When it comes to calculating Debt-Service Coverage Ratio, or DSCR, many landlords look for ways to increase their monthly cash flow in order to get the best interest rates. Optimal cash flow is a key component of being a profitable landlord, and there are several ways to maximize your monthly profits. One area, from our experience, we strongly advise not cutting is insurance. Having adequate insurance is the best way to protect yourself and your lender from financial loss due to unexpected damage. Fortunately, there are several other ways to increase monthly cash flow. Here are five of our favorites:
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Increase Rent
Though it may sound obvious, increasing rent is one of the easiest ways to increase monthly cash flow. Be sure to keep competitive pricing, though! Bigger Pockets has a fantastic guide on raising rents the right way. -
Allow Pets
When you allow pets, you can charge a monthly pet fee. These often start at $25 per pet, depending on your area. Check out the Landlordology comprehensive guide on pets. -
Larger Down Payments
More money upfront, means lower monthly payments. Check out how Loan-to-Value (LTV) affects our interest rates. -
Upsells
Monthly income can expand beyond rent and into services offered. Think of how you can provide internet and cable or a washer and dryer lease. -
Lower Monthly Expenses
Look for areas where you can cut back, such as utilities. Redfin has a great guide on smart technology with even smarter savings.
These are just some ideas to get you started on maximizing your rental income. We always advise consulting professionals for financial planning and decisions. For some ideas on affordable property upgrades, see the “Property Upgrades” section of our blog.
Related: Know ROI Before You Buy
