Investing in real estate is an excellent opportunity to achieve your financial goals. Moreover, investors choosing real estate to start or diversify their portfolio is the best way to guard themselves against economic ups and downs. Many investors count on the cash flow they receive to not only sustain their livelihood but also to build long-term wealth.
Cash flow refers to the money left or the profit received after deducting all expenses from your income every month. These expenses include insurance fees, tax, management fees, monthly payments and any other charges related to the property. Positive cash flow enables investors to pay off loans, build equity and expand their investment portfolio by purchasing another property. Here are some ways to increase cash flow from your properties:
- Optimize rental income : Investors should charge the market rates for their rental properties to maximize rental income. This brings about an increase in rent to stay within the market price. Other ways you can increase the rent is by doing renovations or installing CCTV cameras or intercoms. You can also invest in the furniture and rent a furnished property or make the property a seasonal rental home by listing it as an Airbnb property which is becoming more popular and profitable than traditional rentals.
- Buying at a low price: The price of a property is key in determining its profitability. The lower the price, the less credit you pay. Therefore due diligence is required to know the market price and begin negotiations. Take advantage of discount prices that realtors give to ensure a positive cash flow in the future.
- Ratio Utility Billing System(RUBS): This system assists investors to avoid spending money on utility costs. It ensures that the tenants are allocated utility costs like water, electricity, garbage, and gas among others. As the renter, it is one’s mandate to let the renters know in advance of any billing changes.
- Long term tenants: Vacancies are one of the reasons investors get a negative cash flow thus, ensuring your tenants are happy goes a long way. Responding to maintenance requests and issues in a timely and efficient manner improves client satisfaction. Moreover, ensure rental increase notices are handed out in advance with reasonable explanations and not because their lease is up.
- Rezoning: This is changing the permitted use of the land. If the land you bought is a residential property but the area is slowly becoming commercial, then applying for rezoning will increase its value. This move introduces the concept of highest and best use whereby investors always use a property for its most profitable value thus reaping the benefits. Research the rules and regulations involved to guarantee your property is eligible for rezoning and what else is required.
- Refinancing: Monthly payments are some of the highest expenses. Consequently, it is advisable to check in with your lender and monitor mortgage interest rates as well as loan conditions. This brings about an opportunity to negotiate the terms of the loan, which lowers the mortgage rates and increases the cash flow by reducing your monthly payments.
One of the main reasons people decide on an investment opportunity is to get a return on investment and cash flow is a major factor in the buy-and-hold investment strategy. It is important to learn how to increase cash flow to reap many benefits from your property. However, before reaping the benefits, it is important to acquire a land investment that shows promise on return on investment and appreciating value. Daykio has a proven track record of client satisfaction and profitable property listings. Click here to view our available properties for sale: https://daykio.com/property-type/plots-for-sale/