It might be surprising that some homeowners and investors haven’t been taking advantage of the current lending and market conditions over the past year.
While there has been myriad economic downs and ups since the pandemic hit, conditions for property owners have really never been better.
At present, across the nation, we have the unusual situation where markets are firming at the same time and are set to continue to do so over the short-term at least.
Concurrently, interest rates have never been lower and are set to continue to be that way over the medium-term.
That’s why it’s the ideal time for existing property owners to increase their cash flows, while equity is also growing in their portfolios.
So, here are three ways to increase your cash flow fast.
1. Cosmetic renovation
All properties will need to be upgraded over the years that someone owns them, either as their home or an investment.
That’s because, just like us humans, properties age and need regular maintenance and upgrades to last the distance!
One of the easiest ways for investors to increase their cash flow is to undertake a cosmetic renovation of their asset.
Now, I’m not suggesting doing this at the same time if you own multiple properties, but having a schedule to ensure each property is updated over the years is a good start.
For example, repainting a property can turn it from drab to fab quite quickly, which will also make it more appealing to tenants and likely increase the asking rent for it.
Other cosmetic renovations to consider include:
- Updating floor and window coverings.
- Changing worn out & old bench top coverings
- Re-painting kitchen cupboards
2. Market rent
The utopia for property investors is having a tenant who lives in one of your properties for the long-term and treats it like their own.
This type of tenant should always be rewarded, including the rent that they pay each week.
However, some investors push the equilibrium too far, which sees tenants paying well under what the market rent should be for a property.
This is less of a problem in times of low interest rates, but when rates eventually increase, it will be very difficult to achieve a high enough weekly rent from existing tenants to make up your cash flow shortfall.
Likewise, if the weekly rent has been artificially low and the tenant vacates, it can be tricky to play catch up with the market rent that it should be achieving because would-be tenants can easily see what the historical weekly rents were for it online.
Many lenders have mortgage products with interest rates of two per cent or lower.
However, plenty of property investors have not taken advantage of these historically rates over the past year.
Investors can quickly increase their cash flow by calling their current lenders and asking for the best rate they have available for existing customers.
A phone call is often all it takes to shave hundreds of dollars off your monthly mortgage repayments, because banks do want to keep loyal customers.
Another option, although not necessarily a quick one, is to refinance to another lender who is keen for your business and is prepared to offer attractive interest rates to have you on their books.