Every property owner will have their own opinion about what makes an investment successful, but collectively, their responses will account for how well the property’s fixed costs and unexpected expenses are managed. These two areas have a big impact on an investor’s ability to deliver a positive cash flow.
Trimming Expenses to Generate a Positive Cash Flow
In our previous two blog posts, we discussed specific steps you can take to reduce a property’s fixed costs and manage unexpected costs to grow your bottom line.
By reducing expenses and maintaining a quality property, you will be able to attract the best tenants – the ones that take care of your property and are more likely to renew (thus reducing vacancy and increasing Net Operating Income).
Moreover, building sustainable processes to help you maximize NOI over the long run will enable you to consistently grow your portfolio and take advantage of the compounding effects time has on a real estate portfolio.
Simple Strategies to Improve Your Property’s NOI
NOI is an essential metric for real estate property owners not only because it’s directly related to cash flow, but also because it’s a prime determinant of a property’s value. Here are some ways to improve your property’s NOI to be even more successful with your investment.
- Lease to good tenants – Good tenants cost less money. Why? Because they are more likely to extend their stay in your unit (and thereby reduce your vacancy rate). They are also less likely to damage your property or cause other problems that may lead to expensive repairs.
- Do as the data says – To control your spending while still offering a quality product to tenants, you must track your expenses diligently and evaluate that data regularly. Knowing where your greatest expenses are occurring can help you make better decisions going forward.
- Manage maintenance costs – Repairs and upgrades are necessary expenses that eat into your operational budget. Devise a strategy to streamline maintenance costs and optimize the way you spend and save on repairs.
Lastly, you should consider hiring a professional property management company. Despite sounding counter-intuitive, hiring experienced professionals who know the market and industry best practices can help you save money. Many, like ours at RL Property Management in Columbus, will also manage and run reports for you which you can then draw on as you make ownership decisions going forward.
To learn more about owning rental property in Central Ohio, get in touch with us at RL Property Management.
