Having rental property as your main and alternative source of income and knowing how to maximise cash flow could prove to be a goldmine in cities like Sydney and Melbourne. With the housing market thoroughly active and people moving to the capital cities, there is a rising trend in the demand for rental properties.
Guest post by Tom Stanford
If managed right, your rental property can be a source of stable inflation-adjusted cash-flows on a regular basis. There are several different factors that influence the amount of cash you as an investor can generate from renting and subletting your properties. In case you wish to maximise cash flow from your rental property, these tips can help you through and through.
The Right Property Will Maximise Cash Flow
Investing in a rental property is all about ownership costs versus rental income. If you manage to keep your rental income more than the ownership costs, you’ll thrive well in the industry; and it all begins with finding the right property.
Put in some research on your target markets and the type of homes that generate the most rental income in them. These may vary significantly from one neighborhood to another.
Also, make sure you choose locations that have a healthy price to rent ratio. If you have limited time or knowledge, get some help from experienced buyer agents, who will be able to find the best property for your needs.
Invest in Long-lasting Repairs
In addition to having a stable rental income flowing in, you have to make sure you keep your rental property expenses to a minimum. This way, you can maximise cash flow from your rental property.
Repairs are one of the most common expenditures in rental properties and they keep arising from time to time. To avoid any costly repair that may emerge when you least expect them, make sure you are getting everything fixed and maintained on a regular basis.
Say Goodbye to Real Estate Agents
In case you have ample time on your hands and are located in close proximity to your rental properties, you can take the reins in your hands and manage them on your own. This way you would be saving up on the percentage of monthly rents that you pay your real estate agents as commission, and it could add up to a lot.
However, if you take this step, be careful about practicing due diligence when looking for tenants and staying on top of the rental agreement.
Make it Pet Friendly
People love their furry friends and although they might be trouble for your rental property, allowing pets in it subject to conditions can open up wider income channels for you.
People don’t mind paying a little extra to keep their pets with them. Make them sign an agreement which holds them responsible for maintaining the premises in good condition and charge them the rent you want.
Find the Right Tenants
It is extremely important to find good tenants. For the most part it is the real estate agents who run background checks and determine the eligibility of potential tenants to let the house out.
However, if you are not using the services of a real estate agent, make sure you thoroughly vet the background and sources of income for the intended tenants before renting the property to them.
You want to be sure that they are reliable and have plausible income sources to cover your rent on time.
There is an array of tips that can help you maximise cash flow from your rental properties. For starters, these 5 would do. Try them out and see how your rental income improves.