As of 2024, the average annual pay for a Tennessee landlord is $75,608, with top earners making almost $130,000. If you want to be a top earner and you already own real estate, there are things you can do to increase your earnings.
Memphis landlords have an advantage when it comes to music, culture, and a strong sense of community. Still, you could be selling yourself short if you aren’t proactive in increasing your cash flow.
Keep reading to learn how to earn more money from your properties.
Set a Competitive Rental Price
When you own real estate in Memphis, it’s important to take a look at other properties in the market. If you fail to do your research, you could set too high or too low of a rental price.
A price too high will deter renters from choosing your units over the competition. Too low a rental price will impact your bottom line and might not cover your expenses.
To set a fair rental price, complete a rental market analysis. When you work with property management services, they can provide insights on rental comps for properties similar to yours in the local area.
This rent valuation comparison will help you set a competitive price that will make you more money as a landlord.
Screen Rental Applicants
Investing in rental properties is a risk, like any other investment. You can mitigate your risk of losing money and increase your profits by finding reliable tenants through tenant screening.
As much as you might want to trust what a tenant tells you or what they write on their application, it’s best to opt for professional screening services.
Tenant screening can provide important information that will inform you whether an applicant is reliable.
Create criteria to help you decide, but make sure you stay compliant with Fair Housing laws to avoid discrimination lawsuits.
A tenant screening report will uncover an applicant’s:
- Credit history
- Eviction history
- Criminal history
- Employment verification
When you rent your property to reliable tenants, you have a better chance of avoiding expensive property damage, nonpayment of rent, or costly eviction fees.
Charge an Application Fee
Screening tenants costs money but you can make applicants pay for these services. Charge an application fee to cover the costs of conducting a background check.
In Tennessee, there is no limit to what landlords can charge as an application fee. The price should be reasonable enough that tenants will still apply.
An application fee can be nonrefundable as it covers screening services and the time it takes to look through an applicant’s information. There are no laws in place forbidding nonrefundable application fees.
To avoid disputes with applicants, provide this information in the fine print on the application. Tenants should turn in their payments when they turn in their applications to streamline the screening process.
Charging an application fee can deter unserious applicants or those who know they won’t pass the screening check.
Reduce Tenant Turnover
As a real estate owner, you might know that finding new tenants is expensive. When a resident leaves after their lease is up, you have to market the property, fix up the unit, and screen new applicants, all of which cost money.
One of your top priorities should be to save money by reducing tenant turnover. Gaining more lease renewals is the best way to make this happen.
Being a great landlord with a positive relationship with tenants can increase your chances of higher lease renewal rates. Keep tenants happy by implementing a tenant portal, addressing their concerns, and completing repairs quickly.
Other ways to reduce tenant turnover include:
- Offering new amenities
- Encouraging longer leases
- Enforcing rules in writing
- Offering renewal incentives
Be proactive about lease renewals by reminding tenants ahead of time that their lease duration is almost up. You’ll have a better chance of locking renewals in early with reminders to tenants ahead of time.
Rent to Pet Owners
Some landlords avoid renting out their properties to people with pets because of the damage they may cause. However, these landlords are missing out on additional rental income.
Additionally, pet owners tend to be responsible and can make great tenants who won’t damage your property.
Consider charging a reasonable nonrefundable pet fee or a monthly pet rent to increase your earnings and mitigate your risk. Pet owners are used to paying pet fees and will comply with your conditions to avoid leasing problems.
Create a Lease Termination Clause
Renters will think twice about terminating their renter’s agreement if you implement fees. If you want to protect your cash flow from unexpected lease terminations, include a termination clause in your agreements.
With a clause in place that requires funding from a tenant who leaves unexpectedly, you are protected from a vacant unit.
A common financial penalty is two months’ rent. This will give you time to find a new tenant before the rental income stops abruptly.
You can add an early lease termination clause to the agreement as well. This allows you to terminate the rental agreement before the lease ends because a tenant breached the contract.
Reinvest Your Rental Income
You can earn more money on your rental property by reinvesting your income. Increasing your real estate portfolio is a great way to build wealth over time.
You can choose to invest your earned income into residential properties, commercial properties, and even vacation rentals. You can also look outside of Memphis to expand your real estate investments geographically.
Your initial investment property is a great source for funding future investments. Create a cycle of growing investments when you feel like you have the income to branch out.
Earn More Money When You Own Real Estate
If you own real estate in Memphis, there are various ways to earn additional income. Being a good landlord is the foundation of these principles, but hiring a property management company can also help.
At Reedy & Company, we can help Memphis landlords like you implement these tips and tricks. Since 2002, we’ve offered unrivaled property management services.
We manage over 3,500 properties and are ready to take on yours! Our local knowledge and range of specialists equip us to manage your investments successfully.
We want you to be more profitable! Contact us today to learn more about our services.
