15 Tips To Improve Your Phoenix Income Property Cash Flow

By sonoran • June 18th, 2008

It’s often the small things, the culmination of efficiencies and ideas that increase income in a multifamily property.  Below is a collection of 15 ideas to increase cash flow, either by increasing income or decreasing expenses.  Many of these have been tired by me as an owner of several multifamily properties and others are ideas my clients and friends have used.  I have several dozen more, so this is just a start.

1.  Install water sub-meters.
Sub-meters are cheap and so is the installation.  This is a way to put some of the cost of water use if you have a master meter.  Set a limit for use and anything above that you can charge for.  Just make sure this is spelled out clearly in the lease agreement.  This is especially useful for properties that have a washer and dryer in each unit, as use can get excessive if not controlled.

2.  Get rid of the grass and put in desert landscaping.
Grass, especially in Greater Phoenix can be a nuisance.  It’s expensive to maintain, with high water demands, trimming etc.  The cost can easily escalate.  Putting in a low water use desert landscape with native desert plants will not only make your yard beautiful but low maintenance.  Don’t just trow a bunch of gravel on the yard, put some thought in to the design and don’t skimp on plants, they are cheap when purchased young and it does not take long for them to mature. 

3.  Put in grass.
Some areas just scream out for grass; areas like the older historic neighborhood in central Phoenix.  If you study a sub-market and see that people will pay more for having grass, at least enough to offset the cost of maintenance then it may be worth it to put in grass, otherwise stick to #2, desert landscaping.  Desert landscaping  pays, and I’m speaking from experience.

4.  Paint.
The exterior needs to be fresh.  Just as with anything a good looking product will attract a better client.  Even the cheap apartments could easily look much better with minimal cost.  Tenants won’t maintain a property that is messy and unkept, unlike a clean one.  Paint is cheap and painting can be done for a low cost as well.

5.  Install ceiling fans.
Ceiling fans in apartments are a big bonus and a luxury, even if they are the cheap $40,00 fans.  Just don’t put in the $20 dollar big box white small fans, they are hideous.  What I have noticed over the years is that apartments with fans tend to lease out quicker then ones without, thus lowering vacancy and increasing cash flow.

6.  Separate storage rental from apt. rental.
If your property usually includes a storage space consider separating the storage rental from the apartment rental.  Many tenant lease out off site storage units and why not get some additional cash flow by offering storage at an additional rate.  A decent sized storage unit can be leased out for an additional $15-30 per month.  That does not sound like much but it does increase the value of your property and when combined with other things, it adds up, especially over a year and longer.

7.  Put in covered parking.
Covered parking in the heat of the Phoenix summer is a big seller.  Not only can you charge more for rent but you’ll have lower vacancy rates buy having covered parking.  This can be done easily with a metal structure and a canvas type shade for reasonable cost.

8.  Install efficient bulbs.
One of the easiest ways to decrease the cost of maintaining the common area is to install energy efficient bulbs.  You’ll see immediate savings, especially in large buildings.  With the cost of these bulbs so low, there is no reason to buy regular bulbs.

9.  Get your own washer and dryer.
Some communities have leased equipment for common washers and dryers.  In some of the complexes we manage we did a study to see the feasibility of having our own coin operated washer and dryer vs. having leased equipment.  It depends on the community but its worth having your own equipment even with the occasional repairs.  Another thing to consider to increase the rent by $15-$20 per month and include the use of a common washer and dryer.  This is useful for a 4plex.  You’ll get a little bit less revue but the equipment will be less expensive as well because it does not need to be coin operated.

10. Dispute property taxes.
Taxes can be a big expense and are not often calculated correctly and there are mistakes at the assessors office.  Check with them to see what criteria they are using to assess your property.  The cost of disputing your taxes is minimal and often it pays off with lower taxes.  I have seen returns for previous years mistakes as well.

11. Hire a private company to pick up trash.
There are private waste management companies that can handle your trash pick up even in a small property like a fourplex.  In several properties we have been able to reduce this cost by up to 30% by using a private company vs. the city trash service.

12. Don’t put ads in the print paper.
Rental adds in the paper are rarely effective anymore and they are very costly.  Try to avoid them for more efficient methods like No. 13

13. Expose your vacancy online.
Utilize free advertising or limited cost advertising.  Craigslist.com is free and effective, then Propertynut.com is fee based but its cheap and effective.

14. Lower the rent.
Are your tenant considering moving to another apartment because it cheaper.  Do some calculation and it may be worth lowering the rate for the current tenant to have them stay vs. remodelling the unit for the next tenant at lease for a time; If a tenant is moving out November 31st then you’ll have a harder time finding a new tenant.  December is one of those periods not good for having a vacancy.  Even better when writing your leases stagger them so that they don’t expire during slow periods or at the same time.

15. Put in a washer and dryer at additional rental cost.
Some apartments have a washer and dryer hookup in the units.  Why not offer to include a washer and dryer at additional cost.  Take it further by doing a rent to own type of deal on the washer and dryer.

In each case calculate your cost to the potential return.  How long will it take to break even?  Most of the above items are easy and low cost and the return is quick, making it a smart move.

If you’d like more details about how to take advantage of some of  the above tips give us a call. 

Comments(1) Investing in multifamily, Management, Real Estate Cash Flow

Comments

By How to Get Six Pack Fast on April 15th, 2009 at 07:50

I read your posts for quite a long time and should tell you that your posts always prove to be of a high value and quality for readers.

 

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