While rent is the main source of revenue for landlords, it doesn’t have to be the only source.
There are plenty of additional fees you can charge that are common, easy, and fair. These fees aren’t just a way to make a quick buck; they can be advantageous policies for your business and even your landlord-tenant relationships.
Here are some of the extra fees you can charge beyond rent.
A majority of households in the US own pets. While they pose a greater liability to your property, you’ll seriously limit your pool of renters if you don’t allow pets.
Charging pet fees is an easy way to offset this liability while still attracting tenants who have pets. When you implement pet fees, the potential profit outweighs the risks that pets pose.
There are a few ways to handle a rental pet policy. First, there’s a one-time fee that a tenant pays before they bring in a pet. If you want to maximize profits, you can charge pet rent, which is a monthly charge that’s added to the price of your normal rent.
Because your business depends on on-time rent payments, it’s important to enforce late rental fees. Late payments are a violation of your lease agreement, and as such, a tenant must be penalized for breaking the contract. If you don’t charge late fees, there’s no incentive for tenants to pay on time. To ensure that your tenants don’t take advantage of you, you must consistently enforce late fees.
To simplify the enforcement of late fees, you can use property management software, which automates late fees and does most of the heavy lifting for you.
Screening your tenants is essential in finding high-quality renters. The expenses for credit reports and background checks can add up, so charging an application fee can be a good way to offset these costs.
While application fees can be helpful for your business, you should keep in mind that some renters may be put off by application fees, especially if no one in your area is charging them.
Depending on your area, parking can be a hot commodity. If your rental property includes parking access, you may want to consider charging a parking fee. It’s a common way for landlords to bring in additional revenue. By making the fee lower than nearby parking garages and surface lots, it’s a fair and easy way to offer your tenants convenient parking.
There are several ways to handle utilities. One option is to leave it up to your tenants to cover all their utilities. Another option is to keep all or some of the utilities in your name and simply charge your tenants an additional utilities fee. If you choose to take care of the utilities yourself, make sure that the fee is sensible if you’re charging a flat rate. When covering rent policy in your lease agreement, you must clarify exactly how the costs for utilities are to be handled.
After you’ve gone through tenant screening and have found a prospective tenant to sign, it can be frustrating if they back out at the last second. You’ve already sunk time and money into this tenant and have most likely turned away other prospective tenants. A way to prevent this from happening is by charging a holding fee.
If an applicant passes the background checks but backs out before signing the lease, you get to keep the holding fee as a means of security for your time and money. If the tenant does sign the lease, you can apply the holding fee to future rent payments or a security deposit.
Lease Termination Fees
While a lease agreement is a legally binding contract, you never know if a tenant still might terminate the lease early. One way to minimize your loss for this inconvenience and unwanted vacancy is to charge lease termination fees. Generally, tenants would prefer paying a lease termination fee than trying to find someone else to take over the remainder of the lease.
There are plenty of additional fees you can implement to increase revenue and prevent loss. It’s crucial to be specific and clear about these fees in your rental agreement contract. Furthermore, most states have laws regulating how you can charge fees in the rental business, so it’s a good idea to do some research on that front.
While you don’t necessarily have to charge tenants and applicants for each one of these fees, understanding what your options are can help you make the best decision on how you choose to run your rental business.