As a real estate investor, purchasing a rental property is not the end of it. You will need to make sure it brings in cash flow. Since you bought the property at a high price, it’s crucial to keep it profitable and generate a good return until you decide to sell it on the real estate market. Overlooking the need to boost cash flow will only leave with liabilities and losses that are difficult to recover from.
There are many ways you can increase the income you gain from your rental property. A good part of it involves keeping your vacancy rate low, coming up with a reasonable pricing structure for rent, and keeping your operational costs low without affecting efficiency. Take a look at the guide below for options you should consider:
1. Keep track of market trends
The market where the property is located is a huge factor determining its profitability over the long term. When demographic data shows low wage and income growth, you might expect a higher demand for apartments as more people prefer renting to buying a home. In other cases, you should increase the rent on your rental property in response to local market factors.
If there are impending rent hikes in Florida, you may have a good reason to raise the rent on your property. By keeping up with these factors, you can make the right decisions to justify a higher rent. You just have to make sure the rent increase is in line with pertinent local laws and ordinances.
2. Upgrade the place
The right upgrades and improvements can help your rental property stand out, especially in a highly competitive market. Renovating exterior and interior spaces can help attract more tenants to the property, increasing the occupancy rate as well as cash flow.
Consider refurbishing kitchens and bedrooms with new flooring material and hardwood cabinets. You can also do a bit of landscaping that would make a good first impression among apartment hunters. These upgrades may entail high upfront costs, but you would still get a good return as the occupancy rate increases.
3. Consider additional income streams
Another thing you will need to consider in raising cash flow is the need for amenities that open new income streams. For one, you can offer storage spaces and preferred parking spaces for a monthly fee. Additionally, you can offer vacant units as corporate housing to companies hosting traveling employees or employees who have recently relocated.
If your local zoning laws permit it, you can have advertisers put up billboards on the building, allowing the property to earn advertising income. Coin-operated laundromats and vending machines can also provide you with constant income while high-value amenities such as an in-house cafe and fitness center are great for drawing in high-paying tenants.
4. Make the most of your marketing budget
Whether you own a townhouse or a multi-family complex, you need to make sure it’s visible to the right tenants. This is where an effective marketing campaign comes in. Consider using social media to market vacancies and reach out to inquiring apartment hunters.
You can also use Craigslist and other platforms like Redfin’s Rent.com and Zillow’s Trulia which offer features that allow the right tenants to find your listing. If you own a vacation rental property, come up with a website that shows the property’s best features.
Endnote
Owning a rental property isn’t a “set it and forget it” affair. It’s an investment that requires creative ways to increase income and fuel your goals. Keep these tips in mind to boost your cash flow, help you break even, and build wealth.
