Have you been coming oh-so-close to achieving the cash flow you want out of a rental property — only to fall a little bit short each month? It’s a common problem for real estate investors to face, but, luckily, there are a number of possible solutions you can try.
When you’re looking for ways to boost revenue incrementally in order to achieve a desired cash flow, consider the following 7 ideas:
- Cosmetic Improvements
The fastest way to boost revenue is to raise rent. And the easiest way to raise rent is to make minor cosmetic improvements that support more substantial rental rates.
Fresh paint, new flooring, lawn and landscaping work, new appliances, updated light fixtures and other cosmetic improvements require a modest upfront investment that can support higher rents that cover the initial investment and then some. Even a number mailbox can make your rental property more appealing.
The bottom line: You want prospective residents to walk into your property and get the impression that it’s nice and luxurious, all without spending a boatload on nice and luxurious updates.
- Secure the Right Tenants
Choosing the wrong tenants can be costly. Look for tenants that offer solid income levels, strong backgrounds and rental histories, as well as tenants who are likely to stay longer. After all, shorter tenant stays mean paying for vacancy until the property can be filled again.
Also, keep in mind your property’s location. A 20-something professional living in an Uptown Dallas condo is likely to want different styles and finishes than a family renting a 4-bedroom house in Frisco. Consider your property’s location, and make the investments, updates and improvements that will attract the right tenants and make them want to stay forever.
- Proactive Maintenance
Emergency repairs are costly. Not only do service providers charge more for night and weekend calls, but repairs in general are more costly to execute than general maintenance.
Consider your property’s major systems: electrical, plumbing, roofing, drainage, foundation. Consider annual maintenance inspections for each of these systems in order to keep them in peak condition — and to identify trouble areas before they turn into emergencies. Also, get a home warranty for your rental property. Home warranties can provide protection for times when emergency repair needs do emerge unexpectedly.
- Find Tax Breaks
Are you adding up all your true expenses each year? Keep in mind that all expenses related to your real estate investment help reduce your overall revenue — and therefore your overall tax burden.
Make sure you’re deducting costs related to insurance, business travel and mileage, keeping a home office, hiring contractors and repairmen, etc. Some investors eschew hiring accountants, opting instead for tax-filing software like Turbo Tax. But an accounting professional who is experienced in working with real estate investors can typically pay for him or herself by finding deductions that software can miss.
- Refinance
Interest rates may be on the upswing after a period of record lows. But, if you secured your loan before those record lows, you may still have access to savings by refinancing. Or, perhaps you have the cash to pay off your loan, which means no more interest.
Only you can decide what’s best for your money and your real estate investment business. But take a close look at the loans on your rental properties, and consider whether or not refinancing or paying them off can free up month-to-month cash and lead to long-term savings.
- Prevent Turnover
When a tenant leaves, you’re likely to have at least a few weeks of vacancy. When properties sit vacant, money is flowing out and nothing is coming in.
Consider ways to reduce your turnover, including modest rent hikes, perks for longer-term leases, as well as making between-lease updates to the property. These small investments will pale in comparison to the money lost while a property sits empty.
- Automate and Outsource
Some people manage their real estate investment businesses by hiring team members and maintaining a full-time staff. Given modern technology, there’s little reason to pay full-time team members when you can automate and outsource.
There are a series of real estate management software solutions that can help you manage your business, and there are plenty of property management companies to which you can outsource day-to-day operations. Who knows? Automating and outsourcing might be the missing links in boosting your revenue.
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Contact us today and learn more about our DFW property management services.