If you own and manage multi-family rental properties, you may be wondering what you can do to increase your net cash flow. Not only can increasing your property's cash flow increase your annual income, but it can also increase the resale value of your property as well. This helps leverage your total borrowing power as you look to continue expanding your real estate portfolio.
In order to increase the value of your rental properties, you need to take steps that will not only make your property more valuable, but that will also make your property more attractive to top tenants who will be willing to pay more in rent.
Here are a few simple steps that you can take to boost the cash flow and value of your rental properties.
Improve Your Property’s Curb Appeal
One of the most important things that you can do to increase your property's value is to take steps to improve its curb appeal. The fact is, most people will make up their minds and choose not to consider renting at a property if it does not look attractive and well maintained from the outside.
If you are not properly taking care of your property's exterior, you will have a hard time getting tenants at all, let alone well-paying ones. That’s why it’s crucially important that you take time to make aesthetic improvements to your property such as repainting the exterior and adding nice plants, flowers, and trees along walkways and in common areas.
These small improvements and investments into your rental property make a big difference when trying to attract tenants. Making sure that your property looks clean, welcoming, and inviting will go a long way in helping to improve its rental value.
Another simple way to improve your property's cash flow and value is to allow tenants to have pets.
Allowing pets can help to set you apart from the competition, making your property more in-demand with renters. Improvements such as a dog park and dog washing rooms or stations will also make your rental property more desirable to pet-owning potential tenants.
Not only will this help to reduce vacancies but it will also allow you to charge tenants more. Choosing to allow pets also allows you to bring in extra money each month by charging a monthly fee for each pet a tenant has, as well as a one-time pet fee.
Add Washers and Dryers to Each Unit in Your Rental Property
You can also increase demand for your units, and charge more for rent, by adding washers and dryers in each unit if physically possible.
In many areas, it is becoming harder to find apartments and condos that have an in-unit washer and dryer and this is an amenity than many renters are willing to pay for.
By investing in adding washers and dryers to your units, you can greatly increase the rentability and the rental value of your multi-family property units. This is an investment into your income property that you can actually expect to see a return on fairly quickly.
Increase the Rent of the Units in Your Property
Of course, one of the best ways to increase your property's rent value is to raise the rent upon lease renewal each year.
The fact is, most tenants expect that rent will go up incrementally each year based on the market and inflation, so you are missing out on potential income if you do not raise your rent rates annually. A nominal annual increase can help to further boost your income, but it likely won't be enough to cause tenants to move out.
To soften the blow, it is always important that you notify tenants of rent increases well in advance of when they are going to take effect. Additionally, it is also important that you regularly compare your rental rates to similar properties on the market. You may find that you are pricing your units too low, giving you the opportunity to raise rates for new tenants.
Refinance Your Property
The current rates for long-term, fixed rate financing with 30-year amortization schedules are near their historical lows. Now is an excellent time to refinance fixed and floating rate bank balloon debt with 20 and 25-year amortization schedules. Cash-out financing is available as well which allows you to put your equity to work acquiring and/or improving other properties. Numerous financing options are available. Contact us for more information.
As a rental property owner, it is important that you implement as many of these steps as possible to maximize cash flow. Contact us to learn more.