Every investor or rental property owner always wants to aim for maximizing their property cash flow. While there are plenty of ways to do so, here are a few of the most common opportunities to increase property cash flow.
- Refinance
If you purchased your own with a loan, you may want to speak with a local lender to check on current interest rates, as it may increase your cash flow. The typical should-I-refinance-my-mortgage rule of thumb is that if you can reduce your current interest rate by 1% or more, it might make sense because of the money you’ll save. Refinancing to a lower interest rate also allows you to build equity in your home more quickly. Finding the best financing to make sure this is a good option for you is a great place to start.
- Upgrade the property
It’s a no-brainer that home improvements not only add value to your home, but also increase the quality of your renter and can even reduce vacancies. Carpet is a common headache when renting to tenants, so if you’d replace it with either durable carpet or other flooring types like vinyl flooring could help increase the value and make it look more appealing. Upgrading old appliances to stainless steel appliances, upgrading the yard to xeriscaping, or installing AC when one doesn’t exist add a ton of value which in result, will help increase your cash flow.
- Allow Pets
While every landlord tends to agree that pets can cause damage, the pros definitely outweigh the cons of allowing a pet in your rental property. Denver, Colorado is an extremely pet-friendly city with a whopping 68% of tenants who own some sort of pet. While additional pet rent won’t substantially increase your cash flow, it’s the reduction of vacancies between turnovers when you allow pets where you’ll save. Since most apartment buildings don’t allow pets, your listing will stand out against the rest, which means you can increase your rental amount in comparison to what an apartment unit may charge for a similar unit.
- Increasing Rent
This one may seem obvious to most, but that’s why it’s always smart to ask your Property Manager what the current market value is of your rental property. While a standard 2-3% increase can help, you may find out your home was originally undervalued when you listed it, and you can still be under the market value. Make sure to run comprables when you’re ready to list your home to make sure it’s in line with the market.
- Pass on Utilities to the Tenants
If you’re paying for water, trash, sewage and electric utilities, make sure to pass those on to your tenants to reduce your out of pocket expenses. Most tenants are able to directly put the electrical and gas bills in their names, but make sure you understand the laws and regulations before doing so for other utilities such as water. This could save an owner $50-$150+ per month on expenses.
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