February 17, 2016

Having positive cash flow is vital for success as an investor. It's basic finance right? You need to spend less money than you make to be successful. Duh.

However, simply knowing that you need to make more money than you spend doesn't make it easy to do. As any seasoned real estate investor knows, staying profitable is more complex than keeping your rent higher than your mortgage. You have to make up for repairs, maintenance, vacancy, and numerous other issues. 

Because of this complexity, we put together a list of tips to help you keep your rental profitable. By implementing some of these tips, you should be able to improve your rental value, and therefore, remain successful. 

As you read, keep in mind that every rental is different, and every market has its own nuances. So not all of these tips will apply to you, but some will, and if you take those to heart you will be able to have positive cash flow. 

Once you have improved your cash flow, that is when you can really start having fun. You can pay off your mortgage earlier, or you can buy more properties, or you can use the extra cash flow for personal expenses. The possibilities are endless, and the choice is totally up to you. But first, you need to read these tips and take them to heart.

1) Collect Application Fees

Don't let background checks cut into your bottom line. Charge an application fee to cover this cost.

4-Year ROI = $200 to $300

2) Landscape Before Showings

Remember that curb appeal matters, and a major part of curb appeal is the yard. It is a huge part of the property, and if it isn't well kept it can be a major eyesore. 

4-Year ROI = $80 to $320

3) Replace Old Interior Doors

Stylish doors can add a really nice touch to the inside of a home - or they can show just how old the home is. Make sure that your doors are up to date and you will be able to profit over the long-term.

4-Year ROI = $130 to $370

4) Change Out Old Light Fixtures

If you look around your rental and see old light fixtures, you probably need to replace them. Your tenants shouldn't feel like they've entered their grandma's house...or their grandma's grandma's house. 

4-Year ROI = $130 to $370

5) Replace Old Kitchen Cabinets

This is one of the bigger undertakings you can have as rental owner. It can also take awhile to give you a return. However, if your cabinets are very old and beat-up, you need to replace them. This will also help when you sell the property in the future. 

4-Year ROI = -$80 to $400

6) Charge a New Leasing Fee for Surprise Occupants

Every once and awhile you will get a "squatter" in your property. Don't let them hang around for free just because they are a friend or family of the tenant. They need to be on your lease and you should charge a fee for that process.

4-Year ROI = $300 to $400 (if charged once in 4 years)

7) Replace an Old Mailbox

A new mailbox should only cost you about 50 to 75 dollars, but it can add great curb appeal to the home, which ultimately will help you get better tenants for a higher rent. 

4-Year ROI = $190 to $430

8) Replace Worn Out Shower Heads

Worn out showerheads can ruin the showering experience and they can even look gross if they have built up grime. You can replace them for a little bit of money, and make more in the long run. 

4-Year ROI = $200 to $430

9) Get New Doorknobs

Old doorknobs really date a property, so fix this issue by putting in trendy new ones. They will make your property even more attractive to potential tenants.

4-Year ROI = $200 to $440

10) Replace an Old Dishwasher

Old dishwashers force people to rewash the dishes by hand. It is really irritating to a tenant, and it wastes water, which either you or the tenant is going to pay for. So get a lightly used one for $150 on craigslist.

4-Year ROI = $280 to $520

11) Install Nice Blinds

If we had to take a guess, we'd guess you have the same $7 blinds that every other rental has. So are they hurting you? Maybe not, but you could definitely stand out from the crowd by getting some better blinds. This would allow you to charge more rent and get better tenants. That's easily worth the extra money upfront. 

4-Year ROI = $65 to $545

12) Replace an Old Toilet

Just think about it from the tenants perspective, would you want to have a toilet that is old and stained? Probably not. Additionally, if you have an old toilet, it is likely it is wasting water. Some tenants might be bothered by this if they are more environmentally conscious, plus many know it is costing them money. It could even be costing you money if you cover the water bill on your rental property. 

13) Paint your Front Door

You can really make your property stand out with a new coat of paint on the front door. Plus, it can really pop if you pick a bright or unique color. 

4-Year ROI = $330 to $570

14) Put in a Nice Kitchen Sink

Any time your kitchen sink is starting to look old, worn out, or stained, it is time to start thinking about a replacement. Your tenants will look at it and use it every day, so they will definitely notice if it isn't up to par. 

