How to Make the Most Money Possible from Your Rental Property

This isThis is how to make the most money from your rental property right now in 2025, because it’s great to scale your portfolio and add more units, but ultimately you’re investing to make more money, not just to have a bigger and bigger door count. The amount of cashflow your portfolio produces is what actually matters, and your current properties might be leaving income on the table. So today we’re sharing some ideas you may not have thought about. This is how you add to your cashflow every month with the properties you already own. Keep listening if you want to learn how to put more money in your pocket without another tenant or another tax bill to worry about. Hey everyone. I’m Dave Meyer. I’m a rental property investor and the head of real estate investing here at Pickpockets. And with me today on the podcast is my friend Henry Washington. Henry, what’s up man?Hey, what’s up Dave? Glad to be here.Well, I’m excited to have you here today because I think this is a topic near and dear to both of our hearts. Both of us, I think in our careers over the last couple of years have really tried to focus on making the most of the least amount of properties and not trying to just get more and more doors and just trying to reach your financial goals in the most efficient way possible. And for our audience here today, we’re going to share some ideas that Henry and I have some new strategies, amenities to add investments you can make to increase your cashflow without necessarily the big upfront investment of buying entire new properties or the headache of managing more units. So let’s start with the big ones, Henry. What do you think is the biggest opportunity for people to add more income or maybe just even produce income more efficiently on their existing portfolio?There are things that may not necessarily increase the value of your property, but can add value to your bottom line. In other words, there are things that create an emotional response and when people have an emotional response, they can typically want to pay more because they’ve emotionally been tied to your property. And then there are actual things that if you do them can produce more income.Do you mean pay more like in rent?Yes.Right, the ways to drive up the rent. Yeah.Right. So when I say that emotional response, what I call it is perceived value. When someone walks into your place, you want them to go, Ooh, that’s cool. And when they have that emotional response, they may be willing to pay more to live in your unit than to live in some of the other units they’re seeing that don’t elicit an emotional response from them. So that’s why we always spend a few hundred extra dollars and we put fancy accent walls into our properties because a lot of rental properties don’t have those kinds of amenities. People typically only get those kinds of things in homes that they own, but landlords aren’t necessarily putting design features into a rental property.
It’s typically just let’s make it livable and clean and throw somebody in there. And so I like to spend money on fancy geometric design, accent walls and backsplashes in kitchens. So you can put some pretty fancy backsplashes in the kitchen and not spend a ton of money. Typically, it’s not a ton of square footage, but people see them and they go, oh wow, I can have these kinds of amenities without having to own a home. And you may be priced 50 bucks a month higher than your competition or than the unit next door. You may be priced a hundred bucks a month higher than the unit next door, and you may get that amount of rent just simply because somebody sees something in your unit that elicits that emotional response from them and makes them want to live there. SoThis one makes a lot of sense to me because I do feel like a lot of rental units you go into are just exactly the same, and as a renter I’ve rented for many of the last few years, you want something that makes it feel like your own, something that makes it feel unique. Before we move on, Henry, let me ask you, what’s your surprise and delight when you walk into a house, you’re like, Ooh, I want that. You’re saying a backsplash, is that yours?No, I like cool outdoor spaces even though I don’t spend a ton of time outdoors, but for me, when I see a cool curated outdoor space, it makes me feel like, okay, this home is bigger than just what’s inside the walls. I can actually live in more space. It makes the home feel bigger. I have a patio on my backyard and I went ahead and I screened it in and I spend a lot of time in my air quotes, outdoor living room, which is just a patio with a screened in wall. It just makes me feel like I have a bigger home because I have this outdoor space and then I’m fancy. I like fancy design stuff. It’s cool when I see marble countertops or quartz countertops, that stuff’s kind of cool. If I was looking at a place to rent and