Do you have a cash flow objective for your rental busines?

Would you like to increase your monthly income to make your investment more profitable in 2012? If yes what are you doing about it?

First question? Does the condition and upkeep of your property merit a rent increase? When was the last time you raised your rent? Are you afraid that if you raise the rent your tenant will move out?

Let’s assume that your property is worthy of a rent increase how are you going to justify raising the rent if you haven't raisedthe rent with  your good tenant for the past 5 years and now your taxes insurance and other expenses have doubled- (not a exaggeration by the way) It is a lot easier to raise the rent each year by $10-25 than by a big lump sum.

When I started investing in RE some 35 years ago I was happy to break even. The problem with that is that I did not have a contingency or reserve funds when things went wrong, (vacancies, furnaces, water heater, roof, maintenance etc.) I quickly learned that you need to have enough cash flow so that you don’t have to support this business.

By the end of my first or second year, I had a cash flow objective of at least $150 (after expenses) for each rental.

A few years later it increased to $200 and now, my objective is $250 on each property

If you are going to run your rental properties as a “business” not having a cash-flow objective makes no sense, and you are saying whatever rent I can get is OK.

So let’s turn the corner and set a goal for each property and if the properties are under rented raise the rent. Good properties will always be in demand.

With the additional monthly increase you can start a college funds for your children or grandchildren, pay for next year’s vacation, save enough for a down payment on another property or give some of the money to a charity.

Lot's to think about.

Here's your first step: If you are interested in becoming an investor or adding to your portfolio feel free to contact me at 402-679-3914 for a no obligation confidential consultation and you will be glad that you did. 

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