6 strategies to increase your real estate cash flow

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For real estate investing, cash flow is the amount of money you have left over after subtracting all expenses from your income each month. Concretely, these different expenses include monthly payments, taxes, insurance costs, management fees and all other costs related to your property. The income consists mainly of rent and additional costs that are passed on. Depending on the case, the cash flow can be negative, zero or positive.

If you want to make money from your real estate investments in excess of the wealth you’ve accumulated, you should aim for positive cash flow. A positive cash flow allows you to accumulate liquidity to continue investing. Making money from your real estate goes beyond acquisition, but requires strategic vision so you can optimize your investments. To achieve this there are several techniques you can use.

Related: Learn how to make money from real estate

1. Buy at a low price

The price of the property is an important factor in determining the profitability of your project. The lower the price, the less credit you pay. It is therefore important to negotiate the price of your property at the time of purchase. Always remember that you make money when you buy your property, but not when you resell it. Many investors tell themselves that the property they buy will be worth this or that in 10 years and do not think about negotiating the price.

However, nobody can be sure what will happen in the real estate market in 10 years. Negotiations should take place at the time of purchase before signing. To determine the right price of a property, find out the market price and negotiate below that price. At least you get your property at the market price. Note that sellers usually anticipate negotiation and leave a margin by announcing a higher price. Even a $1,000 saving off the advertised price can impact your real estate project’s cash flow.

2. Negotiation of loan terms

Monthly payments are among the highest expenses. By negotiating the terms of your home loan, you can get better loan terms and reduce repayment costs. Some elements, such as B. the loan interest rate, loan insurance rate, application fees and prepayment penalty can be negotiated with your bank advisor. If the debit interest falls, it is also possible to refinance your loan. This technique allows you to get a lower rate than your current rate and reduce your monthly payments.

See Also: 8 Ways to Fund Your Real Estate Career

3. Increase in rent

By increasing the rent, you increase your income. However, this increase must be reasonable in order to avoid rental vacancies. It is important to stay within market prices. There are several strategies you can use to increase the rent on your property. The first strategy is to improve the comfort of your property with small renovations such as: B. decorating some rooms or installing devices such as an intercom or security system.

There is also the possibility of investing in furniture and moving into a furnished rental property, taking into account the tax regulations that apply in each region. A furnished property is usually more expensive than an unfurnished one. In the same way, seasonal rentals like Airbnb are generally more profitable than traditional rentals. It is possible to mix these different strategies for better profitability.

4. Creation of other sources of income

In addition to renting out your property, you can do other activities to increase your income. For example, you can set up a laundry on your property, a bicycle storage room or a wine cellar. These various amenities provide an extra level of comfort for the tenants of your property while allowing you to generate more income.

5. Reduction of costs

You can use this technique to reduce your expenses. To do this, it is necessary to identify and reduce the highest expenditure items. You can take action against the rental fees that are not charged to the renter. This can be the heating, the electricity or the internet. It is also important to compare prices when choosing a handyman for repairs, as the costs incurred by the work affect the level of your liquidity. If you own a condo, you should also be aware of condo fees, which can go up.

See also: 3 Ways Entrepreneurs Can Save on Real Estate Costs

6. Avoiding the sales

Rental vacancy has a direct impact on the liquidity of your property, as it significantly reduces your income. In addition, every time a tenant moves out of your rental property, you have to plan for some repair and renovation costs that drain your liquidity. So the idea is to keep the high quality tenants occupying your property to maintain a steady level of income.

You should rely on a high-quality service in order to position yourself better on the market. This is manifested in the use of high quality and durable materials to ensure the comfort of the tenants or by maintaining a good relationship with these tenants. Always remember that when tenants feel special and truly welcome, they are more likely to stay in the property.

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