I could get those kind of amenities, I would definitely be willing to spend more money to rent that space.I’m totally with you. I look at the little things. Nothing gets me more hyped about living in a place than the layout of the kitchen If they have the nice insertsInThe drawers and in the cabinet, so I like to cook so I can organize that stuff. I would pay more for that kind of stuff, but you never seeThatIn a rental property or just little accents in the bathroom. Those are the kinds of things people really appreciate and they’re not big investments. These are things that you can do with just a couple hundred or couple thousand dollars. And that’s the thing I really like about this approach because a lot of times people come to me and they want to scale or they want to figure out how to make more money, but they don’t have money for a down payment on the next property. That’s a very common situation that pretty much everyone runs into, but these are the kind of upgrades that you can make in real time. If you are hopefully earning more than you spend every month in your personal life and you can save two, 300 bucks a month, you can make one of these improvements a month or you could save up for three months and make one of these improvements. It’s just a way that you can continuously improve the performance of your portfolio while you’re figuring out where to buy that next deal.What I would do if I was a listener of this show, what I would do is pull the comps for your rental property in question. In other words, go look at what people who want to rent your unit are also looking at. And I think you’re going to find what Dave said earlier is that they all typically look alike. They all have similar finishes.They have those gray walls with the white trim and the same carpet.They look lifeless.Yes,They look like no one cares about you, the tenant. They just want a roof over your head. And so then take that and then take our list of things that we’re talking about and start pricing them out and seeing what you can do. And I bet you, I bet you can command more rent for your market. Maybe it’s 50 bucks a month more, maybe it’s a hundred bucks a month more, but I bet that you could probably spend anywhere between 300 bucks to 5,000 bucks on some of these upgrades and get 50 to a hundred to maybe even $200 more a month rent depending on the market that you’re in. And then if you are commanding that higher rent, your upgrades end up paying for themselves after a few months, and that’s just increased cashflow in your pocket. There’s plenty of little things that you can do to increase the desirability and give people that emotional reaction. People pay for emotional reactions.Totally. And I think you’re like attracting a more discerning tenant, which I like.Pride of ownership, man.Yeah, exactly. You want someone who’s going to be excited and proud to live in that unit. And I just think a lot of times for me as a smaller landlord, someone who owns mostly two to four unit properties, I am always thinking about how do I compete against the bigger landlords, the people who are putting out 200 unit properties or Blackstone or whomever, and this is how you compete, right? They’re not going to do this stuff. No one who owns a 200 unit property is going to go in and think about how to add unique characteristics to each of their 200 things. It’s not in their business model. They’re cookie cutter. You as a small landlord, go care about your property and go make these thoughtful upgrades and it’s going to stand out. And honestly, this actually, I think in a lot of circumstances can improve your cashflow more than buying another property. And on an efficiency basis, cash on cash return wise, I think it almost always works better than buying another property.Absolutely. That return on investment is huge. And so when I think about changes you can make that actually do impact the value of the home. So not emotional changes, but actual changes you can make. Some of the things that we’ve done in the past are including laundry in your units. In other words, there’s a lot of units that don’t even have laundry hookups. So you providing laundry hookups is an added amenity, which means you can charge more because somebody doesn’t have to go to the laundromat or you can actually just provide the washers and dryers themselves, which lessens the expense on the tenant, which means they may pay you more to live there. They know they get a washer and dryer. The caveat with adding washers and dryers is they do add maintenance costs to your ownership. And so I would talk to your property manager or a property management company just about the trade-offs because they’re going to have data to be able to tell you if you provide laundry, expect X, Y, Z in maintenance a year, and then you can do the math to figure if I get more rent, but I’m paying more maintenance, is it a wash or do I actually make more money?
