- Prepare For Tenant Turnover
Everyday property is left empty is a day that your cash flow is decreasing. So it's essential to be prepared for tenant turnover periods. This means setting aside savings to cover any mortgage payments in months you are without a tenant. You should also have a plan in place to fill vacancies as soon as possible, whether that's investing in marketing or working with an estate agent.
- Handle Late Payments Immediately
If you're a new landlord, handling late or missed payments might be something you haven't experienced before, but it's important to handle these as quickly as possible. Missed rent payments are an immediate disruption to your cash flow. Any hold-ups in addressing these with your tenant could lead to long-term cash flow problems.
Where appropriate, consider charging late fees and sending out notices for non-payment of rent as soon as possible.
- Property Maintenance
Undertaking regular, preventative maintenance at your property can help to lower any future costs and ultimately improve cash flow. Add reminders in your diary to visit your property and conduct check-ups and little fixes. By having these visits planned out, you can prevent bigger issues from occurring. Early maintenance will save you money and improve your bottom line.
- Install More Efficient Fixtures
Installing high-efficiency items in your property can help reduce utility bills. Whether you cover bills as a landlord, or these are included in tenant agreements, you can entice tenants to lengthen their contracts if you can make amendments to the cost of bills.
Key considerations include replacing showerheads and toilets with low-flow alternatives, reducing water bills each month. Making sure all the windows and doors are up to date is another way to improve the efficiency.
- Keep Long-Term Tenants
Holding on to tenants at your properties for long periods of time can help improve cash flow. In general, long rental periods can lower your turnover rate which in turn, improves your overall cash flow.
Retaining tenants is simple if you are the best landlord you can be. This means keeping lines of communication open, responding to issues in a timely manner, and being upfront with tenants from the commencement of their tenancy.
- Make Improvements Before You Rent
We've previously shared insight into pricing a property for rent [link to blog] and within this we highlighted the importance of making small improvements to your property to allow you to charge more rent. Leaving renovations for a later date can lead to further expense as you'll need to fix any tenant-created issues whilst also trying to undertake additional renovations.
- Separate Bills
Thinking about your tenant agreements, are utility bills currently included in the rent or does the tenant pay them separately? Separating some of these bills, if not all of them, from the rent is something you could consider to have a better cash flow.
To accommodate the change, you may need to review your current rent cost and lower it slightly. But, you are likely to have a better cash flow overall from the change in billing. Your cash flow may not increase rapidly, but it will become more stable as you won't need to worry about any fluctuations in bills such as water, gas, and electricity.
- Collect Rent Via Direct Debit
If you are still collecting rent yourself, you could be placing yourself and your business at risk. We would recommend using an automated system to collect rental payments. This can help to reduce the likelihood of any personal issues or problems preventing you from collecting payments.
If you prefer to collect rental payments, ask your tenant to set up a Direct Debit agreement to meet all upcoming payment dates.
- Review Paid Services
Regularly reviewing any services you pay for is a great way to maintain a steady cash flow as a landlord. From employing a property manager to paying for monthly financial services, it's best to make sure these services are worth the investment. Many of these paid-for services can make the day-to-day work of being a landlord easier, but you should only continue paying for them if you are making use of the services.
We recommend every three to four-month, spending some time reviewing any paid for services you currently have and how much you spend on them each month. Review whether the investment every month is worth the reward and if not, consider terminating the service, and this will, in turn, improve your cash flow.
- Consider Allowing Pets
If you're struggling to fill a vacant property or keep long-term tenants, you might want to consider allowing pets in your properties. Incorporating pet security deposits into contracts will help you navigate any concerns you may have about potential damage to the property. Having these longer term tenants will ultimately improve your cash flow and stability as a landlord.
- Choose Reliable Tenants
Securing reliable tenants could mean you have fewer repairs to make after they move out. In turn, this means you will be able to re-rent your property faster and therefore no gaps in your cash flow.
We recommend taking the extra time to find high-quality tenants, ensuring your property will be kept in good condition. On top of repairs costs, good tenants are less likely to need to be evicted or go to court for other matters, so you'll also be saving time, money, and frustration in that area too.
- Review Payment Dates
When it comes to managing cash flow, you should always have money coming in before you have to pay anything out. With this in mind, you should review the date mortgage payments leave your account and try to move the payment date to the days a few days following any rental payments, creating a buffer for yourself.
This will accommodate for any late rental payments and minimise the chances of your account having insufficient funds to make the payment.
- Respond To Issues Quickly
When it comes to issues with your property, the sooner you can deal with them, the better. Resolving problems quickly means you will be keeping your tenants happy while also minimising the likelihood of void periods, which creates consistency in generating income.
Putting off repair work can mean the problem intensifies, resulting in a more significant repair process, which will cost more money.
We recommend getting into the habit of setting money aside each month to cover repairs and maintenance work. With these savings, you'll be able to resolve the matter quickly, saving money and maintaining positive cash flow.
If you are in the Huddersfield area and would like help with cash flow management and cash flow projections, contact our team of experts to see how we can support you.