4-Year ROI = $330 to $570

15) Replace an Outdated Range Hood

This is one of those situations where you kill two birds with one stone. Not only can a new range hood look amazing, but they will also help you save money on repairs. 

4-Year ROI = $330 to $570

16) Install New Bathroom Lighting

It becomes really difficult to brush teeth, comb hair, or put on make-up when the lights in your bathroom don't work to the best of their ability. Not only that, but old lighting is unattractive, so replace any insufficient lighting in the bathroom.

4-Year ROI = $380 to $620

17) Pressure Wash the Exterior of the Home

Pressure washers can be rented for around $25 and they can help you remove any unattractive grime from the home. This is really important before showings, plus it will help you maintain the property well.

4-Year ROI = $380 to $620

18) Buy Modern Street Address Numbers

The aesthetic appeal of modern street address numbers is fantastic, and you can get them for as low as $60 dollars.

4-Year ROI = $400 to $640

19) Get a Nice Vanity for the Bathroom

A lot of time is spent either at the vanity or looking at the vanity, so make sure it is up to date. It will cost you a bit to get it installed, but it is well worth your investment.

4-Year ROI = $470 to $710

20) Charge Late Rent Fees Religiously

These are adults, right? So don't treat them like children. They should be able to manage their finances and keep themselves organized. If they don't pay the rent on time that is their fault, and we have found that once someone starts paying rent late it becomes a habit. Make sure you get your money on the first of the month by charging late rent fees. Typically, tenants don't even complain because they know they messed up. 

4-Year ROI = $480 to $960

21) Replace Old Flooring with Tile

Over time flooring will crack, scratch, and become discolored. By installing tile you can remediate this issue, and tile also lasts forever, so that is a win-win.

4-Year ROI = $420 to $1,140

22) Add Additional Parking

People don't like driving around to find a parking spot and they don't want to hike to get to their car. By adding parking you can charge a higher rent each month. 

4-Year ROI = $1,000 to $1,200

23) Paint Your Old Kitchen Cabinets

It can take quite some time to get a return from replacing cabinets. Depending on your situation, you might actually be more profitable by simply painting the cabinets you already have.

4-Year ROI = $1,000 to $1,240

24) Add a New Coat of Paint Indoors

If you do it yourself, painting the inside of a home can be one of the best ways to keep a property up to date. It can also give you a great return on investment.

4-Year ROI = $885 to $1,365

25) Add Storage Units to Your Property

We have seen this be more successful for multifamily properties, but you can even make renting space profitable for single-family homes. People need extra space for their things, especially in a multifamily property where space is limited. You can profit from this while also fulfilling a need for your tenants.

4-Year ROI = $1,200 to $1,375

26) Upgrade Your Fridge

You can find a nice, stainless steel fridge on craigslist for $300. We see it all the time, people make changes in their primary residence simply because they like the way a different fridge works. Then, they sell a perfectly nice fridge for very little on craigslist. You can swoop in and take that fridge for far below its market value and use that to profit. 

4-Year ROI = $1,140 to $1,620

27) Put a Washer and Dryer in the Unit

Think about all the hassle of going down the street to a laundromat. Wouldn't your tenants rather do their laundry in the unit? And wouldn't they pay more to live in a unit with a washer and dryer? We can guarantee they would, and if you buy your equipment used you can really increase your cashflow from this addition.

4-Year ROI = $1,560 to $1,800

28) Offer Landscaping as An Additional Service

We often have tenants take us up on the offer for this additional service. They pay extra each month and we both pay the landscaper and keep some income for ourselves. So we are able to provide them with additional service, and also profit in the process. We both end up happy. 

4-Year ROI = $1,440 to $1,920

29) Collect a Holding Fee When Finding Tenants

When a tenant applies, ask for a holding fee. Only keep it in the case that the tenant bails on your property to go live somewhere else. This will make sure you are only dealing with qualified tenants interested in your property. Plus, every once in awhile tenants do cut out and you get to keep the holding fee.

4-Year ROI = $1,000 to $2,000

30) Increase Rent to Market Value

Take a look at your rent. When was the last time you increased it? If it has been awhile, you should take a look at your local market and see if you are up to market value. You might be letting tenants live your property for less than it is actually worth.