And then if adding and providing the laundry doesn’t work for you, you can actually rent washers and dryers to your tenants as well, which can produce income for you because you can say, no, we don’t provide the washers and dryers, but you can rent them from us. And that keeps income coming in. Also, you can charge more rent because you have it, and so it’s kind of getting paid twice on some of thoseThings. Have you ever added storage? That’s something I’ve thought about because I’ve bought properties that have garages or a garage that’s honestly just so crappy that you can’t park a car there, but it’s totally fine for storage. But I’ve recently been thinking about you could buy these sheds sometimes you could just buy them secondhand, like tough sheds and kind of stuff and putting ’em on your property and renting ’em out. Have you ever done that?I’ve never bought storage to rent, but we’ve rented space that came with the property. So we had a property that had some garages and no one was parking in them, so we would just rent them to the tenants who wanted them for 25 to 50 bucks a month additional.Yeah, that’s what I’ve done. But I’ve been just looking at Facebook marketplace and you could buy these things for sometimes 1500 bucks, nice ones, 2000 bucks, you could rent them for a hundred bucks a month. I’m like, I should just do this all day and I don’t want to negatively impact my tenants who lives their experience. So you have to figure out a way to fence it off or just making an okay experience, but I’m like, you could just make more money that way. It’s a good way to addValue. Absolutely, man. Another thing you can do for laundry is, especially if you have a property with four units or more, is if you don’t have laundry hookups and you don’t want to pay to put laundry hookups in your property, you could create a laundry space in a basement or a garage and then you can either offer coin operated or you can partner. There’s companies who will supply the washers and dryers. They will maintenance the washers and dryers. All you have to do is take a split of the profits. So they usually will do like a 60 40 or a 50 50 depending on the company. They’ll provide all the machines, they’ll do all the services. You don’t really have to do anything except get paid every month.That’s like the two to four unit special man you’ve seen when we were going around the Midwest. A lot of these old buildings, the basements just aren’t livable,ButThey’re too short or they smell or whatever, and it’s like it’s a perfect place to do this kind of thing. And it works in a lot of buildings more than you would think. Absolutely, at least in the places I invest that have these older style homes. So I think there’s a great category for just generally finding ways to increase rent through adding unique amenities, but we have more ways that you can upgrade your existing portfolio. We’ll share them with you right after this quick break. Welcome back to the BiggerPockets podcast. I’m here with Henry Washington talking about how to make the most of the units that you already have before the break. We talked about adding unique amenities that will attract great tenants who are willing to pay more for those amenities. Next, I want to go to the one I really love and I’ve been thinking about a lot, which is just adding more capacity. Buying a property that maybe has a basement that’s unfinished or there’s a split level that you can split into two different units, or there’s a single family home that has three bedrooms that you can make into five bedrooms. I think this idea of just taking what you got and making it more efficient for you
Is one of the best ways you can make money in real estate regardless of if you’re buying a new one or doing this to your existing home. Just I love this playbook.This method almost always produces a better cash on cash return than buying a new unit. Now, this method typically is going to cost you some money. So if you’re in a boat where you’re like, Hey, I’ve got 20, $30,000. Do I go put it as a down payment on my next property or do I try to increase my ROI and what I currently have? This method is something I’d encourage you to look at and you don’t even need that much money. My favorite way to do this is on mostly all of my units that have a single car garage. I convert the single car garage into a bedroom, townhome styles that have a single car garage, two bedrooms or three bedrooms upstairs with a bathroom, and then downstairs is just a living room and a kitchen. All of those that I own, I’ve converted the single car garages in the bedrooms, just every time I have a rental property with a single car garage, no one parks a car in it. It’s just always full of stuff, alwaysMaybe tell us the numbers. What does it cost you to convert one of those?I’ve spent as little as five grand and as much as 12 grand to convert a bedroom.That’s not bad at all. Nope. And what do you think it adds to yourRent? Where I’ve done it most recently, it adds two to $300 a month in rentMaking. Let’s just call your average price nine grand on something like this. That’s fair. And you’re making three and a half grand. So that’s a three year payoff on that investment. That’s a 30% cash on cash return. That’s incredible. That’s a really good investment for anyone to make.And people always say, especially when I posts about this on Instagram, they’re like, well, I like a garage so I wouldn’t rent there. Perfect, then don’t. But most people don’t use the garage, even though they say they want one, they don’t use it to park a car, and it literally just stores stuff. So for somebody like you, Dave, if you’ve got one, you could convert the single car garage to a bedroom, increase your rent, and then go get that storage, shed put it in the back and then they could put the stuff in the storage stand and pay you extra for the storageCombo. I think the other thing in addition to doing this is I’ve been looking at this here in Seattle because there’s a lot of split levels where they have a walk off and separate entrances
