For real estate investors, one of the most important things you can do for your financial future is to maximize your monthly cash flow.
Naturally, every real estate investor wants positive cash flow—but more than just having positive cash flow, you want to have significant positive cash flow.
And in order to do that, you have to be proactive in your strategies for maximizing that cash flow. Even passive real estate investors have work to do.
Improving your cash flow month-to-month demands a few things: a solid investment strategy at the foundation and regular, concentrated efforts that are focused on either a) generating income or b) cutting costs.
So investors, what can you do to help give you cash flow a shot in the arm? Keep reading!
3 Financial Strategies for Growing Your Monthly Cash Flow
Audit Yourself
Say it with us: audit. Did you get a chill? See your life flash before your eyes? Audit isn’t always a scary word. A self-audit is a great way to see if you’re utilizing all of your assets at their maximum potential. Take some time and sit down with your financial information—compile all of your assets. Make a list of what you have, what’s actively being invested, what isn’t, and review your goals. There’s likely room left for some money to be invested somewhere. You don’t want to have money sitting around in a lonely, stagnant bank account where it’s not working for you.
If your assets aren’t being leveraged or they aren’t being leveraged to your satisfaction, maybe it’s time to sit down with a financial adviser and work out where you can see some bigger gains.
Quality First
For real estate investors, there’s often an impulse to go for cheap—cheaper properties, cheaper management, cheaper repairs. That will increase your cash flow, right? If you can reduce your costs, it’s just simple math. Well, it’s not always that easy.
Even though you could buy the cheapest property on the block, you have to consider that the cheapest property on the block is likely old and in need of significant repairs and renovations. You’re likely to end up spending a disproportionate amount of money on upkeep than you would on a property that is more expensive on the outset. Price of entry isn’t always the best indicator of your long-term costs or cash flow.
The same goes for your management—while you can skimp and go for a cheaper option, you may be doing your investments a disservice. Your management may not take the best care of your properties or your tenants, which can add cost to your repairs and increase turnover. It can even damage your reputation in the community if you’re not careful!
Whatever you do, keep in mind quality first. What will stand the test of time? What will last with fewer needs for upkeep and repairs? What will promote longevity, appreciation, and returns? The price tag, though important, should be a secondary factor.
Mind the Market
With the growing demand for rentals nationwide, it can’t be overstated how important it is for investors to adjust their rent prices to a) remain competitive and b) take advantage of extra income. Even in markets that might not seem like they’re “on fire” may have growing rental demand—so look around regularly, especially as your tenants grow close to the end of their lease.
If you can raise your rent due to either market demand or renovations that increase the quality and value of the property, don’t hesitate to do so. Of course, this strategy demands that you pay mind to the market from the get-go. Are you selecting the right markets for investment? For the kinds of investments you want to have? Different markets favor different kinds of properties: some are better for single-family properties, others multifamily.
Don’t neglect to stay on top of market changes. You want to not only capitalize on new growth in demand, but be able to spring into action ahead of new trends.
Maximizing cash flow doesn’t happen overnight. Real estate investors have to work diligently to ensure that they’re getting the most out of their investments. There’s good news, though—you don’t have to do it alone.
Our portfolio advisors are standing by to help you make the right call for your financial future. All you have to do is pick up the phone.
