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5 Tips for Increasing Rental Property Cash Flow - Part1
from: ...Tip! You have now decided on the location and sort of property you want to buy. Now is the time to start contacting the various agents (both on the internet and in the location directly where you are looking to purchase).
We've all heard about cash flow. The term that is most-used when speaking of rental property profitability. Cash flow is basically the cash that rental properties generate from various sources. The level of cash flow essentially evaluates the wealth of the property owner because even if a property owner owns 100 properties, the properties are worthless unless they are generating excess cash flow (cash after all expenses). Because of the importance of cash flow, below are five tips for increasing cash flow from rental properties.
Hmo Property Riches. How To Become Asset And Cashflow Rich From Property.
1.) Raise the Rent -The easiest way to immediately increase monthly cash flow is too increase the monthly rent of one's properties. When raising rent, tell the tenant(s) that the rents are simply following inflation. Just make sure that the rent increase DOES follow the inflation number, or one may have an upset tenant. Another excellent time to increase the rent is when an old tenant moves out and a new one is coming in. The new tenant most likely didn't know the rent of the old one, and as long as the rent is fair, there should be no complaints.
2.) Cut expenses - Want more money but rents are basically maxed out to what the market is willing to pay? Well, quit paying the neighbor boy to mow the lawns for $10.00 each or save locks that are taken from apartments. Then one can use the old locks on other properties they own (Rotating locks is one term used to define this practice). Small expenses add up to make big ones. Don't be a slum-lord, but at the same time make sure that priorities are set when fixing problems or updating properties.
3.) Utilities? - If one lives in a healthy real estate market, they should have no problem making the tenant pay utilities. In fact, this can give the property owner an advantage when marketing their properties because the marketed rent will be less than comparable properties up for rent. In realty the potential tenant isn't saving any money (they'll pay a lower rent, but also utilities), but that initial low rent will stick in their mind.
Tip! Notary Fee. The notary puts on public record that the title deed has been signed in their presence and understood by the parties concerned. The notary is further in charge of the submitting of the title deed with the other related documents of the transfer to the cadastral and the property register (land register).
4.) Decrease Property Taxes - This option is possibly the most "out there" in terms of easiness, but there are properties out there that could easily qualify. What if one owns a property that was newer when they purchased it. Some time has passed and now the property isn't near as nice, while many tenants in and out of it have left it less than newer. Well, the property owner can go to their local assessor and ask for the property to be reassessed. If the property is reassessed and the new value of the property isn't near as high as the old property, the property owner's property taxes will be adjusted to a lower amount and the property owner just lowered their tax bill and created more cash flow.
Tip! Do a seasonal try-out when buying property abroad. What looks like an attractive place to live in summer can be a very different proposition out of season.
This practice can also work if the property owner feels that their initial tax assessment was too high, and that a new assessment would bear a lower property value
5.) Reduce Tenant Turnover - There is a lot of financial stress when a tenant moves out. Not because the property owner is in financial trouble, but now they must get a new tenant in the property before their next mortgage is due (if they don't want to hurt their cash flow). Reducing tenant turnover eliminates costs of running ads to find new tenants, paying utilities while the property is vacant, as well as many other costs that a vacant property can create.
Cash flow is the result of many other rental property factors, but in the end cash flow must exist or the owner will eventually lose the property. The property owner must remember to keep a close eye on their cash flow and/or those that manage it for them. Getting sloppy and too busy to run the business aspects of an investment property can destroy an empire that surely took a plethora of time to build.
The author is the founder and owner of both ManageYourRentals.com and LandLordDocuments.com.
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