And just turning it into two units, you could basically have two a thousand to 1400 square foot units instead of 1 2800 square foot unit, which is just kind of the trend in a city like Seattle. I know in some markets people really want the big homes, but in a city, most people are accustomed to living in a thousand, 1200, 1400 square feet and you could just add capacity and there’s already a driveway that fits all of these people. You need to do the hookup, like you said, you need to put some laundry in there, you need to add a kitchen of course, but that can potentially make something in a city like Seattle or expensive market actually cashflow. Whereas if you just bought as a single family, there’s no way.I’ve talked to other investors who do that specifically as a strategy, just converting the basement to a living unit, and now you’re essentially sitting on a duplex. And you can also do strategies where you take that three bed, two bath, single family home, that’s a split where the primary bedroom’s one side of the house and then the two or three other bedrooms in the bathroom or on the other. There are people who have split that into two units because your primary bedroom, essentially, if you put a kitchenette in, it can be like a studio unit. And then the other three bedrooms, the kitchen and the bathroom are its own home. If you’re in a place like Seattle or a more expensive, more metropolitan area, properties where you can do that, make more sense than in a place like where I live. But that’s an option given your demographic.And just like to put some numbers behind it, these houses are still expensive, but if you bought a house that was, let’s just say 500, $600,000, you’d probably get 3,500 bucks in rent, something like that. But if you’ve spent another 50 grand between the two units, you’re probably getting 5,500 bucks in rent. So if you just think about the efficiency of your capital, it just makes the money go a whole lot further. So I really like that and I am starting to underwrite it. I need to learn more about this, but I’m thinking about doing an A DU development, parceling off an A DU. I’m excited about it because in Seattle and a lot more and more cities around the country are allowing you to do this, not just to build an A DU, but I think the critical difference is parceling it off so you can sell it or you can sell the main house and hold on to the A DU, or you could sell both of them. But dude, in Seattle, there are like 1200 square foot ADUs in the neighborhood I live in. They sell for seven 50.That’s crazy, man.It’s insane. You can build them for three 50. Obviously there’s holding costs and all sorts of other soft costs, but dude, it’s unbelievable what they’ll sell for. So it’s very attractive. I’m not saying this works everywhere, but more and more cities are allowing this and you have to have the right lot for it. You have to have alley access or you need to have a corner lot to make it a good experience. But if you own a property that has the potential to do this and you have the right kind of property, the return can be insane. It is really worth lookingInto. I literally have a spreadsheet that I built several months back when we initially started talking about ADUs on the show of all of my properties that have a DU potential in the size of the lot or the zoning, and then I’m doing my new construction single family homes this year to kind of give me that build experience because I want to eventually put ADUs on these properties. I just want to make sure that I understand more about how to develop something from the ground up before I go do that on my existing properties. But I am ready. I’m locked and loaded.All right. We’ve talked about how to add value through adding amenities, how to add capacity, whether it’s in adding additional bedrooms or adding entire new units onto a property that you already own, but we have some more management strategies that you can use to increase your cashflow. We’ll share those with you right after this break. Welcome back to the BiggerPockets podcast here with Henry talking about how to add value to your existing portfolio. We’ve gone over adding units, adding capacity, adding amenities. All of those can just be extremely good uses of your money, a lot of times more efficient investments than buying new units. But Henry, I wanted to talk to you about some management strategies to increase your cashflow. To me, these are sort of just different ways that you can operate your property, and I know you’ve looked into some of these. I know you’ve done some of these. So I’m curious, what are your opinions right now in the given market on short-term rentals, on midterm rentals, rent by the room, maybe even assisted living? Do you think these are good ways people can optimize their portfolio?Yeah, absolutely. But they’re all going to be very market specific, and so you really have to understand your market and then what’s the demand for that strategy? It used to be that four or five years ago, you could just be like, you know what? I’ll make more money on Airbnb, throw some IKEA furniture in it, and then yeah, you would make more money.
