How to Increase Cash Flow From Your Rental Properties
Increasing rental property cash flow does not have to be complicated. Numerous options are available to you, ranging from refinancing and investment strategies to raising rent and adding new revenue streams.
The team from Chris Price details the different strategies that you can employ for your rental property.
New amenities and services
Offering new services to your tenants or in your community is another way to increase your monthly earnings. For example, if your property has scarce parking spaces you can charge a monthly fee for the parking spaces on your property.
First, offer these rented spaces to tenants. If you still have parking spaces available, you may be able to rent them to nearby residents and workers. You could also make extra income by renting out advertising space or common areas. For example, if you live in a high-traffic area, offer local businesses signage space.
Rent reviews
Increasing your rent to increase your cash flow appears to be an obvious first step. It's not as easy as it sounds. Before raising the rent, look into local rental prices to see how your property compares. Set a price that will provide you with the highest return while also appealing to renters. There are also the terms and conditions of the lease agreement to consider.
Pricing your property too high can result in extended vacancies, which will cost you money. Also, avoid making large increases during the holidays or during economic recessions e.g., during the Covid-19 pandemic. This will assist you in maintaining good relations with your tenant.
Apply for Tax Deductions
Tax deductions can reduce the amount of tax you pay on your income property each year, putting more money in your pocket. To maximize the number of deductions, you can claim, research local legislation on real estate and investment taxes.
In most cases, you can deduct everything from the cost of repairs and supplies to the interest on your mortgage, property depreciation, and insurance. Many real estate investors do not claim basic tax deductions. However, tax codes may differ locally from market to market. Do your homework to avoid leaving money on the table.
Reduce expenses
It may seem like an obvious tip but it is often the simplest ones that are rarely considered. Lowering your monthly expenses will help you maintain a healthy cash flow. Examine your budget to see what you are willing to forego to save money.
Suppose you are currently using an expensive property management company, you might consider taking on some responsibilities yourself by using property management software. Similarly, prioritize necessary repairs and maintenance over nice-to-have upgrades.
Conclusion
From our experience in the Austin property market, cash flow is the lifeblood of real estate investing. When investing in real estate, cash flow is critical. It is crucial for your properties to generate income and cash to enter rather than leave your pocket. There are ways of increasing the cash flow from your investment property. You can cut your expenses, improve or renovate your property, raise the rent, find other sources of income, or flip your property. Keep these in mind if you're looking for ways to increase positive cash flow from your property.
Contact Chris Price if you want to buy, sell, or rent a home. Chris Price Realty is a full-service residential and commercial real estate brokerage firm. We are market experts who specialize in providing the best service to our clients to find their dream home or office space.