Thread: Want to improve cashflow

Originally Posted by rythmik1

Hello. I own a duplex and my mortgage is currently more than what I can rent the two units for, so I have negative cash flow right now. I was wondering what the the best route is for getting to a point where I have positive cash flow on the property. Is it smart to pay the principle down and refinance? Are there better or quicker options?

Make sure you provide a dish washer if you do not already as you can usually charge a little higher rent for the same unit with one rather than without one.

Find some better quality washer and dryers and rent them to tenants. You can get as high as $35 extra a month for a used washer and dryer in good shape. And you can probably pick them up for less than $200.

You can try and dispute the taxed assessed value in an effort to reduce your out lay. Other than small tings like the above that help increase the rents and reduce costs there really isn't much you can do to change your cash flow position.

Another thing to look into if you do not have 20% down you can pay the mortgage down to this point to help get rid of mortgage insurance or if it has a second mortgage you can focus on paying it down.

Once you have implemented all of the above suggestions then all you can do is wait for the loan pay down and then refinance.

I would make sure that you have your properties rented at the going rents for the area. Some people do not raise rents every year as they should. Make sure that you raise the rents every time the lease expires. As most people will not move if the rents are raised $20 a month because it costs so much time and money to move. A good idea is to make some kind of small improvement to the property or offer a new service of some sort so that the tenant does not feel like there is no reason for the rental increase.

what is your current monthly loss? It may be better to sell property if there is no way to increase monthly rent enough to breakeven or have positive monthly cash flow. Also, depending on how much you are in the negative, it may be better to take negative cash flow in short run if it will reap long term profit down the road when you sell after property has time to appreciate and seller market returns.

I agree with james. Giving some more facilities like geyser, cupboard, dryer, dishwasher etc can result in earning more rentals for your home. By just investing a little amount in refurnishing and then renting can result in positive cashflow.

Regards
Apexone