How can a landlord increase the cash flow from their rental property?
This question is being asked against the backdrop that, even if they wanted to, landlords usually can’t raise the rent above the accepted rate for their area.
Secondly, in some cities, the government ensures that such arbitrary rent increases do not happen.
Given this scenario, and as an investor who wants to maximize profits, how do you consistently improve cash flow from your rental property?
14 ways to increase rental property cash flow
1. Optimize rental income
Yes, we know what we said, but if your rent is below the rental rate for your area, you should increase it. Most of your tenants will stay as long as the increase is reasonable and even below market rates.
2. Add new amenities
You can increase the rent without adverse reactions from tenants if you add new amenities to the rental – a dishwasher or washing machine. Most tenants will see the need to pay a higher rent for these new features; make sure to add things that tenants want.
3. Choose better tenants
To reduce the rate of rent default and property damage, improve your processes for vetting potential tenants. The extra money and time invested in proper tenant screening will help you attract high-quality renters looking after the home and paying the rent on time.
4. Cut maintenance costs
If you can find and fix maintenance problems before they become significant expenses, you will significantly reduce costs. That is possible with a plan for preventative maintenance that includes routine inspections and prompt repair of all detected issues.
5. Improve tenant-retention
Poor tenant retention is a big reason for cash flow problems in a rental. Even if rents are below the going rate, a rental property can still be profitable if long-term tenants pay the rent on time. To get them to stay, work to keep tenants happy.
6. Create an additional living space
Add an Accessory Dwelling Unit (ADU) to the property, finish the basement, or convert the garage into an extra bedroom. You may treat this new space as a second rental unit if there is a separate entrance or increase the rent if you created it as part of the existing unit.
7. Convert to short-term rentals
Depending on your location, you could make more money using the property as a short-term rental instead of aiming for long-term tenants. If the property is near a local tourist attraction or busy convention center, you could benefit from the flow of visitors.
8. Improve rent collection
Missed rent and late payments will hurt your cash flow. If there are enough of them, they can destroy your investment. You must refrain from playing nice and expect tenants to pay up on time. Take immediate and consistent action on non-payment of rent and late fees.
9. Furnish the rental
A furnished rental will let you charge a higher rent. You can attract renters who are on the move and would instead not purchase their furniture and appliances. These tenants are often willing to pay higher rents, and you can sell more services to them.
10. Rent out spaces
If your rental is in an area with scarce parking space, you can charge tenants a monthly fee for using the parking space attached to the building. If you have more than enough space, you can rent the additional space to other residents or workers in the area.
11. Install energy-efficient features
Adding energy-efficient features to the home will save costs without affecting service quality. Such features include LED lighting, low-flow toilets and showerheads, high-efficiency furnaces, and air conditioners.
12. Separate Utilities from the rent
Sometimes, controlling costs and improving profits is easier if you don’t bundle utilities with the rent. If tenants do not pay their utility bills, you may want to separate utilities from rent. That ensures that you don’t absorb the cost fluctuations in these bills.
13. Allow Pets
Allowing pets in your rental will let you charge pet rent. Since most landlords don’t allow pets for fear of property damage, pet owners have difficulty finding decent rentals. But pet owners are often more affluent than the average renter, and they tend to stay for the long term if they like their rented home.
14. Claim tax deductions
You are leaving money on the table if you are not taking advantage of tax deductions. Rental properties qualify for a long list of tax deductions on everyday expenses. Claiming these deductions will let you improve your rental property cash flow massively.
Finally, to see real improvements in the performance of your rental, you must do these steps sparingly. Consistent implementation of these strategies is how you generate enough cash flow to make a profit on your rental property every single month.
We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.