6 Ways To Increase Cash Flow From Your Rental Properties
Investing in a rental property can be a great real estate investment. However, to maximize your earning potential, you must maintain a positive cash flow at all times.
Circumstances can change quickly and unexpectedly. So if you've found your cash flow falling or remaining at a standstill due to unexpected vacancies, market changes, renovation problems, or other reasons that money's not flowing in as easily as it used to – don't lose hope! You can move your cash flow from black to red by making some adjustments!
Here are six ways you can increase cash flow from your rental properties.
ADD NEW AMENITIES
As you research the local rental market, find things your tenants are looking for and can afford. For example, installing a washer and dryer or a dishwasher costs money, but it will also potentially increase your monthly revenues, at least in some places.
RENT OUT SPACES OR SERVICES
Another way to increase your monthly earnings is by providing new services to your tenants or in your community.
If your property is located in an area with little to no structure for parking spaces, you can charge a monthly fee for the parking spaces on your property. But, first, build or purchase designated parking spots. Then, once purchased or built, offer these rented spots to tenants first. Then, if you still have parking available, you might offer them up to neighbouring residents and workers too!
You might also be able to score some extra cash by renting out advertising space or common areas. For example, if you live in a well-travelled area, offer signage space to local businesses. Get creative!
INCREASE RENT
Charging more rent to increase your cash flow sounds like an obvious first step — it's not as simple as it might sound.
Before you sell your home, research the going rate for homes in your area to see how your property stands up against the competition. Set a price that gives you the best return without being too costly to outbid other homes for sale. Pricing too high may also attract less buyers and ultimately cost you money.
When doing your market research, you may find that your property is more profitable if you rented it out individually versus making one lump sum payment for the entire space. The best way to find this out would be to do an analysis similar to a pro forma cash flow spreadsheet by dividing the property into smaller segments, each with its separate entrance. The type of rental property described could be perfect in places where college campuses are close by.
It may be not easy to raise the rent for your tenants, but also consider other ways of making income. You can often negotiate price increases with contractual rental agreements instead of giving an immediate hike all across the board. If you know that a few months will be particularly busy, start increasing the price of apartments months in advance. This way, they'll take longer to notice and instead, landlords will have time to adjust, which minimizes confrontation and keeps all of your tenant relationships healthy.
DECREASE EXPENSES
In addition to increasing income and decreasing monthly expenses, utilizing an accounting firm that uses property management software can help you manage all aspects of your business to increase profits.
CLAIM TAX DEDUCTIONS
Tax deductions reduce the tax you pay on your income property annually, meaning more money in your pocket. Therefore, it's important to research local legislation to ensure you receive the most benefits from the deductions you claim!
Many real estate investors miss out on the opportunity to save additional money in taxes by taking things like their mortgage interest, property depreciation, and expenses for repairs and supplies. All of these deductions are fully legitimate and should be claimed where possible. Local taxation codes may vary from market to market, but you can ensure there is no loss of savings by researching what is available for you.
SELL AND BUY A NEW PROPERTY
If your rental property isn't producing enough income — or perhaps your local market is oversaturated with high-income producing properties — then selling your current property and buying a new one may be the best option for boosting your cash flow.
Conclusion
For more information on Property rental management or Property services Auckland, reach out to West Auckland Property Management as early as possible!
Source URL:https://wapm.co.nz/