But it’s not like that anymore with short-term rentals. And it’s not like that even with midterm rentals as much anymore because there is more supply for it. So you really have to understand, does your market have the demand that’s going to allow for that to financially sense for you? And what I mean by that is I think in most markets you could probably convert your single family to a long-term rental to a Airbnb and it may make a little bit more money, but a little bit more money might not make the cash on cash return worth it. So my general rule of thumb, at a minimum, it’s got to make me two and a half times what I would make as a long-term rental for it to make sense. Because when you convert from a long-term rental to a short-term rental, not only do you have the expense of furnishing it, but you take on additional monthly expenses because now you’ve got to buy supplies, you’ve got to pay for internet access, you’ve got to pay for streaming services, you got to pay for lawn care because my long-term rentals, my tenants pay for the lawn care.
And so you have additional expenses and there’s additional work, and you want to be compensated for the additional work. So if it’s not going to make me at a minimum two and a half times per month, then I’m probably not going to do it. And so you
Definitely have to understand do you have the demand? What really works in short-term rentals right now is providing really cool experiences and amenities for the bigger Airbnbs, but there is a market for the smaller just corporate user Airbnb that it doesn’t have to have all kinds of crazy amenities. It doesn’t have to be some million dollar mansion in Scottsdale, Arizona that has a pickleball court. It can be a normal property, but you have to know if your market has the demand for that. So as an example, I have 2, 3, 4 properties that we do Airbnb out of, but we only do it in one particular city within northwest Arkansas because that one particular city has the most demand for those types of units. I could try to do it in some of these other cities in northwest Arkansas, but the demand isn’t as high, and I don’t know that I’ll get the return.
But in this one particular city, I know that they get lots of tourism. I know that there are not enough hotels to support the amount of tourists and corporate people that come into town. And so that helps me have some level of comfortability that there’s not going to be regulation in that city because they need the tourism dollars and don’t have enough places for people to stay. And so because I have that level of understanding of this market, I know I can get the return that makes sense. And so that’s why I only do it in those markets. And then I have a couple of midterm rentals that are in a city just south of that where the research has shown me that the midterm does better there than either the short term or long-term. So it’s very strategic. You can’t just go and say, I’ll make more money as a short-term or midterm, throw furniture in it and hope for the best. You could end up actually getting a negative return on your investment if you’re not doing the properResearch. And I agree, actually, I’ve never been particularly crazy about these options because I feel like they’re fads. It’s like they get popular as investors, they get popular for demand and then they wax and wane, and that’s just different than the long-term rental markets different than house flipping. Those have just long-term fundamentals that don’t go anywhere, and that doesn’t mean you can’t make more money that way. It just means you have to be willing to adapt and react basically continuously for as long as you have that you actually need to just be willing to change and learn and operate based on what’s going on in the market. And that’s okay. There are a lot of people who crush it at this. It’s just not me personally. It’s not something I’m going to do. And I actually, I was having a conversation with someone the other day.
