Cash Flow
What are some of your ideas to increase cash flow? I have sixty townhouse apts. Has anyone tried two tone paint, nicer 2" blinds, upgraded carpet ?
I would like increase rents by 10%, however the market is still a little tight.. Any ideas would be helpful.
Mike
Two words:
Coin-op laundry!
Works for me.
Good Luck.
[addsig]
Have you considered a Cost Segregation Study on your buildings? This can greatly reduce your tax liability therefore increase your cash flow.
Generally there are three ways to increase cash flowincrease rents, and/or non-rent collections, reduce operating costs, and, reduce debt service.Rent increases for cost of living, and increasing the rent your market will bear with property improvements and upgrades, as well as non-rent income opportunities (coin laundry, for example) have already been addressed.
You also need to pay attention to vacancy rates. Reducing your vacancy rate can also increase your cash flow. Do exit surveys when a tenant vacates. Perhaps there is an objection about the property that you can correct. Is there a breakdown in your tenant relations that you can fix? Perhaps there is a maintenance problem that has been deferred too long.
Are your rents at or slightly above market? If so, consider setting your rents just under the market top for comparable property. Tenants may not be so quick to leave if they have to pay more rent elsewhere for a comparable property.
If you have contracts for trash removal, cable TV, grounds mainenance, recompeting these contracts may reduce your overhead and increase your cash flow. Outsourcing is great for saving yourself time and energy, but it is expensive. I outsource property management, but it costs me 9% of my rental collections. If you outsource management, maybe you can do it yourself and save the management overhead -- at the expense of your own time and energy. Do you want to outsource bookkeeping, or do it yourself.
What about advertising? Are there less expensive advertising outlets for your vacancies that may be just as effective as what you are doing now? Posting a notice on a public bulletin board can get a new tenant just as easily as putting an ad in the classfieds. You can also call the local public housing authority if you will accept a Section 8 tenant. They will send qualified tenants to you, without having to pay for advertising or referrals.
How about supplies? Do you purchase in bulk to reduce cost. Are there some repairs you can do yourself? Rather than hiring an electrician to change a lightbulb, how much would your cash flow increase if you did it yourself.
Debt service is sometimes overlooked as a way to increase cash flow. I recently looked at the debt service on my rental properties. I noticed that I could do a cash out refinance on ONE free and clear property for the amount needed to pay off the mortgage balances on three other properties. I would end up with one new mortgage and retire three old ones. The monthly debt service on my one new property would be about $500 less per month than the combined debt service on the other three properties.
Look at your debt, to see if restructuring your debt can lower your debt service, and consequently, increase your cash flow.
These are all excellent ideas. I especially like surveying vacating tenants.
I ran into this problem with a raw piece of land I owned and wanted to get some cash out to do something else. I have an awsome banker and she ran it as a business loan using the land for collaterial. I borrowed 80% 10 years fixed at prime 5%
The way i create mortages on properties that are
free and clear is thur my corp. name and i been doing that for 5 yrs now ..
The way i create mortages on properties that are
free and clear is thur my corp. name and i been doing that for 5 yrs now ..
How do you do this. create a mortage on prop with your corp name?
Better watch tax situation on that. That is a taxable situation ....the sell of investment property. Refi is not a taxable event and neither is selling a personal residence if you lived in it two of the last five years, a gain of 250,000 is not taxable. Just my thoughts on what I would watch for.
even if u havent live in it for a day u can take 80 out of the purchase price. no seasoning. your broker sounds limited on where they can do loans at. I can broker to hard money even.
As far as the land, that is a bit tricker and no traditional bank i know of will let you get equity. let me know if ican help