Improving Cash Flow by Advance Rent

Posted on May 8th, 2008 | by John Glenn |

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Collecting last month’s advance rent at the beginning of a lease term is an overlooked strategy that can really save and make you extra money. Now days, when tenant signs a lease, they have to pay the first month’s rent, the security deposit and the last month’s rent, that means they have to pay the rent of three months at a time while signing a lease. So, this could be like a burden over the tenants. This is very difficult to afford for the tenants who are living on paycheck to paycheck.

Collecting last month’s rent can help you only in a way when a tenant skips, or breaks their lease and moves out early, possibly without even telling you. You may not realize they are gone until they don’t pay their rent and you go looking for them. You’ll eventually figure out they’ve left, and you’ll still have a month of pre-paid time to re-rent their unit.

Collecting money sooner rather than later is always a good thing. Theoretically you get to sit on one month’s rent for a whole year, collecting interest on the dollars. Collection of three month rent at the early stage helps a lot in improving cash flow of the landlord. They can earn a good interest on this payment as this is safe for them over a full year until the tenant left them.


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  1. 3 Responses to “Improving Cash Flow by Advance Rent”

  2. By simplyRik on May 21, 2008 | Reply

    Very good advice on this one. Having lived in Japan for 16 years, I can say that most in other countries have it relatively easy. In Japan, while I was living there, in most cases you had to pay a First Month, Last Month + 1 month depost, Agent Fee (1 Month) + Agent’s Fee (1 Month). Do the math, that was 5 months of Rent up front. At the end of it all you usually got back was a partial of the 1 month deposit. That was always partial due to the cleaning/repair’s that landlords usually discovered upon your vacation. Either way there was always a hit for the cleaning fee.

  3. By KushMoney on May 27, 2008 | Reply

    Good Advise. I plan on being a landlord sometime next year so this is very helpful.

  4. By dji on May 28, 2008 | Reply

    nice website… :mrgreen: :mrgreen:

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