I would like to share with you some ways to make long-term investments work in your portfolio. One of the biggest inhibitors to successful long-term efforts is getting your properties to have a positive cash flow in the early years. When you hold property with fixed mortgages, rents eventually rise over time and pay handsome returns while the monthly payments remain the same.
However, in the early years, positive cash flows can be fleeting and difficult to achieve consistently. I can show you how to improve your cash flow early on, which will improve your long-term portfolio. I know that when you have a positive cash flow, you will be more likely to invest on a higher level. Here are three ways to increase your cash flow:
First, increase rents. To justify the increased rental rate, add appliances that the building may lack. Adding washer and dryer hook-ups is always worth additional rents. This also allows you to lease appliances to tenants for additional income. You can also increase your revenue by adding extra parking, covered parking, storage facilities, fenced play areas for kids, pet-acceptable apartments, furnished apartments, soda and candy machines, and extra bedrooms and bathrooms where floor plans permit.
Second, decrease expenses. You can decrease expenses in a number of ways. I love to find buildings with joint gas or power meters that have separate meters. This allows the owner to pass the utilities bills to the tenants because each tenant can sign up separately. I also love to save money by putting in better insulation in the attics, higher efficiency furnaces, air Conditioners, better-insulated windows and doors, and low water-required landscaping. Less expense means more money goes to your bottom line!
Third, find properties that are large enough to build additional units. Finding the right property can be tricky, but very lucrative. If you are already making money with the existing units on your property, imagine your cash flow with additional units! Call me to show you how to begin to locate these properties.
Properties that pay positively are great assets to anyone’s financial portfolio
Happy Investing,
Kendall E. Matthews, CRMC
Phoenix, Arizona Investment Real Estate