They were asking, should I be a short-term rental investor? Should I be a midterm rental investor? And I was like, I have never thought of myself as any of those things. I think of myself as a residential rental property investor. I buy houses that are in good locations that are going to have great demand. And if I decide that I’m going to operate it as a short-term rental or a midterm rental for some period of time, that’s okay. That’s a strategy that I’m willing to work on. But I personally am not someone who’s going to go out and buy a property just to make it a short-term rental or just to make it a midterm rental. You say this all the time about having multiple exit strategies. I don’t even think it’s about exit. I think it’s multiple operating strategies. And I think these are ways to manage your property. It’s not a way to define yourself as an investor of all of these things. I actually like rent by the room the most based on the current market conditions. I’m not saying this is good, but rent is super expensive. I think more people are going to be interested in these co-living models. And if you are willing to take on the operational burden and it is an operational burden, sure is, you can definitely make more money. I think that one actually makes sense right now.I like the co-living model. Again, all of these guys, you’ve got to do your research and see if it makes sense before you start taking living rooms and turning them into bedrooms and trying to rent by the room because you need to understand what is the average rent by the room price in your market. Because in some markets, I was doing the math for one of my students the other day, and it was like they would get 150 bucks a room per week, and they had four rooms, and by the time you added that up, it wasn’t much different than what it could get as just a long-term tenant. And I was like, yes, this doesn’t make sense. And so you really have to know, is there a demand for it in your market? This typically works better in larger cities where people need to get to work and there’s great public transportation because typically the people who are doing this probably don’t have a car or have limited access to a vehicle where I live. I couldn’t do this strategy.No, it wouldn’t work for you, soPlease do your research. Is the point that I’m making. You can’t just do some of these things and hope they make money because somebody else in some other city’s doing it and they’re making a killingCertain markets this could work for. And yeah, like you said, it’s usually dense areas or college university towns like this is a great method there. But again, I wouldn’t buy a house and then cut it up into more bedrooms. See, this is what I sort of mean by I’m just a rental property investor and I’ll change the operating. I’m not going to buy a house and change the layout to have nine bedrooms and three bathrooms. That might work for me for a year or two. And then the market shifts and people don’t want this anymore. And then you’re stuck with the weirdest house on the block and you’re not going to be able to rent it or you’re not going to be able to sell it. If I buy a house that’s a great long-term rental and then it happens to be something that I could rent by the room relatively easily, then I would consider it. But personally, I’m not going to change the layout of the house for something like that.You just have to do your research and going and buying a property that only works as a short-term rental or only works as a midterm rental or only works as a rent by the room model may help you in the short run, but in the long run, you could get hurt tremendously if thingsChange. Oh, for sure.A lot of the regulation isn’t in your control, so you could literally go from making money to losing a lot of money overnight because someone behind a desk somewhere decided they didn’t want you to do thatAnymore. I think we should get out of here unless you have any last thoughts on optimizing your portfolio right now.No. The last thing I’d say is if you own that four unit or more, you really want to think outside of just what you can do to your unit. And you want to think about what can I do for the complex as a whole that provides convenience for your tenants that they would be willing to pay a little extra for. So in other words, you might not get more rent per unit because you’ve added the amenity, but that amenity itself could make you money, which increases your net operating income, which increases the value of your property. So think about things like, remember when we were in Chicago and we were meeting with Andre and he created a room where his tenants could go and relax and where they could do workout. He had a couple little workout machines in there, right?A massage chair.A massage chair, right? So if you charge 25, 10 bucks, 25 bucks a month per tenant for access to that, it’s cheaper than a gym membership. It’s something that they can use, but it increases your net operating income. If you could add a vending machine with things that are convenience. It doesn’t always have to be snacks. It can be laundry detergent and dryer sheets, things that they may not want to go get in their car or lose their parking spot to go to the store to get. And then the money that vending machine makes, increases your net operating income, which increases the value. So think about what amenities can I add where people would pay for those amenities for the convenience of them that wouldn’t cost me a ton of money, and then that increases the value of your property as a whole.Well, that’s what we got for you all today. Remember, optimizing your portfolio can be as good or better than acquiring new properties, and it’s really just all about how you can pursue your financial goals as efficiently as possible. Thank you all so much for listening to this episode of the BiggerPockets Podcast. I’m Dave Meyer, he’s Henry Washington. We’ll see you next time.