Whether you are a novice or experienced real estate investor, cash on cash returns is necessary to understand because it is considered foundational in every realtor’s or landlord’s playbook. Failing to do so can lead you to file for bankruptcy and have your properties repossessed by debt collectors. Consider the following tips for your guidance:
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Lessen vacant months with temporary tenants
It is normal to have vacant properties in the rented space business, but prolonging it is an indication of lost revenue and possible losses at the end of mortgage payout. To avoid this, you should have prospective tenants ready when someone is about to move out, allowing you to keep your operations going. Doing this will enable you to break even or even surpass your cash on cash returns generating profits.
One practical means to lessen vacancy for months in real estate is to promote them to temporary house guests, like those who travel for work, need a vacation from their place of employment, and other related needs. You can even look into the possibility of joining the homestay industry, like by having a certified Airbnb property during the summer and winter breaks.
Just ensure you compare if either temporary or long-term tenancy arrangements will generate more cash on cash returns. If you are unsure about your computations, consult with real estate professionals, like property managers.
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Reinvest by opening up more rental properties
Of course, it is a given that you cannot gain more returns unless you have significant investments. For example, suppose there are a few Orlando properties in your name, especially in Holden Heights. While it can be worthwhile to have a monopoly on this area, venturing out to other nearby spots can be more profitable, like in Conway or Edgewood. By doing this, you have more flexibility and cash or cash assets available.
It is also a given that once you have more properties, you have more responsibilities as the landlord or property owner. If you don’t learn to manage them immediately, it may even be possible to miss out on growth opportunities, which is why effective property management is a must. Ensure you have that by contracting real estate professionals well-versed in the rental property industry.
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Improve your existing rented spaces by renovating them
Tenants are just as particular as real estate investors in finding houses and commercial spaces that are well-maintained, clean, and aesthetically pleasing. If you are convinced that your current properties don’t hold up to those high standards, it is best to have them renovated to garner more demand for tenancy and look into selling.
Remember, the renovations don’t have to be large-scale projects, meaning even small, budget-friendly refurbishments will do. At the end of the day, it is about what generates you the most profits!
Conclusion
Managing cash on cash returns for rental properties is no easy feat, but it is doable. Just remember all the tips mentioned above and think about your next steps carefully as a smart investor. Meanwhile, if you are not confident about your capabilities to oversee your real estate assets and reinvest them, know that you don’t have to since there are professionals like us who are more than willing to help!
Are you in need of professional property management services and other real estate interventions in Orlando? Get in touch with us at Orlando REO Professionals. Our company is dedicated to ensuring you can get the most out of your rental spaces, maintaining them as you reinvest and let your money grow. Call us today at 407-704-8559!