Positive cash flow is always a goal in business, but maximizing those profits is the ultimate objective. If you own rental property, it may seem like there is little wiggle room beyond the basics of raising the rent. The good news is, there are actually a number of ways to boost cash flow and increase your bottom line. Here are 5 such strategies that you can start implementing right away.
Don’t sleep on receivables.
To keep your properties cash flow positive, make sure you’re staying on top of those late or missed rent payments. Set clear rules and expectations with your tenants and, if necessary, assess penalties, such as late payment fees when those rules are not adhered to. Or, conversely, you might encourage tenants to pay on time by offering incentives. Enabling online payments is another great way to facilitate on-time payments and also save you time and improve your cash flow.
Reduce your overhead.
The amount of money you are spending to maintain your properties and your business operations can dramatically impact your bottom line. Routinely looking for areas where expenses could be reduced or eliminated is a wise business decision. For instance, by conducting regular expense audits, you might discover that you’re paying for an unnecessary service, or that some of your service contracts could be negotiated to lower rates. Less cash flowing out will tip the scales in a more positive direction.
Upgrade or add amenities.
Another great way to increase your incoming revenue is to increase the value of your properties. This may involve making certain upgrades or renovations, or it could include adding new amenities that are available for an additional fee. Another idea might be to convert larger properties into smaller units. For instance, turning a garage loft into an extra room could help by increasing the number of paying tenants you have. Don’t be afraid to think outside the box.
Consider a flip opportunity.
If you’ve got the available capital and the market is right, you could pad your profits by buying a property below market value and fixing it up. Then, you can either rent it out at a higher rent cost or sell it for a profit. Flipping properties is also a great way to scale and grow your real estate investment and property management business. If you do decide to go this route, however, just be sure you know exactly what you’re getting into so you don’t end up in over your head and upside down financially.
Reduce tenant turnover.
While keeping things status quo may not seem like a logical way to improve cash flow, in reality, the cost of tenant turnover can truly impact your bottom line. Finding new tenants is expensive, both in terms of time as well as money. By prioritizing tenant relations, you can reduce the likelihood of losing quality tenants and having to deal with vacancies in your properties.
In order to maximize your profits, you need to be strategic about how you run your business. Whether it’s upgrading your properties, cracking down on late payments, cutting expenditure or something else, your efforts will almost certainly pay off in the long run.