7 Tips for Dramatically Increasing Rental Spreads

7 Tips for Dramatically Increasing Rental Spreads

2 min read
Sterling White

Sterling White is a multifamily investor, specializing in value-add apartments in Indianapolis and other Midwestern markets. With just under a decade of experience in the real estate industry, Sterling was involved with the management of over $10MM in capital, which is deployed across a $18.9MM real estate portfolio made up of multifamily apartments. Through the company he founded, Sonder Investment Group, he owns just under 400 units.

Experience
Sterling is a seasoned real estate investor, philanthropist, speaker, host, mentor, and former world record attemptee, who was born and raised in Indianapolis. He is the author of the renowned book From Zero to 400 Units and the host of a phenomenal podcast, which hit the No. 1 spot on The Real Estate Experience Podcast‘s list of best shows in the investing category.

Living and breathing real estate since 2009, Sterling currently owns multiple businesses related to real estate, including Sterling White Enterprises, Sonder Investment Group, and other investment partnerships. Throughout the span of a decade, he has contributed to helping others become successful in the real estate industry. In addition, he has been directly involved with both buying and selling over 100 single family homes.

Sterling’s primary specialities include sales, marketing, crowdfunding, buy and hold investing, investment properties, and many more.

He was featured on the BiggerPockets Podcast episode #308 and has been contributing content to BiggerPockets since 2014, with over 200 posts on topics ranging from single family investing and apartment investing to mindset and scaling a business online. He has been featured on multiple other podcasts, too.

When he isn’t immersed in the real world, Sterling likes reading motivational books, including Maverick Mindset by Doug Hall, As a Man Thinketh by James Allen, and Sell or Be Sold by Grant Cardone.

As a thrill-seeker with an evident fear of heights, he somehow managed to jump off of a 65-foot cliff into deep water without flinching. (Okay, maybe a little bit…) Sterling is also an avid kale-eating traveller, but nothing is more important to him than family. His unusual habit is bird-watching, which he discovered he truly enjoyed during an Ornithology class from his college days.

Education
Sterling attended the University of Indianapolis.

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How can rental property landlords continue to increase their cash flow and profit spreads?

What are some of the smart ways to create more cash flow in a new deal and to counter inflation in order to maintain great profit margins on rental homes and apartments?

7 Tips for Dramatically Increasing Rental Spreads

Get property taxes reduced.

It’s great to see more investors using this tool, but more still should be. There frequently continues to be significant disparity between the property tax bills sent out and what owners owe. The majority of property owners probably still pay the bill without questioning it. That’s what the city is counting on. Depending on where you own property, as much as 50 percent of the tax bills sent out each year can be overinflated. You could save thousands, if not at least hundreds, of dollars every year by challenging those bills and getting them reduced. Work towards getting that appeal!

flipping-hot-market

Select tenants who are willing to pay more.

Some tenants are going to be willing to pay more than others for the same units. Perhaps they just really love the location, or maybe the wife must have that extra bathroom to keep her sanity. Possibly they don’t qualify for other local rentals due to some quirks with their application. Some may even be challenged on the move-in money, but may perform very well with less deposit upfront and a higher monthly rate.

Related: 10 Screening Tips to Help Avoid Profit-Tanking, Time-Consuming Tenants

Makeover the property to appeal to high paying tenants.

I find the kitchen and bathrooms are especially important in this respect. However, depending on where you live, the key may be curb appeal, positioning the property as a vacation rental with everything provided, or upscale interior design touches to attract the best paid professionals.

Never go over the top with your rehab.

I can’t stress this point enough. Spending too much on your rehab can also mean cramping your profits. Go too expensive, and you may never find a tenant who is willing to pay as much as you want. That means bleeding money every month — or years without positive cash flow. Please don’t fall victim to this.

Improve your rent collection methods.

The data shows that landlords can face massive time waste and financial losses from the old school methods of knocking on doors to collect rent. This is due to labor costs, physical dangers, counterfeit bills, and check fraud. Go online and put those dollars in the bank instead. Simply moving to online payment options for rents can dramatically lower costs and the risk of loss due to fraud.

productivity

Related: How to Successfully (& Legally) Raise the Rent as a Landlord

Practice proactive maintenance.

Proactive maintenance versus waiting for repair and wear and tear issues to become emergencies can save a lot of money. That’s profit that should be going into your bank account, not funds you’re paying out to vendors when it could have been avoided. For example, my team conducts frequent inspections and looks out for additional issues when going to the property for routine maintenance, like furnace filter changes.

Buy right.

Be sure to always buy right so you aren’t forcing yourself to push for a rent that’s too much for the area in order to cover your costs. Make sure you dig deep into the data to learn what realistic rents are. Sites like Rentometer, Zillow and Trulia can help when doing due diligence. 

Investors: How do you increase rental profits? What would you add to this list?

Leave a comment and let me know!