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How to Increase Profits Without Increasing Rents

There is a widespread misbelief that rents only go in one direction, Up. With rental markets in small cities and suburbs still experiencing rent growth mid-pandemic there is mounting support for this misconception. The main source of income for multifamily investors is rental income, we would love for this myth to be true, but it simply isn’t.

Many large cities are seeing declines while rents in other markets have plateaued. If expenses are creeping up and rents are already maxed out or even worse declining, owning the property will not be financially sustainable. How do you increase multifamily returns if rent growth is limited?

Whether rent growth is a problem or not, here are a few ways to increase profits in any market without raising rents.

Two Methods: Decrease Expenses, increase other income

There are two methods to increasing profitability when rents are maxed out. Multifamily investors can either decrease expenses or increase other income. It may be cheaper and faster to decrease expenses than to increase other income.

Other income is the income a property generates from sources besides rent collection. Increasing other income may require an initial capital investment to make a service or product available at a multifamily property.

Decreasing expenses may be as simple as a few phone calls and artful negotiation. Here are some tips to reduce multifamily operating expenses.