February 14, 2024

How to Increase Cash Flow in Real Estate Investments: A Case for RFO Units

By: Melecio Martin G. Arranz IV

With the significant amount of upfront capital involved when investing in real estate, property investors like yourself should find ways to establish cash flow and recoup initial investments.

There are many ways to increase your cash flow, including investing in ready-for-occupancy (RFO) units, but there are more you can explore with the help of this article.

To start the discussion on how to increase cash flow in real estate, let’s focus on the merits of investing in RFO units.

What is Cash Flow in Real Estate?

Cash flow is the income you generate from an investment property after accounting for its operating expenses, indicating your real estate’s financial performance. Ideally, you target a positive cash flow to signify that your property makes more money instead of losing it to maintenance costs. A positive cash flow also hedges against market fluctuation, ensuring your investment’s sustainability during downturns.

A real estate investment’s cash flow has three primary components:

• Income refers to the money you generate from your investment.

• Expenses encompass all costs of maintaining and managing your property, including:
  • Property taxes
  • Insurance
  • Property management fees
  • Maintenance and repairs
  • Utilities

• Financing is the debt you incurred, including principal and interest payments, after taking out a mortgage or other financing options to purchase your property.

Understanding and carefully managing these components is vital to achieving and sustaining positive cash flow. In turn, you can build a profitable and resilient real estate investment portfolio.

How to Increase Cash Flow in Real Estate Investments

The following strategies can help enhance your cash flow and ensure your investment remains financially robust and profitable long-term.

Find cost-effective financing

How do you plan to purchase an investment property? Your financing choice is pivotal in cash flow management, so explore different lenders and loan options to find favorable interest rates. Also, your chosen loan terms must align with your strategy.

For example, longer loans may offer lower monthly amortizations but result in higher overall interest costs. Ask yourself which is more important: to reduce your monthly payments or maximize the loan term or repayment period.

Minimize operating expenses

As mentioned, operating expenses significantly impact your cash flow, so practice efficient property management to control costs. For instance, you could proactively maintain your property through regular assessments to prevent pricey issues down the line. It also helps to periodically review your insurance, taxes, and utilities to identify cost-saving opportunities through more affordable providers.

Start marketing your listing immediately

You can advertise your property as soon as it’s ready for occupancy. Online marketplaces and social media typically have built-in tools to help you quickly access a wider audience and attract potential buyers. Then, research your local market to help you price your units competitively.

Consider investing in RFO condo units

RFO condominium units refer to turnkey properties ready for immediate move-ins. They come pre-furnished and appeal to those seeking a hassle-free transition into a new home. Thanks to these characteristics, RFO units often have a high market demand and, consequently, entail lower holding costs.

How RFO Condo Units Can Improve Your Property Portfolio’s Cash Flow

What makes RFO condo units unique? These properties offer the following advantages to expedite and optimize your investment returns.

Immediate income potential

RFO condo units are available for immediate move in, so you can start generating income almost immediately. This swift turnaround is particularly valuable in a competitive market, as prospective buyers and tenants can move in immediately with minimal delays. It also reduces vacancy periods and holding costs, which may otherwise drain your cash flow.

Readily available utilities and amenities

You don’t have to worry about applying for utility services because RFO condo units typically have them ready for installation. Meanwhile, fitness centers, swimming pools, green spaces, and other amenities can attract a wider pool of tenants willing to pay more for these conveniences. Charging higher fees for these conveniences can then maximize your cash flow.

Enjoy More Sustainable Investment Returns with RFO Units

A positive cash flow is your lifeline as a real estate investor, ensuring your asset’s sustainability and profitability. It’s best to implement the strategies discussed above and tap into RFO units’ potential to bolster income from your properties. 

Are you looking for a property within a prime spot in the Philippines? Check out Peninsula Garden Midtown Homes, Federal Land’s RFO condo for sale in Manila. This family-friendly residential community offers modern amenities plus proximity to Metro Manila’s conveniences, making it a potential high-value investment for budding and veteran real estate entrepreneurs.

Contact them to learn more.