5 Ways to improve your Cash Flow Now!
Own the laundry
- While having a contractor owns the laundry machines is easy, it hurts you in the long run. If you give away 50% of the revenue you also give away the leverage that cash flow has on your market value. In a 10 CAP property with $1,000 in existing laundry income the impact to your sales price is $10,000. If you kept the entire $2,000 in revenue your impact would be an increase in value of $20,000. You could buy a lot of washers and dryers for that!
Raise the Rents!
- Constantly compare your occupancy and rents to your competition. Don’t let the property manager be happy with 100% occupancy! Get them to do their job. You want 95% occupancy and rents at (or above) market.
- Don’t get complacent. By pushing the manager to increase rents not only will you have more money today, but a better future tomorrow.
Keep your tenants
- The number one expense is tenant turnover
- Implement a tenant retention program
- Reward tenants for bringing new tenants on board.
- Focus on tenant gripes. By fixing unit maintenance items you will keep more of your existing tenants AND shorten your turnover time!
Watch the CASH!
- If your tenants often pay with cash watch out! Rented units suddenly turn vacant.
- Try direct deposit to your property rental income bank account. Not only will this help with stick fingers, make your rental income more consistent but it helps with tenant retention!
- Have your bank sweep this account so all funds are moved from the deposit account to a separate account every day.
- Is someone else paying the rent? Student housing is a classic example of this. Think direct deposit, or semester payments.
- You can increase your collections by making it easy to pay you.
Utility bill back
- Whether you use a RUBS system (Ratio Utility Billing System) or tenant bill back, getting the utility expense off your Profit & Loss (P&L) will dramatically your cash flow (and property value)!
- Be careful to keep up with the competition. It’s much better to be a follower in this practice than a leader
Fees! Which ones aren’t you charging?
- Do you have extra storage space you can rent? How about covered parking? Non-refundable pet deposit?
- Look at your expenses and see which are beneficial to your tenant. They will pay for those that they see value in
Shop, Shop, Shop
- Shop your competition; know the current market rates for rents, services contracts, manager contract, utility payment bill backs, and fees.
- Remember your property should be a cash flowing machine. See what you’re up against and beat them to it.
- The bottom line…If you bought the property today what would you do to increase the value? To your success!