Property investment brings with it the golden promise of steadily increasing returns. But the reality is that ongoing repair costs, low rental rates and high vacancies can potentially put you in the red.
Here are some ideas to remedy negative cash flow and protect your property during tough times.
Explore a rent-to-own strategy
This scenario benefits both the property owner and the tenant. Designed for buyers who don’t ordinarily qualify for a mortgage, the rent-to-own strategy allows the tenant to purchase the property from the owner over time. Essentially, the tenant pays a small upfront deposit then pays monthly rental payments above market value with the right to purchase the property in the future at an agreed price.
Property owners ultimately benefit from that initial deposit cash injection, as well as consistent monthly payments. The long-term guarantee of an eventual sale also sweetens the deal. Just remember to screen prospective tenant-buyers with a thorough reference, employment and credit check.
If you’d rather a more immediate solution, you could consider short-term rentals. Furnished properties that are located close to amenities like universities, airports or business centres can do very well, attracting lucrative short-term tenants such as tourists, students or corporate consultants. The best part is that you can potentially command above-market-value rent.
To make this strategy work, ensure you furnish and market your property to cater to specific short-term needs, and look for opportunities to secure a long-term contract with businesses or educational institutes that need reliable rental accommodation.
Rent separate amenities
Take a good look at your property to see if there are any additional amenities you could rent out to existing tenants or people off-site. This could mean renting your driveway to someone who wants a regular parking spot, or offering up your attic or basement as a storage solution for tenants. You could even consider renting out your backyard to locals who want the extra gardening space.
Convert unused space
Another strategy for reversing negative cash flow could be renting out unused space inside your property, or converting existing space into a more lucrative offering. For example, renting out individual rooms in a single unit, or converting a large house into multiple units.
Depending on your situation, this may require an additional investment. But if done right, the results could really pay off. Just be sure to get the appropriate council approvals for large-scale structural changes.
Consider a joint venture
Lots of people are looking for an opportunity to invest in property. If your property desperately needs some renovation and maintenance, but still holds great future investment potential, a joint venture partner could be an ideal way to secure much-needed cash today in exchange for future capital gains from appreciation. Finding a partner who’s just as committed to the property as you are could help get your property back on track.
Above all, choose a team who will help you protect and grow your property portfolio. Contact property management experts K.G. Hurst today.
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