*WAYS TO IMPROVE CASHFLOW!*
•Increase rent to market rent.
Many investors and property managers forget to review there rents every year and therefore may be getting under payed compared to other properties within the same area. Your property manager should have a good understanding of the market rent and should be notifying you if you should be raising it. A slight bump up in rent can change you cashflow position at the end of the year dramatically.
•Value add to property
Adding granny flats, cosmetic renovation, renovation, upgrade street upeal are all ways to increase the cash your investment property is producing. Adding a 2nd dwelling in the form of a granny flat can be a excellent way to introduce a 2nd rent flow, although you need to understand the suburb and if a granny flat will suit. Many homes with granny flats don’t sell or don’t grow as quickly as normal homes.
•Review your interest rate
Reviewing your interest rates once a year is a critical thing to do every year. As a slight drop in the interest rate you are paying can result in a huge cashflow bump up. As interest will be the biggest expense in an investment property, reviewing them should be the biggest point on your to do list at the end of year. Especially if you hold a substantial portfolio.
•Paying down your mortgage
If you have reached the desired value of properties for your passive income goal then the next step is the retire debt on the portfolio. By paying down your loans your LVR will decrease, alongside your repayments which in turn will raise your cashflow at the end of year. Selling down a underperforming asset can be an effective way to pay a large chunk of debt down.
Remember capital growth will get you out of the rat race, but it’s cashflow that will keep you alive in the property game!
Written by Tom King
Director of Bez property buyers
