Finding cash flow real estate investments is not easy, especially when you’re a beginner trying to succeed with your rental property business. In fact, when asking how to make money in real estate, although one of the most common answers is to find the best real estate investments, not every beginner has been able to achieve this. That’s because finding income properties can be quite an intimidating process, especially for young investors. For this very reason, we will share with you the 4 best tips to help you always find cash flow real estate investments. Are you eager to learn all about how to invest in positive cash flow properties? Keep on reading this blog!
#1 Plan Ahead and Budget for Future Cash Flow
We cannot stress enough how important it is to have a financial plan before investing in income properties. It is of the utmost importance to know your financial situation prior to buying a property in order to avoid negative cash flow investing.
Cash flow represents the typical cycle of the money your rental property generates as well as the costs associated with the property for a specific period of time. For instance, the monthly cash flow equals the rental income generated by the investment minus the expenses you have in regards to the property (mortgage loan payments, repairs, etc.). Therefore, in order to generate positive cash flow, the incoming money should outvalue the outgoing money.
To avoid negative cash flow, we advise you to create a budget plan and follow it strictly. Make sure you have correctly chosen the method of financing for your investment property. Additionally, include any mortgage or loan payments in your future budgeting scheme.
You can even go a step further. With real estate market analysis, you can explore in-depth the area where you want to invest. You can roughly estimate the costs associated with rental properties similar to the one you’re interested in. This way you can get an idea of your monthly expenses. Moreover, by using real estate comps, you can estimate the market value of your property, and thus, how much you will be able to charge for rent. Overall, you will be able to get a general idea of your future financial situation to ensure you will have positive cash flow real estate investments.
#2 Use a Heatmap to Find the Best Place to Buy Investment Property
A common tip for finding cash flow real estate investments is to find the best place to buy investment property. That is easier said than done. In the current real estate market, it can be extremely hard to find good cash flow real estate investments on your own. The US real estate market is very broad, and thus, hard to examine.
Every successful real estate investor knows that research is the key to making money in the field. For this very reason, we put a twist on this common real estate investing tip: Use a heatmap analysis tool to find the best place to invest in real estate. One of Mashvisor’s real estate investment tools happens to be a heatmap, so let’s dive further into how to use it to find cash flow real estate investments.
Heatmap Analysis Tool
Mashvisor’s heatmap analysis tool is a very useful market research tool. It helps you to quickly assess the state of a market by presenting you with a color-coded map based on performance (rental income, cash on cash return, and occupancy rate) as well as listing price. You can select the city where you wish to buy a rental property and use the heatmap to analyze the neighborhoods in seconds.
The tool marks areas with lower than the average results in red, in orange- averagely performing places and in green- above-average results. This makes the usage of the tool quick and efficient. With that, neighborhood analysis is complete and it would be time to look for an investment property.
#3 Know Exactly What to Look for in an Investment Property
Knowing what to look for in an investment property is one of the greatest tips when cash flow investing. You want positive cash flow but what does that translate into exactly? Well, good cash on cash return, cap rate, low/affordable property expenses, etc. and it should be appealing to the target tenants of the location to ensure high occupancy rates.
The best cash flow real estate investments, however, are not always the ones on paper, but rather the ones that suit you best. Of course, in order to avoid negative cash flow, you should focus on the data and analysis mentioned above. Nevertheless, you should always make sure that the investment property complies with your criteria.
Moreover, before investing in cash flow real estate investments, you should know whether or not the given properties fit within your real estate investment portfolio and align with your business ideas and budget.
#4. Use an Investment Calculator to Find the Best Cash Flow Real Estate Investments
Mashvisor’s investment property calculator is yet another extremely useful tool. It can help you perform more detailed investment property analysis, and therefore, assist you in finding positive cash flow properties. The tool computes various real estate metrics, such as cash on cash return, cap rate, return on investment, and potential rental income.
Moreover, you can compare different properties in a matter of seconds. This certainly comes in handy when searching for the best cash flow real estate investments, right?
Last but not least, this real estate calculator provides you with insightful information about the chosen property as well as its surroundings. Thus, we can state with confidence that this is one of the best real estate investment tools you should use in order to find cash flow real estate investments every time.
To start looking for and analyzing the best investment properties in your city and neighborhood of choice, click here.
To Sum It All Up…
When searching for the best positive cash flow real estate investments, there are 4 main tips to follow:
- Make sure you are on point with your budget planning. Remember, positive cash flow happens when the sum of money that comes in is larger than the sum of money that is spent.
- Make sure you use a heatmap tool in order to select the best place to buy investment property.
- Know exactly what you’re looking for before you start your search.
- Use Mashvisor’s investment property calculator to find positive cash flow investments.