Many Charleston landlords believe that monthly rent is the only way to earn passive income through a rental. But what if we told you that there are several more ways to make money through your Charleston rental property? As a smart investor, we’re sure you’ll want to know about all of the benefits of owning an investment property.
Here are some of the best strategies that can help when you own a Charleston rental home.
1. Tax Benefits
They say a penny saved is a penny earned. Extending that analogy to your real estate property, you can earn a substantial amount by identifying your tax deductibles.
Some of the standard tax deductibles applicable for real estate investors in Charleston are:
You can deduct the entire amount that you pay for mortgage interest from your taxes. The two tax-deductible interest costs are the interest that you pay on your credit card balance and the interest that you pay to a member of a Limited Liability Company.
Depreciation is commonly known as the biggest tax-deduction in the real estate industry. Studies show that rental properties in the United States depreciate at an average rate of nearly 3.6% every year for over 27 years. As soon as you start using your Charleston home for rental purposes, you can deduct the depreciable amount.
All business-related operating expenses are eligible for a tax deduction. These can include property taxes, costs of advertising, repairs, maintenance, pest control, utility bills, supplies, and professional service fees. We recommend that you use a separate business credit card specifically for purchasing any required appliances or doing the essential repairs on the property. This will make it easier at tax time to present the expenses in an organized manner.
Landlord’s insurance is considered a routine business expense by the IRS. Hence, the entire insurance premium is tax-deductible.
2. Build the Market Value of Your Charleston Property
With time, you can increase the market value of your rental home by taking the following steps:
Making Structural Changes
Renovating your home by adding a wooden deck, remodeling the kitchen, or making any necessary structural changes to increase its usability can increase the value of the house in the rental market.
According to your budget and the structure of your home, you can add either of the amenities mentioned below to increase its value and add to your return on investment (ROI).
- Build a shed for a home gym or a home office
- Install a swimming pool
- Offer an extra parking space
- Build a rooftop garden
Single-family properties tend to appreciate faster than big residential units or commercial properties as the demand for these homes is driven by the two biggest groups of renters and buyers – Generation Y, and Boomers. Single-family homes are also suitable for couples or families. Reports show that a small two-bedroom home can appreciate at nearly 6.6%, while a 5-bedroom house may appreciate at about 4.3% a year.
3. Monetize the Storage Areas in Your Charleston Single-Family Home
Consider adding or installing storage units within your single-family home, either in the garage or in a storeroom. You can turn these into a source of income by allowing the tenants to store their belongings in these units and charging them a monthly fee for using the storage. It can be a low-cost investment that can get you long-term returns.
However, make sure you check with the local and state laws and, if required, get the essential permits through your local municipal government office before making any structural changes to the property to build extra spaces.
4. Charge Pet Fees
With establishments like dog-friendly restaurants, breweries, and public beaches, Charleston ranks as the top dog-friendly city in the US. Adding facilities for pets can draw more tenants, keep the property occupied, and keep the cash flow consistent. If you add facilities like a pet tub, play area, or a pet cradle, you can charge your tenants an extra amount, as any pet parent would happily pay for these facilities.
5. Charge Referral Fees
You can charge your utility provider or cleaning services provider a small fee whenever you recommend their services to your tenants, and they use your referrals.
These were some of our best tips for making additional money from your rental home. An experienced property management company, like the Meridian Residential Group, can help you explore the most lucrative ways to earn extra income from your single-family rental. We provide comprehensive single-family property management services in the Charleston, SC, area, including in North Charleston, Summerville, Goose Creek, and Moncks Corner, among other cities.
For more information, contact us at the Meridian Residential Group.