally obsolete, and there’s no rational reason for keeping it.
And of course there are plenty of people out there who temporarily have nowhere to put many of their belongings. People who are traveling for long periods, or temporarily living in an apartment while their new house is built, etc.
You can charge more if the space is climate controlled. With that said, many below-ground spaces remain consistently cool year-round. When you advertise, emphasize the stability in climate if you can.
The best thing about leasing storage space? It doesn’t come with any of the normal headaches of leasing residential units. No wear and tear. No residential regulations, requiring months of fighting to recover your space if the renters stop paying. It’s a simple and straightforward transaction: you pay me, and you can use my real estate. The end.
5. Rent Out Parking
Matt Nagy, wholesaler extraordinaire and owner of Homes4Income.com, doubles his annual income from a rental property in Plant City, Florida. How? By offering extra parking for ten days a year, on the lawn of his property.
“The Strawberry Festival brings in over 500,000 patrons annually and parking is always at a premium. During the ten days of the festival, we bring in over $7,000 (cash) additional income from selling parking spaces on the lawn of the property.”
Wouldn’t the tenant object to this sudden influx of strangers’ cars all over their lawn? “We offer the tenant a free month of rent and a cut of the proceeds that are collected. It’s a win/win for us and the tenant!”
But you don’t need a major festival down the street from your property to earn money on parking. Does your property have multiple parking spots? Try including one with the rental unit, and renting the other(s) for a monthly fee, either to your renters or the public.
Don’t have parking? Maybe you could add it – how much would it cost to add a parking pad or parking lot?
Like Matt, get creative! Find a way to make it work.
6. Sell Electricity to Your Renters and/or The Grid
Solar panels get cheaper every year. Perhaps even better, they get more efficient and attractive every year.
Look no further than Tesla’s solar roofs, that look like slate or terra cotta roof tiles (see the photo to the left).
You can effectively become the power utility for your renters, producing electricity for them and charging them for usage. Increasingly, utility companies also now let you sell excess power back to the grid – a perfect complement to smart thermostats and appliances, and among the many ways that smart homes and green homes are merging.
If you don’t want to hassle with charging renters for their actual usage, you could simply raise the rent and include electricity.
And just think of how much more marketable the property will become, advertising it with 100% renewable solar power!
Make no mistake, this is an investment in and of itself. Installing solar panels or a solar roof is not a trivial cost, but it’s one that will continue to pay dividends for decades to come.
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7. Life on the Farm
Owners of farmland have been making money this way for millennia: offering farms for rent, with the understanding that tenants work the farm and split the profits with the landlord.
But what if you don’t have a farm?
Could you collaborate with the renters on planting a large garden or vegetable plot, and splitting the proceeds from sales at farmer’s markets?
What other uses could your property offer, for adding revenue? Is the renter an animal lover, who would be interested in raising and breeding dogs, cats, horses, or livestock?
It doesn’t have to end with these semi-standard ideas, either. What if you grew hops on trellises, and sold them to local breweries or homebrewers? Or even grapes, if your climate and soil are right? You’d be shocked at how many people want to live on a vineyard – you could bump the rent by 50% for the cachet alone.
Or you could get even wackier. Jeff Neal grows and drop-ships crickets through his website at TheCritterDepot.com. Yes, he sells and ships them alive. He keeps them in his shed.
The business does about $2,500 in monthly revenue, of which roughly $700 is profit, and it takes him about ten hours/week.
“I worked for an ecommerce company before, and was still very interested in starting my own niche drop ship company. And after some research, it was apparent that crickets were the only solution.
“It just goes to show that there’s a niche for everything, right?”
8. Advertise Like Don Draper
Okay not really. But if you own a building with a large blank wall, and some traffic/exposure, why not rent the space out to advertisers?
Heck, for that matter, you could always use it to advertise your other vacant units for rent, or to advertise your other business(es).
Or if your building doesn’t work for advertising on directly, could you install a billboard on one of your properties, near a busy road?
Beware though that you’ll probably run into local zoning or housing regulations when you start talking about erecting billboards. Do your homework before investing!
To Infinity and Beyond!
There’s no limit to the creative ways you can earn more money with your rental properties.
Have an apartment building? “Fitness classes are all the rage and if you have the space to do so, you can offer yoga or other fitness classes to your residents for an additional fee,” offers Krystallin Baker of Turbo Tenant. Bring in a yoga or zumba or personal training instructor to offer classes in the gym, or on the lawn for that matter. Split the profits with them. Rinse and repeat every week, or even every day!
You could install coin-operated laundry machines. Or vending machines. Or arcade games, or pool tables or ping pong tables or pinball machines.
You could bring in experts on credit improvement, to teach your residents how to improve their credit. As a bonus, they’ll probably get better about paying their rent on time!
The only limit is your own imagination, when it comes to partnering with local service providers and offering additional resources to your renters. Because it’s purely optional, it’s all upside for your renters; they’ll love it.
And as a great bonus, these extra amenities dig your renters’ roots deeper in your property and community. People can get used to having someone pick up and drop off their dry cleaning at their door every week. Read: one more way to boost tenant retention rates.
Get creative, and you’ll find ways to make extra revenue that your competitors only dream about!
What clever and creative ways have you added extra revenue from your rentals? For that matter, what have you considered doing, but haven’t had the guts to try yet? The more outlandish the better!