It’s not easy to figure out how to increase rental property cash flow without increasing the rent. Some landlords simply raise the rent on their residential rental properties if they find that they need more income. However, it’s important to find other ways to raise the cash flow, as you can’t simply raise the rent whenever you want to (and your tenants probably won’t be too happy about it, either). What you thought would increase your cash flow can actually lower it in the end.
In this article, we’ll go through a couple of ways to increase your cash flow without having to raise your rent prices. Do note that these property management suggestions may not apply to your situation — they’re merely recommendations. You should still consult a real estate professional from a property management firm to find out what works (and what doesn’t work) for your particular property and market.
#1 Raise the Rent
We know we said raising the rent isn’t the only way to generate a good cash flow (and it isn’t), but that doesn’t mean you should be afraid to do it. Eventually, you will have to raise the rent – it’s inevitable, and sometimes it’s the logical thing to do. The bad news is that it can also cause problems, as no tenant wants to be told that their rent will be going up.
If you have to raise your rent (you’ll know if you “have to”, as it’ll be obvious in market trends), do not allow yourself to be swayed by your tenants to do otherwise. You need to be willing to be “disliked” by your tenants, as it’s what’s best for your business. If you’re concerned about tenant turnover, you can increase the rent in tiny increments, and then build it up from there.
Besides, a rent increase should not be unreasonable if the tenant-landlord relationship is in good shape. In other words, if you’ve been providing your tenant with proper property management, there’s nothing to worry about.
#2 Improve Your Rental Property’s Amenities
Find out what amenities tenants want. This will provide you with the highest long-term profits, as you’re giving people what they can’t find in your competitors’ properties. Although it can be costly, it will be well worth it in the long run. For example, although installing a washer and dryer or a dishwasher costs a lot, your tenants will probably be willing to pay a higher monthly rent for these amenities.
If you need help determining the amenities that are most important to renters in your market, ask a professional property management firm. A reputable real estate company will have been in the business longer, so they’ll be sure to know what your market wants.
#3 Improve the Property Over Time
Some rental property owners do not invest in property improvements as they think it’s one way to save money, however, it results in the opposite. Sure, they may be able to save money on renovations in the short term, but in the long term, they’ll regret that they allowed their property to get “ruined”. There will come a point in the property’s life that it will get so damaged, that they’ll end up paying more than the amount they didn’t want to pay in the first place.
Don’t be afraid to pay a premium for repairs that will help your property last a long, long time. Besides, you’ll only need to pay for repairs once, and if done correctly, you’ll never have to repair the property a second time.
To save, you should consider partnering with a property management company. They’ll have an established network of vetted vendors that they can entrust to complete the work according to your budget.
#4 Reduce Ongoing Costs
You shouldn’t be the “cheap” landlord, but you shouldn’t also be a spender. One way to increase your cash flow is to lower your costs. For example, when shopping for furniture, go for low-priced products – and if possible, buy from thrift stores. It’s time-consuming, but it can also enable you to save a good amount of money in the long run.
Another way to lower your costs is to “pass on” some of the expenses. For example, rather than paying for your tenants’ water bills, you can allow your tenants to pay for their bills on their own. Once you relieve yourself of this responsibility, you can increase your cash flow substantially.
#5 Claim All Possible Tax Deductions
Rental property owners tend to forget that they can (and should) claim their tax deductions. Tax deductions can increase your cash flow, as they lower the amount of tax you pay on your tax returns each year. To maximize the tax deductions you can claim, read up on local regulations on rental real estate taxes, or consult a property management company.
In general, everything from repairs to property management costs can be claimed against your property taxes. However, tax rules differ from market to market, so make sure to do your homework to guarantee you don’t forget anything (or worse, that you claim what can’t actually be claimed).
#6 Sell Your Rental Property
Selling your present property and purchasing a new one might be the best option if it’s not generating the cash flow you want. Look for properties with potential – these are residential properties in markets with an impressive return on investment (ROI). You should also be on the lookout for properties where your potential tenants will be – for instance, if you’re looking to rent to a family, look for markets that have tons of family-friendly amenities such as good schools, grocery stores, and daycare centers, and more.
By working with a skilled property management agent, you’ll be able to put more money in your pocket.
The Bottom Line
As you can see, there are more ways than one to increase the cash flow on your South Florida rental property. You don’t always need to raise the rent.
At Luxury Property Care, we help property owners maximize their investments through our expert property management strategies. Get in touch with us today to discuss your rental property needs – dial (561) 944 – 2992 or complete our contact form for more information.
