Want to increase your rental yields without increasing the rent or refurbishing the property? There is one simple and easily implementable change that will help you generate more income from your investment and keep your units occupied all year round.
Most property owners are likely to concentrate on setting the right rent, minimizing the costs, or enhancing their properties. But there’s another way that is rarely considered yet could help increase profits: offering rollable lease terms.
That’s right: allowing your tenants to have more choices than the traditional 12-month lease can help you decrease vacancy rates, increase the number of renters, and maintain a steady stream of income. Let’s find out why.
How Flexible Lease Terms Increase Your Revenue
A one-size-fits-all lease is not something that every renter is going to want. Some people are moving for a job, others are living somewhere temporarily, and still, others just don’t want to be tied down for a year. If you only have 12-month leases available, you might be turning away potential tenants who will happily pay more for a different lease term.
It is possible to offer both short-term, medium-term, and long-term 12-month leases to the target audience and ensure that all the units are occupied. And if you are working with a property manager, then they will be able to help design the leases that will help you get the most return on your investment without having too much turnover.
Example #1: The Length of the Lease is Shorter and the Rate is Higher
Short term leases are generally associated with higher rent. A person who needs accommodation for six months may be willing to pay more per month than a person who needs accommodation for one year. Why? Because rolling over terms is not easy, and people who need them are willing to pay more for the convenience of it.
For instance, a one-bedroom furnished unit that is offered at $1,500.00 per month for a yearly lease may be offered at $1,700.00 for a six-month lease or $1,900.00 for a three-month lease. Those extra dollars can really add up.
Example #2: Preventing Costly Vacancies
What happens when your current tenant moves out in October and you are unable to find a person willing to sign a lease for one year starting from fall? Rather than having your unit standing idle for a number of months, you can offer a six-month lease term, which will suit those who require a place only up to spring. This way, you continue to collect rent and stand to re-lease the unit at a time when the competition is highest and demand is at its peak.
A good property manager will be able to assist you in coming up with a lease strategy that will minimize the gaps and at the same time make sure that you are not losing money on the rentals.
Example #3: How to Rent to Remote Workers and Digital Nomads
The rental market has been transformed by remote work. More people are traveling and living in different cities for a few months at a time. Some of them are ready to pay top dollar for a well-situated rental with a flexible lease.
If you own a property in the tech hubs, downtown areas, or scenic areas, you can easily get high-paying remote workers if you provide short or medium-term leases. Furthermore, these renters are likely to have steady incomes and tend to be very responsible tenants.
How a Property Manager Can Help
If you are still not comfortable with the idea of managing different lease terms, there is no need to panic; a property manager can do it for you. According to Iron Horse Property Management, they will create the lease templates, set the right prices, and make sure that you are not signing more turnovers than you need.
Property managers also have the necessary experience and resources to market the flexible lease terms correctly, find decent tenants, and process the applications fast, without your having to worry about the risk of unsuitable tenants.
The Switching Process is Easier Than You Think
If you are concerned about the logistics of it all, I promise it’s really quite simple. Here’s how to begin offering flexible leases without the headache:
Find out the demand in your area. See if there is a need for short or medium-term leases in your area. The smart thinking would be to consult with a professional property manager because they can also give you an idea of what is happening in the market.
Determine your lease prices. You should be able to increase the rent a little for shorter leases to cover for the possible turnover.
Use an online lease signing system. This makes the process fast and simple for the tenant to sign the lease and move in.
Consider employing a property manager. If you are still not sure how to handle lease terms, a professional will be able to show you the way.
More Lease Options, More Profit
Offering your tenants different lease terms is not only a benefit, it is a strategy that will help you get more tenants, reduce the time that the units stand empty and, consequently, receive more income.
If you want to get the most return on your investment, it is time to change your leasing policy. The client is the king in the rental market and needs are changing. Are you prepared to provide them with what they want while also enhancing your profits?
Change this one step today and you will see the effect on your profits.