How to Increase Your Monthly Rental Amount and Your Property Value

Dustin Edwards • August 7, 2020

Explore Two Options to Improve Your Asset and Increase Your Income

Increase Rental Amount and Property Value

As an owner of a rental property in Long Beach, besides providing great housing for your tenants, a core objective should be to maximize the value of the asset. We covered rental property upgrades in previous updates. Today we wanted to share two key strategies that could allow you to increase your property value AND increase your rental income.



Consider the following strategies to increase your asset value today:

 

  • Adding Square footage to your property
  • Changing the configuration with your addition

 

Increasing Your Property Value with Each Square Foot

As a general rule when you add square footage you are adding value. Adding square footage for a large value increase runs contrary to most renovation shows where they show a transformation of a kitchen and fresh paint and suddenly the property is worth $100,000 more than the purchase price. As a note in those shows the property is usually purchased at a substantial discount from the market price as a result of the condition of the property.



Locally in Long Beach and Lakewood an average property could sell at $458 per sq ft. While that number can vary, even within Long Beach neighborhoods (or by cities, considering in West LA or the Southbay it can be upwards of $1,000 per sq ft) it is a good value to know when determining how you can add value to your property. To add square footage to a property a rough rule of thumb to use is $300 per sq ft for construction costs. This means that should you consider a renovation that adds 300 square ft you could be increasing your property value by $137,400! Even when taking construction costs into consideration this means effectively you have a net increase in value of $47,400.



A Change in Configuration Can Increase Your Rental Amount

Homes in Long Beach and Lakewood come in a variety of configurations. Consider the common property orientations:



 

  • 2 bedrooms, 1 bathroom 
  • 3 bedrooms, 1 bathrooms
  • 3 bedrooms, 2 bathrooms 



In general the 3 bedroom, 2 bathroom property is the most desirable as it allows for the easiest use for a larger array of prospective tenants (i.e. roommates, families, etc.). As an owner of a rental property in Long Beach, you might be thinking what is the difference in rent between these configurations? While configuration of bedrooms and bathrooms are not the only contributing factors to the monthly rental income, let’s explore a few rental listings in Long Beach that were on Zillow in the 90815 zip code.

Available Rentals in Long Beach

When evaluating a 3 bedroom 1 bathroom property vs. a 2 bedroom 1 bathroom property that are close in square footage the difference is $400 a month or nearly 15%.  Each year that means that the additional bedroom can add nearly $5,000 a month in annual rental income.  With the orientation of many properties in Long Beach the addition of a bedroom can be a manageable addition to your rental.



What if you had an additional bathroom for your Long Beach Rental?


Looking at the same zip code in Long Beach (90815) there is a 3 bedroom, 2 bathroom home available for rent for $3,250.  Over a 2 bedroom, 1 bathroom home this would provide for $6,600 more in annual gross rental income and in this case $1,800 in additional annual gross income over a 3 bedroom, 1 bathroom rental home in Long Beach.  




Individual Long Beach Rental Listing

We understand that undertaking the addition of a bedroom, bathroom or even a bedroom and a bathroom isn’t easy.  We also understand that when you take this approach you will be without rental income during construction, but that is often the cost of investment to have a stronger long term gain.  When you want to understand if expanding your rental property is best we invite  you to fill out our Free Rental Analysis or call us today (562) 888-0247 and we will be happy to share more information (we can even perform a preliminary property analysis to help you see how your value would increase).



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These may include late or missed rent payments , lease violations, or property damage. Additional risks include neighbor complaints and costly eviction proceedings. Replacing a problematic tenant can be expensive and time-consuming. Between lost rent, repairs, and vacancy periods , a single bad tenant placement can cost thousands of dollars. Professional rental property management prioritizes careful screening because prevention is far easier than resolving problems later. The Tenant Application Process The screening process begins with a rental application. A thorough application collects information needed to evaluate whether an applicant meets the property's rental criteria . Applications typically request: Personal identification information Employment and income details Rental history References from previous landlords Authorization for credit and background checks Property managers review this information to ensure the applicant meets established qualification standards. Consistency is critical; property management companies in Long Beach must evaluate applicants using the same criteria to remain compliant with fair housing laws. Credit History Evaluation Credit history is one of the most common factors considered during tenant screening because it reflects financial reliability. A credit report provides insight into an applicant's behavior over time. This includes payment history, outstanding debts, and collections accounts. It also shows credit utilization, which helps assess overall risk. While a credit score alone does not determine whether someone will be a good tenant, it helps identify patterns of financial responsibility. Professional Long Beach property management services evaluate credit reports carefully while also considering income stability and rental history. Some applicants with lower credit scores may still qualify if they demonstrate strong income and a reliable rental record. Income Verification and Affordability One of the most important indicators of whether a tenant can consistently pay rent is income stability. Property managers verify income to ensure that applicants can reasonably afford the monthly rent. A common guideline is that tenants should earn at least two-and-a-half to three times the monthly rent in gross income. Income verification may include reviewing: Recent pay stubs Employment verification Bank statements Tax returns for self-employed applicants This step helps ensure the tenant's financial situation supports consistent rent payments. Professional property management uses income verification to reduce the risk of late rent or financial hardship. Rental History and Previous Landlord References Past rental behavior is often one of the best indicators of future tenant behavior. Property managers typically contact previous landlords to verify information such as: Payment history Lease compliance Property condition upon move-out Whether the landlord would rent to the tenant again A strong rental history suggests the applicant understands tenant responsibilities and has demonstrated reliability in the past. Experienced property managers in Long Beach California pay close attention to rental history because it can reveal patterns that credit reports alone may not show. Background Screening and Compliance Background screening may also be part of the tenant evaluation process. This can include criminal history checks conducted in compliance with fair housing regulations. It is important that background screening is performed consistently and in accordance with local and state laws. California and many cities have regulations governing how criminal records can be considered in rental decisions. Professional property management companies in Long Beach stay current on these regulations to ensure that screening practices remain compliant. This protects property owners from potential legal risks related to discriminatory screening practices. Establishing Clear Rental Criteria Before screening applicants, property managers establish clear rental criteria. These criteria outline the minimum standards applicants must meet to qualify for the property. Typical criteria may address: Minimum income requirements Credit history expectations Rental history standards Occupancy limits By establishing criteria in advance, property managers ensure that all applicants are evaluated fairly and consistently. Clear criteria also help set expectations for applicants and streamline the approval process. The Importance of Fair Housing Compliance Tenant screening must always comply with federal, state, and local fair housing laws . 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