4 Ways to Earn More Money from Your Duplex
Follow these steps to get more bang for your buck - no matter what kind of duplex you own.
Improving Your Duplex's Cash Flow
In a hot real estate market, profit margins can seem slim. In Minneapolis, many duplexes are going for a much higher asking price than they would have just a couple of years ago. However, just because you bought high doesn't mean your cash flow has to stay low. Here are a few easy ways to get more money from your duplex.
1- Consider Airbnb
Airbnb isn't for everyone, but in the right neighborhood, it could lead to an increased profit margin. You might find that short-term renters provide you with a higher profit margin than the one you received from long-term renters.
In one study performed by SmartAsset, an average Airbnb owner's annual profit (from a two-bedroom rental) was observed to be $20,619. Compare that number to what you make per year from long-term renters. How does it stack up?
If you're renting out the average two-bedroom property in MN, then odds are that this is more than what you're earning today from your annual lease agreement. How much more? Probably just a measly $339 according to Rentcafe's average rental estimates for Twin Cities properties.
But keep in mind that these are just averages - the Airbnb average was a broad-sweeping average between 15 different cities, so your actual results in Minnesota could be significantly different.
The real pros and cons of choosing to utilize Airbnb are all summed up in this - risk and reward.
Having a long-term tenant gives you a good idea of what you'll make annually and even monthly. Renting your property out on a short-term basis to Airbnb users puts that all up in the air. For some, it could mean tripling the profit from a particular unit. For others, it could be halving that.
If you're up for a feast and famine style of renting that could lead to big-time profits, Airbnb just might be for you. If you're more interested in a reliable passive income that dishes up predictable income, then having a long-term renter might be better.
Also note that getting into the "hospitality" industry provides a unique set of challenges that you should be prepared for and knowledgeable about. You don't want to step into Airbnb rentals without knowing what you're up against in terms of off seasons, rental rates, expectations for hospitality, government regulations, and more.
The "hospitality" industry provides a unique set of challenges that you should be prepared for and knowledgable about.
If you're interested in knowing a little more about AirBnB rentals, we'd first encourage you to check out our article about whether an AirBnB investment property is right for you.
2 - Provide Amenities
Another strategic way to earn more from your duplex is by providing amenities. By doing this, you'll actually be providing additional value for your tenants in such a way that encourages them to invest more in the property. Maybe you're interested in providing Wi-Fi or cable so that tenants don't have to deal with the headache. Maybe you want to provide on-site laundry in a place that didn't have any previously.
Whatever the case, consider what kind of things you'd care about a tenant and what you'd pay just a little bit extra for.
We're not necessarily advocating that you itemize each expense and ask the client to pay for them. Rather, we're encouraging you to make your property look more and more desirable so that you can roll these expenses into your rental rate or simply provide them for free with the knowledge that you'll be setting yourself ahead of the competition.
Think about it: if you were deciding between two similar properties at the same price point and one had a dishwasher while the other did not, you'd probably go for the former.
Making your property the obvious choice will almost certainly reduce your vacancy rate and thus your turnover expenses. You'll be earning more from your property even if you don't raise the rental rate by one penny.
3 - Get Paid for Upkeep
While you can't necessarily require your tenants to pay you for your services as a handyman, you might be able to persuade them that it would be worth it to invest in additional services such as lawn mowing, shoveling, housekeeping, and other important services. This kind of offering allows you to keep your property in tip top shape while earning a little extra from your tenant.
The fact of the matter is that most renters don't necessarily care to do the upkeep that's necessary for a property. It's not their own, which means they don't have the same motivation that you would in their shoes.
Because of this, many renters would happily turn to a professional service if the price is right. Of course, for this to happen, you'll have to be crystal clear in your lease agreement that there is an expectation on them to handle these tasks in the first place - otherwise they'll wait for you to come around.
On the BiggerPockets blog, Brian Davis suggests partnering with a local service provider when you offer your clients the option to book a professional service. If you're able to work out a deal with the provider, you may be able to earn a small cut of the profit every time your tenant books them.
4 - Make Use of Empty Space
One last way that you could stand to earn a little extra money from your duplex is by making use of otherwise vacated spaces.
While you don't want to get in your tenants' way, you may be able to work out a way to use a spare bedroom or basement as a storage facility or some other cash-generating area. After all, people always have extra stuff that they're looking to store, and if you're using your duplex as an investment property, you might as well make the most of it!