| Every investor wants to maximize cash flow. | | | | their security deposit (if they didn't already forfeit |
| However, achieving this goal can sometimes be | | | | it by breaking the lease), you will likely face some |
| counterintuitive. For instance, you may think that | | | | deferred maintenance and updates to make your |
| because you have tenants paying below current | | | | unit appealing once it is back on the market. You |
| market rent that you should automatically raise | | | | will need to pay a locksmith to re-key the doors. |
| their rent to full market value when it comes time | | | | You may need to replace the carpet and will likely |
| to renew their lease. While this may make you | | | | need to paint the walls. All of these routine items |
| some extra money in the short-term, it could | | | | cost you money and you need to do most of |
| cost you over time. | | | | them whether your former tenant lived in your |
| Now, I'm not saying that you shouldn't raise rents. | | | | property for two years or ten years. |
| It is often a prudent thing to do. However, if you | | | | If you stop and think about it, isn't it better to be |
| have really good tenants who take good care of | | | | faced with painting and carpet replacement every |
| your property and pay on time every month, you | | | | ten years than every two years? Your cash flow |
| may want to rethink the rent-raising property | | | | reserves can easily get wiped out, and you will |
| management strategy in the interest of turning | | | | likely have to come out of pocket to get a house |
| them into long-term tenants. | | | | rent ready again if you're losing tenants every |
| What many investors fail to consider is how | | | | couple of years. If there are longer intervals |
| frequent turn-over in their rental houses costs | | | | between move-outs, not only will you spend less |
| them more than a few months worth of lost rent | | | | money on fixing up your property over time, but |
| dollars due to vacancy. Every time a tenant | | | | you will have built up greater reserves from your |
| moves out, in addition to the standard clean up | | | | positive cash flow to avoid coming out of pocket |
| costs that you should be able to deduct from | | | | when you finally do have a tenant move out. |