Getting the most value out of a furnished apartment or home for rent is the goal of most of the hosts we’ve had the pleasure of meeting. It’s one thing to find a rental model that earns, and another that earns efficiently.
Since sitting around won’t get you anywhere (at least, not until you choose to sell your property), we’ve put together this guide to landing higher returns on your rent. It covers a handful of tips on lowering your overhead costs, raising rent without raising a commotion, and collecting the smart way.
Read through it and find out if you really have been doing everything to make the most out of your plans for a furnished apartment!
Choose an Area with High Demand
If it turns out you haven’t settled on a location just yet, then pay close attention to this first point. Out of the many things to consider when investing in a rental property, choosing the right location is one of the top priorities.
Your neighborhood or surrounding area will determine how much you stand to earn from your investment in a furnished apartment. Not all areas are created equal in the way of demand, so you want to familiarize yourself with your local real estate market, scope out nearby businesses, and gauge your proximity to urban centers or tourist attractions. There are clear signs of whether a rental unit will succeed or fail, and you can find them written in your local economy.
Likewise, it pays to find out the local crime rate, and learn more about the different features that make your area more or less attractive to would-be guests. Note that setting up shop close to certain kinds of establishments can raise your value in the eyes of one type of visitor, but not others.
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For example, a furnished apartment located in the heart of a bustling city might be attractive to traveling professionals or competition attendees who are in the market for corporate housing, but not to vacationers looking for a relaxing getaway.
If your investment property is already up and running, don’t worry—you can still find some value in this kind of perspective by reconsidering your ads and write-ups to make sure that your rental unit targets the right crowd. Guests are more likely to pay a premium if they belong to the kind of demographic most likely to fall in love with the space you have to offer.
In the end, it pays to step into the shoes of your target clientele. The more you see things from the perspective of a guest, the smarter you’ll be when choosing a location or marketing an existing furnished apartment rental unit.
Aim for Extended Stays
The extended stay model is the popular middle ground between overnight rentals (think Airbnb) and traditional leases (think a classic apartment setup). It makes for a faster turnover rate than the traditional rental model, but comes with none of the drawbacks of very-short-term furnished apartment rentals like a propensity for noise complaints or the fact that world governments are cracking down on it.
You can boost the returns you gain from your investment property by aiming for extended weekly (1+ weeks) or monthly (1+ months) stays. Aside from the fact that it’s a rental model in high demand and therefore ripe to be priced at a premium, it blends the high turnover rate of short-term rental with the stability of the medium term.
It’s the preferred choice for furnished apartment units near urban centers, and for those nearer to tourist destinations as well. Segmenting the market for travelers into categories and picking the one that’s willing to meet your preferred price is a lot easier now that the deck is stacked in the landlord’s favor.
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Now that travelers can move around and sustain themselves while on the go for extended periods of time (shout out to the gig economy), the model looks like it’s here to stay. Make the most out of it, and tailor your rental system to ride the wave.
Perfect Your Listing
The perfect listing should draw in more attention than your rental unit can handle—after all, who doesn’t like a little bit of buzz? From your choice of media to the price you display, every factor counts towards convincing your guest that you’re worth a premium rate.
First off, let’s talk about presentation. If you have a dull listing for your furnished apartment, with low-quality images and a vague description of your unit, then you’re asking to be scrolled past. Spare no effort in making your listing stand out among a sea of online rental offers—invest in high quality images, and a listing site that lets you do more with the space you’re given.
A full list of amenities, neat and organized displays, and innovative features like video tours or a 360˚ view of your property can do half the work of marketing your property to the right guests. Quality presentation can leave an impression of modernity and professionalism. Not sure what that looks like in action? Have a look through our listings to see how the pros do it.
Next, the perfect a listing takes the perfect price. Many of those trying to make the most out of their furnished apartment units fall into the trap of thinking that the only way to beat the competition is to raise their rent as infrequently as possible. In reality, there’s a smart way to go about raising rent and staying ahead of market forces like inflation.
Image from TalkoftheTown.ie
The secret is to keep a close eye on your local rates and find a subtle way to rise with the tide. If you know where your rate for a furnished apartment stands relative to other listings in your area (whether they offer extended stays or traditional long-term leases), you can increase your rent to that sweet spot where it makes more sense for new and existing tenants to choose your unit.
Be Smart About Collecting Rent
Our final tip on getting higher returns on your rent is simple: make sure you get a return at all.
A common pitfall for many hosts and landlords—whether they offer short-term, medium-term, or long-term housing—is being lenient when handling late or missing payments for their furnished apartments. We’re the last people who will tell you to do away with compassion, but at the end of the day, you likely have your own people to feed and house as well. Something’s got to give, and it shouldn’t be your resolve to collect on the rent.
There are few ways you can be smart about collecting rent:
First, be strict with deadlines. If you’re still running a manual system for collection (meaning their credit cards aren’t automatically billed), it helps to notify your clients around a week before the rent is due. This gives them little excuse to miss a payment, and it’s easy to pass off as concern for their well-being and an interest in helping them avoid paying a late fee.
Second, while there’s little we can do about guests and tenants who simply fail to keep to a schedule, there are things we can do to make sure they don’t become an even bigger headache. Be strict with late fees and refuse to accept any amount of rent unless the sum is complete—in this case, compete meaning inclusive of penalties. If you budge an inch, there’s a good chance your tenants will learn to take advantage of it come the next payment.
Image from Moonstone.co.za
Third and most important, automate your rent collection. It’s 2018, and the rest of the world have their businesses set on autopilot; why shouldn’t yours?
List your unit on a platform that facilitates payment for you. Doing so automates a number of processes that you’d have otherwise had to deal with: running security checks, processing fund transfers, and settling disputes over late or missing payments. Outsourcing the job keeps you safe and keeps your payments coming in on time—on top of marketing your furnished apartment listing for you (provided they do a good job with presentation).
To sum things up, getting a higher return on your rent is a matter of playing smart and playing safe.
Play smart by injecting some careful thought and strategy into your furnished apartment’s listing and marketing. Sometimes, drawing in your target clientele is a matter of knowing who the right guests are from the get-go. Find the market segment that works best given your location, and then target them with the perfect listing—that way, the premium rate you’re looking to offer makes much more sense.
Finally, play it safe by choosing the right model for your rental business (it is a business, after all) and automating your key processes to make sure the cash flows in when it’s needed. If you want a higher return on investment, secure your business from both the downsides of your industry and the worst-case scenarios that your guests might force you into.
Hosting extended stay guests can reward you with pride and unique experiences. That having been said, it shouldn’t come at the cost of the most basic reward of the business: your personal income.