Chicago Income Property
Hello to all my blog readers out there!
I just wanted to talk about some simple things that
you can do to increase your non-rental income.
Some people call this type of income “ancillary income”.
1) Late Rent Fees
In Chicago, rent is typically due on the 1st of the month.
Tenants usually receive a five day grace period before a
late fee is assessed. If you own property in Chicago,
you have to make sure that you don’t set the late fee too high.
The Chicago Landlord and Tenant Ordinance says that you can
charge $10 plus 5% on the amount of rent that exceeds $500.
So, if the rent is $1000 per month, $35 is the most that you
can charge as a late fee.
2) Application Fees
When prospective tenants submit an application to rent your property,
be sure to ask for an application fee. Hopefully, you are ordering a credit
report and background check. But you should ask for an extra $10 to $15
above your costs. It is not uncommon for owners to charge a $50 application fee.
If the tenant complains that they don’t want to pay an application fee,
then move on to the next applicant. If they can’t pay a $50 fee, imagine what
is going to happen when it is time to pay rent.
3) Install coin operated washers and dryers.
All of those quarters really add up!
4) Vending Machines
This might be a good idea if you have 20+ units with a large laundry room.
5) Parking spaces
You can charge an extra $50 to $75 per month for an off street parking space.
In densely populated neighborhoods, you might be able to charge $100 or more!
6) Pet Fees
You can probably charge an extra $25 to $50 per month in rent if the tenant has a pet.
I would also advise getting a $250 pet deposit when the tenant moves in.
Many tenants have a pet or they are thinking about getting a pet.
You can capitalize on this, because many owners still don’t allow pets.
You may want to check with your insurance company though.
Some insurance companies might not be happy to find out you have pets
in your apartments.
7) Lease Cancellation Fee
If a tenant wants to break the lease, let them do it.
But charge them a two month rent cancellation fee. Once they move out, try to
get the unit rent-ready in one week. If you find a new tenant within another
three weeks, you just made yourself one month’s rent!
8) NSF Fees
If a tenant bounces a check, you can probably charge them a $35 returned
check fee. Just make sure that you state this fee in your lease.
9) Storage Locker
You could install storage lockers in the basement and charge an
extra $20 per month.
10) Cable Fees
If you have a larger multi-family property, you might be able to strike a deal
with a local cable company. Your tenants will get their cable through that company.
In return, you get an extra stream of revenue.
So, there you have it.
10 ideas that you can use to increase your investment income!
Even small increases in monthly income can have a huge impact on your bottom line.
What do I mean?
Here is a formula that I do in my head to quickly estimate a property’s ball park value:
I take the net operating income (gross income – expenses) and multiply it times 10.
So, a property that has an annual net income of $25,000 is worth roughly $250,000.
(That number might need to be adjusted depending on location and condition)
Now what happens if we increase the monthly net income by a mere $100?
The property value jumps to:
(100 x 12) + 25,000 = $26,200…. 26,200 x 10 = $262,000!
Pretty slick huh?
We just turned $100 per month into $12,000. This is how real estate investors build
wealth. They buy apartment buildings and add value by increasing income. They hold
them 3 to 5 years, and then they sell them for a nice profit.
Then they lather, rinse, repeat … 
Until the next time,
Mark Killion
Kale Realty
542 W. Roosevelt Rd
Chicago, IL 60607
Visit me online: www.773property.com
EQUAL HOUSING OPPORTUNITY
