Before you can begin increasing your rental income, you must first learn the basics of what rental income is. According to the IRS, rental income is “any payment you receive for the use or occupation of property.” This means that recurring fees you charge for rent, pet rent, or utilities, and even one-time fees such as a security deposit (only if you don’t plan to return the money to the tenant) or a lease cancellation fee count as income for your property.

Much of this revenue is often used to pay for other expenses like maintenance or repairs, but with a positive cash flow, it’s possible to increase your profits and expand your business.

An important aspect of understanding how to increase your business’ rental revenue is learning about your monthly cash flow. Cash flow is equal to your income minus your expenses, leaving you with a profit (positive) or loss (negative) for the month or year. Calculating your cash flow can provide insight into whether the income you collect is enough to cover the expenses you’ll encounter in your business such as repairs, renovations, and other maintenance.

If you have a negative cash flow, you’ll need to increase your income and decrease your costs. Below, we’ll discuss different methods and tactics to help you get started and achieve a positive cash flow.

A straightforward way to increase profits through rental income is to earn more money. This can be done through many avenues, but we’ve chosen three broad paths to increase rental revenue: adding revenue streams, charging fees, and increasing rent prices.

One way to increase your rental revenue is to add revenue streams. There are many ways to diversify your forms of income, so you don’t have to box yourself in by only collecting rent each month. You could install coin-operated laundry machines or a vending machine in your building, offer cleaning services or satellite TV in your units for a price, or rent out storage spaces. While these revenue streams require an initial investment, they’ll quickly pay themselves off and you’ll be bringing in extra cash.

Another method to consider is charging additional fees for your tenants. It’s important to be an ethical landlord and only charge fair and just fees for your tenants, but there are plenty of opportunities where you can rightfully charge tenants for services. Think fees for pet rent, late payments, tenant applications, or even landscaping.

Lastly, many landlords increase rental income by increasing the price of rent. Of course, to still attract tenants at a higher rent price, you must have good reason to increase it before sending a rent increase notice. There are two steps you should take before you raise rent: researching the market and improving your existing properties.

When researching the market around you, be sure to consider what each unique unit has to offer and what is affecting the price, like location, amenities, or size. Then compare to your units — do you need to repaint, install smart thermostats, use upgraded locks, or refurnish the space? Implement some of these improvements to increase your property’s fair market value and justify a fair rent increase in your units. Lastly, be aware that rent control laws in your area may limit how raising rent works in your state.

Though making more money is always a fast way to increase your earnings, another way of upping your profits as a real estate investor is to decrease the costs needed to run your business. There are several key methods to do this: reducing expenses, lowering utilities costs, and minimizing turnover and vacancies.

The first way to decrease costs is to reduce expenses. The easiest way to do this is by cutting third parties out of your business processes when possible. It’s more work for you as a landlord, but by managing your own properties, using property management software, and lowering costs of maintenance by helping yourself, you eliminate the need to pay other people for their services.

Next, consider lowering utility costs. There are countless ways to do this, but to start, consider using green appliances that save on energy and electricity over the course of the year. You can also change old lightbulbs for energy-efficient ones, change air filters on a set schedule, or even implement landscaping with more shade that can keep your units from overheating and needing more air conditioning.

Lastly, it’s always best to minimize turnovers and vacancies when possible. By creating a space where tenants feel safe and comfortable, you keep tenants in your units for longer. Finding quality tenants, updating your apartments, and collecting rent electronically are great ways to incentivize renters to renew their leases for your units.

If you do have vacancies, the best course of action is to be proactive and heavily advertise your units. By making your listing accessible, more people will find and apply for your property. You can even offer incentives such as selling partial months to renters who are unable to move in on the first of the month.

Of course, there are some expenses you simply can't eliminate or reduce - like property taxes and some tenant turnover. However, by limiting them where you can, you can make better use of the market rent you receive and have fewer expenses to cover yourself.

Increasing the revenue from your rental business takes time, effort, and care but yields results that increase the value of your properties. All you have to do is choose the methods that work best for you and stick with them. By putting in a little bit of commitment and energy, you can grow your business and enjoy an increase in earnings in no time.

For more insight on the specific steps and tools you should utilize when looking to bring in more rental revenue, download Innago’s Increase Revenue eBook above.