If you’re looking for ways to increase cash flow for your rental properties, this blog is going to be a great asset for you. Increasing rental property cash flow can be a bit daunting, but it doesn’t need to be a head-scratcher.
There are many ways to increase cash flow for your rental properties, so let’s dive right in!
1. Increase Rent
More rent means more money. Of course, too much rent means you’ll lose tenants and actually decrease your cash flow. So, there needs to be a balance.
Research the rent in your area and see if you’re charging less than neighboring properties that are comparable to yours. If an increase is appropriate, there are a couple of things you’ll want to keep in mind.
Imagine behind a tenant and you’re just enjoying your birthday — and suddenly your landlord busts in and says that rent is going to increase. Your birthday is ruined! Make sure not to increase rent during holidays or special occasions like anniversaries and birthdays.
By being considerate of your tenants, they will more likely be okay with a rent increase and resign their lease with you.
2. Create Additional Revenue Resources
Offer services like laundry machines, vending machines, or even cleaning to directly increase revenue streams while promoting convenience. Another practical revenue source would be offering your tenants storage options.
After all, most tenants want to securely store their bikes, cars, and precious items somewhere that is easily accessible.
Get creative with your additional revenue resources and you’ll be increasing your cash flow in no time! Tenants are like any other customer — they value convenience and are willing to pay for it!
3. Add Amenities and Upgrades
If you don’t think your tenants will react well to a rent increase, give them a reason to! Home improvements that add value and comfort to their stay can be used to justify a rent increase.
Plus, the property itself will become more valuable and appealing to new tenants — allowing for quicker tenant turnover periods. The upgrades that tenants will be most happy to see are functional ones. For instance, consider improving your current security system by installing smart locks that will make your tenants feel safe and secure.
4. Low-Cost States Are Your Friend
Take advantage of states with zero property taxes and a low cost of living. When the cost of living is cheap and there’s virtually no property tax, you can upgrade, repair, and maintain rental properties at affordable prices.
Once freshly renovated, you can charge at competitive (or above) prices to make your money back and then enjoy the benefits of an increased cash flow.
5. Decrease Operating Expenses
If you decrease rental operating expenses, you’ll have increased cash flow. But, how can we do this? Making functional upgrades can be a great way to cut expenses. Install a new HVAC system and you’ll be able to cut energy consumption by over 40% (FinanceGuru)! If you install new windows and add insulation — you’ll be able to reduce heating costs in the freezing winter.
Other than upgrades, you may choose to be more hands-on. This can cut the expenses associated with property managers or maintenance workers. Try to learn to fix and install upgrades by yourself instead of a contractor.
If you’re going the DIY route, just make sure your results are satisfactory and keep your tenants happy.
6. Invest in Low-Class Properties
Consider investing in Class C or Class D properties. These properties are more “run-down” and not as desirable as newer buildings — but there is a certain perk to these properties. Looking at cash-on-cash return (CCR), these affordable options increase your CCR once the properties are renovated.
If you do your research and happen to know of an up-and-coming real estate hotspot — that’s even more reason to invest in the low-class properties there!
7. Utilize The BRRRR Method
The buy, rehab, rent, refinance, repeat (BRRRR) method is a popular tactic. It involves buying a property at below-market value, fixing it up, renting it out, and then refinancing other investments.
A unique benefit of the BRRRR method is how fast you can scale up your properties. As you accumulate more buildings, you’ll have more cash flow options. Plus, the economies of scale will allow you to leverage your properties to get better deals.
8. Scrutinize Property Tax Assessments
Property tax is often one of the leading costs for property owners. In most parts of the country, the amount of property tax you pay will fluctuate depending on the actual value of each property. If you believe your property has decreased in value since it was last assessed, contact your local assessor for a reassessment of your property.
After all, a lower assessment directly leads to a reduction in your property tax bill — and thus — increases your cash flow!
9. Be Prepared to Move On
A bit of a bummer, but sometimes, things are totally out of our control. If you notice that the appreciation of your property is decreasing at a fast rate — it might be time to abandon ship. Even if you still have tenants, consider if you are willing to continue letting the property dip in value.
The better option might be to sell the property completely and reinvest in a more dynamic area that offers upside potential.
10. Develop a Niche
Developing a niche that caters to specific audiences often yields rewarding and stable results. For instance, smoke-free rental properties that cater to seniors have always been popular and the niche is dramatically growing.
Research your local community, and see if the need for a niche-based rental property ever shows up. You may want to consider student housing as well which has become increasingly popular — as more and more people go to college.