4-Year ROI = $2,400 to $3,360

31) Charge Pet Rent

We typically don't advise letting pets in the property. They can really age your rental. The exception to this is when you add pet rent. It is totally normal to charge $25 a month per pet, and it is totally justified since they can damage your property. 

4-Year ROI = $1,200 to $3,600 (per unit)

32) Have a Lease Termination Clause - And Use It

It is all well and good when a tenant finds a new job or buys a home, but don't let this hurt your bottom line. We suggest a clause that will charge the tenant 2-3 month's worth of rent to break the lease. 

4-Year ROI = $2,000 to $4,000

33) Rent out Furnished Property

Depending on the demographic of tenants in your area, you could do quite well furnishing your property. For example, if you know you can get a student renter or someone temporarily living in an area for business, you can charge extra rent for the additional furnishings. This can help you make quite a bit more over time.

4-Year ROI = $2,550 to $4,950

34) Make One Bedroom into Two Bedrooms

If you have a relatively large bedroom, you can turn it into two. This will allow you to charge more rent because of the extra space. Just make sure you keep everything up to code.

4-Year ROI = $15,055 to $19,855

35) Add Vending Machines to Your Multifamily

If you add the right items to a vending machine, like floss and aspirin, you can make a killing. Everday items that would normally be bought from the store is the best way to make your money.

4-Year ROI = $1,400 to $47,000

36) Add Coin-Laundry at Your Multifamily

If you have 30 residents, and charge 4 dollars a load, you can make between $35,000 and $60,000 in a 4 year period. How is that for cash flow? 

4-Year ROI = $36,880 to $59,920

37) Take out the Trash

You know how the mafia had a history of being involved in the trash business? Well that was because there was a lot of money to be made. If you add a valet trash program to your multifamily you can make an extra $15 a door every month. It doesn't even require any work on your part because there are companies that will do it for you.

4-Year ROI = $14,400 to $72,000

38) Do Not Hold Showings

One way to improve your workflow is to add automated lock boxes. This will allow prospective tenants to come and have a self-guided tour, which decreases vacancy rates. And don't worry, these lockboxes use credit card verification to keep your property protected. We have used them thousands of times and never had an issue. 

ROI = Less time on market

39) Schedule Showings Together

The alternative to the last tip is to schedule showings at the same time. You might get a bidding war started, or at the very least you can save your time driving back and forth to the property.

ROI = Higher rent, saved time

40) Decrease the Rent

So sure, it sounds like you would take a loss. But if you are above market value, no one is going to want to be your tenant. That extra time on market is going to kill your cash flow. 

ROI = Less time on market

41) Clean the Unit for Showings

If your rental is dirty or cluttered, prospective tenants are going to really struggle with imagining the property in its best condition. So make it easier for them by cleaning it up before showings. 

ROI = Less time on market, better tenants, higher rents 

42) Lightly Stage Before Showings

There is no need to go all out with your staging. Simply put some flowers around the rental, maybe some rugs in the bathroom with a nice shower curtain. It will help your rental look nice and stand out from the crowd.

ROI = Less time on market, better tenants, higher rents

43) Be Professional at Showings

This rule means that you don't just look nice, but that you be nice! Tenants don't just sign up for a property, they sign up for a landlord too. If you seem like a jerk, or just unprofessional, they are likely to look somewhere else.

ROI = Less time on market, better tenants, higher rents 

44) Market Your Property Like a Pro

You should try to place your rental on every free online listing source. This includes Zillow and Craigslist, but there are definitely others. So take some time to find them, and then get creative. Take great pictures and write a catchy title for your property.

ROI = Less time on market, better tenants, higher rents 

45) Hire an Accountant to Do Your Taxes and Depreciation

So an accountant is expensive, we understand that. However, if you don't have someone knowledgable working on your behalf, you are likely to leave money on the table. Don't make this common mistake. Find a good accountant and work with them to ensure that you get every last penny.

ROI = Money Saved

46) Repair Before You Buy New

Remember that things can be fixed, and that a little elbow grease goes a long way. If something breaks, think about fixing it before you buy a replacement.

ROI = Money Saved

About the Author: Caleb Malik works for a Scottsdale property management company in Arizona. In his free time he enjoys blogging about property management and reading about real estate investing. He also teaches communication courses at a community college and enjoys hiking in the nearby mountains.

This is a contributed article, which was developed from information that originally appeared in an article titled 51 Ways to Increase Your Rental Property Cashflow.