If you are like a lot of investors in Australia, and you have bought a property that is costing you more than you thought, well you’ve got three options; you can either do nothing and watch your money go down the drain, you can sell, or you can increase your cash flow. If you’re pondering between choices two and three, you should seek professional help from a financial advisor. If you want to know some ways you can increase your cash flow, read on:
1. Raise the rent
Many landlords resist raising the rent in fear that they will lose their tenant. The trick to raising rent is to offer the tenant something that will benefit them as well as yourself.
2. Buy, subdivide, sell
If the house you buy is on a piece of land that is big enough, you can legally subdivide the land either once or several times depending on the size of the land. You then would look to sell the vacant land for a profit. Having made a profit on the sale you would then use that profit to help pay the loan. This would, in turn, reduce the interest payments and increase cash flow.
3. Lease options
Essentially what this means is that the landlord is financing the tenant who has agreed to buy the rented property at a price that is agreed upon by both parties. The landlord can then charge rent at a higher than market rate. This rent is then counted as payments toward the purchase of the property. A fee of about $3000 is also charged to the tenant as compensation for a deposit.