Check out these six ways to increase the cash flow and returns from your rental property…
- Decrease Expenses
To make more money you either have to increase your income, or decrease your expenses. Thankfully, there are a variety of ways to drive down costs. This can include renegotiating contracts with service providers like landscapers. It could be challenging your property tax bill, or separating services like internet. Utilities are one of the biggest areas of waste for landlords too. Can you pass those on and have tenants pay directly, install energy saving appliances and windows, or even convert to more energy efficient options like solar panels?
Mortgage interest rates are still low, and debt service is one of the biggest drains on cash flow. This could be time to refinance or structure financing. Drive down those costs with a better loan, or bring in equity partners, which can provide an even more secure position at the same time.
- Increase Longevity of Tenants
Vacancy and tenant turnover costs are two of the costs often overlooked by landlords. Seek long term tenants and work to retain them. That will eliminate losing money from vacancies, and avoid the cash out of pocket needed to cleanup and market for new tenants.
- Raise the Rents
Landlords should be routinely raising the rents. There can be sizable opportunities to raise rent on the takeover of a new building. Tenants should expect annual increases as well. While there may be times to offer move-in specials, keeping the rent up can also help raise your asset’s value.
Income doesn’t just have to come from the rent. Rental property owners can offer additional services that can generate income as well. This may include cable and internet service, laundry facilities or washer and dryer leasing and even parking spaces.
- Reduce Vacancy & Turn Times
When you have tenants who are exiting, the shorter the time your rental property is empty, the higher your overall cash flow and returns. So, keep tuned into tenants’ plans when renewals are coming up, create systems for fast turnover of units. Consistently build and maintain a waiting list of qualified renters, so that you can have cash coming back in within hours of a tenant leaving.
Cash flow is so important to landlords. Your properties need to provide you income and not be a drain. Fortunately, there are many ways to increase income, and drive down expenses, to increase cash flow spreads, and elevate total returns. Use this as a checklist the next time you acquire a property, or need to improve your numbers.