Tuesday, January 21, 2014

Cash Flow Management Tips for Property Managers

Bounced Check"Poor cash-flow management is causing more business failures today than ever before," declares Philip Campbell at Inc.com. These failures are often attributed to a lack of cash flow, but Inc.com claims it is the mismanagement of the cash flow that poses the real threat. This is an especially salient issue for property managers who, in spite of a full building, may be facing empty bank accounts in the middle of each month.

Target the Cause of the Leak

Before you can fix your cash flow problems, you need to figure out where the leaks is. Are tenants refusing to pay the rents or are the rents too low? Look at other rentals in your area and make sure that your prices are comparable. Keep in mind, however, that a responsible tenant can be worth more than a couple of hundred dollars each month, and try not to drive away any stable tenants with aggressive rent increases.

Are your buildings only half full? Vacancies are your worst enemy, and if your building is harboring a lot of empty space, it may be time to mix up your advertising strategy.

Perhaps maintenance issues are causing the issues. Can you save costs by doing some of the work yourself? Do you need to spend more on routine maintenance so you can spend less on repairs?

Tighten Your Application Process

When you rent a property to a tenant, you are essentially offering them credit. If they fail to make good on that arrangement, you are left holding the empty bag. The process of removing a delinquent tenant is long and cumbersome in many areas, and property managers typically lose money in the process. Halt this progression before it even starts by taking Inc.com's advice to increase cash flow by tightening credit requirements and ensuring that you have responsible tenants. If you do have delinquent tenants, use a service like the American Apartment Owners Association to report them to credit bureaus and inform them you are doing so. It might serve as extra motivation to pay on time.

Engaged Management

Property is not a passive investment, and if you are not engaged with your investment, that may be the reason your cash flow is suffering. The Housing Inspection Services from the city of Minneapolis explains the benefits of an engaged management style, including a stable tenant base. Lower turnover ultimately results in less cost and effort on your part. When tenants know you are there to help them out with routine maintenance or to answer questions, they tend to take better care of the property. That results in boosted property values, safer properties, and more appreciative neighbors.

Keep Your Receipts

A big part of property management is fielding calls from little old ladies with broken faucets and clogged toilets. Although you may just be spending a few dollars on a couple of parts, you need to track these expenditures. RoofTopInvestment.com suggests collecting every receipt and reminds you to claim those expenses on your taxes. By being meticulous about your records, you will lower your tax burden and thus augment your cash flow.


  1. Far too often, landlords mistake deferred maintenance for profits. Then, when tenants no longer want to rent, or will not pay top dollar, cash flow suffers. It becomes too much of an expense to bring it back to 100%.

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