Rental Property Income: How to collect rent, & decrease expenses.
Rental Property Income:
- Get Your Tenants To Pay The Rent On Time: Are you a real estate investor, who is buying & holding rental property? Then this Strategy is for you. To get your tenants to pay the rent on time, offer a discount on the rent. It’s simple if you want to rent an apartment for $400 per month, then charge $440 per month for that unit (10% increase). Offer a $40 per month discount (10% decrease), if the rent is paid by the 1st. If it’s paid during the grace period, from the 2nd to the 5th, the tenant pays the full $440. I’d advertise the apartment for rent, at the original $400 price. Since this is what the tenant will end up paying. This policy works both ways: it allows your property to appear as if it’s “on sale”, plus it discourages dead beats from renting your property. Another strategy that works well in conjunction with this? Have your tenants automatically transfer the rent to your bank account each month, making sure they always get the “discount,” and that you always get the rent. This automates things for the landlord, saving time, and money. Plus it changes the mindset of the tenant. They know the money has to be in that account, or they will overdraft.
- Would You Like To Collect An Extra Month Of Rent, Without An Extra Month Of Expenses: This is one of the best ways to increase your rental property income, and rental property cash flow, without increasing your rental property expenses. Switch your rent from $400 per month, to $200 every 2 weeks. Since many tenants are paid bi-weekly, this is a very popular tactic with some renters! What most of them don’t realize is this: if you collect your rent monthly at $400, you collect $4,800 per year. If you collect your rent bi-weekly, you get 26 payments of $200, or $5,200 per year. This extra $400 can be a huge windfall for many buy & hold investors. If your net profit per unit is say $150 per month, or $1,800 per year, your $2,200 net profit with bi-weekly would be almost 25% greater!
- Would You Like To Pay Off Your Properties Six Years Early: A paid off rental property, allows the owner of the property to keep a far greater share of the rental property income! So how can you pay off a 30 year mortgage, 6 years early? Simple, don’t just collect your rent bi-weekly. Have all your mortgages set up on a bi-weekly mortgage, instead of a monthly mortgage. You’ll end up paying an extra payment each year, which will go straight to the principal balance of the loan. I highly recommend making extra principal payments when possible. Especially in the first 5 years of the loan. The more principal you pay now, the less interest you’ll pay later. The sooner the mortgage is paid off, the sooner you can keep most of the rental income.
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Written By: Derek Puleo