Increasing cash flow from rental properties comes in many ways. You don’t need to increase the rental fees just to increase cash flow.
Moreover, you can assess your cash flow through your net income or the amount left after paying the properties’ utilities, capital expenditures, repairs, vacancies, insurance, taxes, and mortgage.
Checkout 4 Prime Steps Landlords And Investors Can Increase Cash Flow:
If you want to increase it more, you may want to consider doing the following:
1. Appeal Property Taxes
Property taxes increase each year. Although this is normal, you shouldn’t pay a significant amount of taxes that decrease or stagnate your cash flow.
It may be best to appeal such taxes if you think your property is being evaluated too high. Although this may have the opposite of your desired outcome, it’s still worth the try.
Otherwise, you may want to try other helpful tips on how you can deal with property taxes. For instance, Pay As You Go (PAYG) may change the amount of tax withheld, so you can routinely increase cash flow.
You may also want to invest in rental properties in states with zero property taxes. This way, you can have more cash to shoulder the taxes on your other rental properties.
2. Create Additional Revenue Sources
Your rental properties don’t have to be as is. You may want to add vending machines or coin-operated laundry within or inside the property.
You may even want to add extra storage that you can lease, such as a wine cellar, shed, bikes, and other stuff that your tenants may want to keep in a separate storage area.
If your rentals are for lodging only, adding an accessory dwelling unit (ADU) is a good idea. It’s a structure or property near or adjoining your rentals with a living space, bathroom, kitchen, or entrance that tenants could use. Renting this out can help you generate more income, especially if tenants need additional facilities or amenities nearby.
3. Charge Late Rent Fees
Renting out properties requires having a business mindset, and you can do this by holding your tenants accountable for late fees. Late payments can hurt your cash flow since you have expenses to pay. Thus, you must ensure that your tenants take your rental fee seriously to keep your cash flow healthy.
Moreover, adding the late rent fees condition to your lease agreement is best. This way, you can prevent any complaints concerning late payments in the future. Not only will it keep your cash flow healthy, but it can help you stay afloat when the market is slow.
4. Improve The Rental Properties
Another best way to increase the cash flow is to upgrade your properties. Doing this can avoid vacancies because tenants are more likely to rent properties in excellent condition. And even if you raise your rent, they’d find it justifiable.
Below are some improvements you can consider for your rentals:
- Additional Parking: Tenants with cars are likelier to look for properties with sufficient garages or parking.
- Replace Carpet With Tile: Spending on new carpets every time an old tenant leaves your place because you don’t want new tenants to use faded or overused rugs can be expensive. So instead of replacing it over again, go for tiles. They’re more durable and don’t require constant replacement, reducing your expenses.
- Replace Old Flooring With Tile: It may also be best to replace old floorings with tiles, such as laminate or vinyl flooring. Doing so can improve the value of your property.
- Pressure Wash Outside: Make your exterior walls, driveway, or deck mildew or mold-free by pressure washing them. Showing tenants how you maintain your property makes them feel safe since your property is in its pristine condition. Moreover, the exterior of your property is the first area that potential tenants will see, so keeping it clean will attract more clients.
- Install New Bathroom Lighting: Replacing old lighting with up-to-date fixtures can help you capture the highest rent possible. Tenants will appreciate it more if you do such a simple update.
- Add A New Range Hood: Updating a range hood not only adds to your kitchen’s aesthetics but can also help reduce moisture. As a result, you won’t have to have various maintenance issues after some time.
Investing in rental properties may be one of the best real estate investments because of its opportunity to grow your assets.
However, you need to ensure that you’re increasing cash flow to maximize the return on your investment. Try doing the recommended ways above so you can have more profits.