Owning rental property can be a great way to reach your financial goals. With a positive cash flow, a landlord can build equity, earn profits, and expand their portfolio. But higher-than-expected vacancies, operating costs, or repair needs can quickly turn what should be a lucrative asset into a financial drain instead. What should a landlord do when their balance sheets start dipping close to red? Here are seven ideas for increasing cash flow.
Rental income. Make sure your rent is keeping up with comparable properties in the local market. Failing to implement reasonable rent increases every so often may cause you to miss out on potential income and make it difficult to keep up with rising costs. When tenants fail to pay rent, don’t hesitate to send a notice and charge late fees in accordance with your lease.
Energy efficiency. Utilities can be a key source of cost savings if your appliances or fixtures are out of date. New windows, improved insulation, or an updated air conditioner or furnace can produce significant reductions in heating and cooling costs. Low-flow toilets and showerheads can reduce water consumption. Even small investments in smart technology like thermostats and lighting can improve energy efficiency.
Upgrades. The more attractive your rental property is, the more rent you can charge. Consider whether your property would benefit from a renovated kitchen or new flooring. Or increase convenience for your tenants by adding appliances like a washer and dryer or dishwasher. Some amenities can even provide an extra source of income, like parking spaces or meeting rooms.
Fresh strategies. Give some thought to what might not be working about your current approach with your rental property. Could you earn more income changing from a long-term to a short-term rental or vice versa? Would adding furnishings to your unit attract new potential tenants? It might even be worth researching whether an investment in a different location or property type could produce better results.
Less turnover. Screen applicants thoroughly to make sure they’ll be a good fit for your property. Once they’re moved in, maintain a positive relationship through good communication and prompt responses to questions and maintenance requests. Keeping quality tenants in a unit as long as possible is one of the best ways to maintain a steady income stream from your rental property. But when tenants do eventually leave, have an efficient turnover process in place to minimize the length of vacancies.
Preventative maintenance. Some major repairs come without warning, but many can be prevented. Perform routine inspections and preventative maintenance to catch small issues before they turn into expensive repairs. Caring well for features like flooring and appliances will also help them function better and last longer.
Reduced expenditures. Periodically take inventory of your paid services to make sure they’re worth the investment. Minimize taxes by utilizing applicable deductions and appealing unreasonably high property tax valuations. Or consider whether refinancing or a re-amortization could free up funds by lowering your monthly payments.
Finding the right balance between income and expenses can prove tricky, but it’s a critical part of making your rental property endeavors a success. Fortunately, with planning and creativity your cash flow can be adjusted to fit your business needs.
About Rentals America
Rentals America provides full-service property management for residential rental properties. Our team is completely dedicated to property management and we’re here to help landlords navigate the rental market.
