Becoming a real estate investor is the go-to strategy to save up for retirement andsafeguard a financial cushion in the long run.
Investors can choose to do real estate investing part time, make it a full-time business, or consider it as a side hobby. Regardless of the degree of commitment you pursue, real estate is an ideal long-term investment strategy granting investors many financial rewards and stability. The buy-and-hold investment strategy is all about buying real estate for positive cash flow and increasing rental property cash flow overtime. Real estate investors turned landlords use the passive income to pay off their mortgage payments and use the extra money to save or invest further in real estate. Whether you choose to invest in a or a multi family home, real estate investing becomes your business, and you must treat it as such in order to maximize cash flow returns on your rental property.
Related: Cash Flow Investment Property: The Key to a Successful Investment
Making money in real estate depends on many key success factors, and without much due diligence and planning, real estate investors won’t materialize financial success on a long-term scale. With strong competition and dynamic housing market trends, real estate investors must keep up with the competition and tailor their investment strategy accordingly for profit. For instance, if the economy is in a downturn, it is never wise to sell real estate properties. Another example of smart real estate investing is choosing to invest in the right place at the right time; the best places to invest in real estate properties right now are Dallas, Texas; Jacksonville, Florida; and Orlando, Florida. Keeping up with housing market trends gives real estate investors key insight to invest for success.
Key Success Factors in Real Estate Investing
1. Acquiring the right knowledge
This is crucial for all real estate investors; you cannot invest in real estate and make money if you do not grasp the most important real estate concepts and lingo. Acquire real-time education by immersing yourself in real estate blogs, real estate news, and the effects of economic conditions on the housing market in addition to grasping important key metrics, such as cap rate, cash on cash return, and positive cash flow analysis. Without having the right education, real estate investors won’t succeed in identifying positive cash flow properties for sale. In a nutshell, become a well-educated real estate expert to attain big success and achieve high return on investment on your real estate properties.
2. Becoming an expert in real estate market analysis
To invest in positive cash flow real estate, the importance of evaluating rental property cash flow and conducting real estate market analysis goes without saying. To put it in simple terms, comparative market analysis (CMA) is about assessing the value of real estate properties based on real estate comparables, aka real estate comps. Basically, you must collect data on properties in the same area comparable to your property that are currently listed for selling or have been recently sold. To cut your time in half, you can find real estate comps anywhere in the US via Mashvisor. Another helpful tool is Mashvisor’s investment property calculator which estimates the return on investment of your real estate property, i.e., cash flow, cash on cash return, and cap rate.
3. Conducting cash flow investment property analysis
Conducting real estate market analysis is half the equation, the next step is to hone down on the property for further inspection and assessment. For cash flow investment property analysis, real estate investors must analyze a wide range of factors to minimize expenses and reap positive cash flow real estate investing:
- Area and neighborhood
- Number of bedrooms and bathrooms
- Other rooms
- Number of floors
- Construction age
- Amenities and features such as swimming pool, garden, fireplace, balcony, veranda, etc.
- Location with respect to roads, marketplaces, public transportation, schools, etc.
- Recent improvements
Related: Real estate investing 101: How to calculate cash on cash return
4. Choosing the best investment strategy
Smart investing begins with a defined business plan and setting clear investment goals. Figure out which real estate investment strategy is aligned with your vision and long-term goals and find the best investment properties to grow your real estate investment portfolio and increase your return on investment.
The top 6 real estate investment strategies include:
- Buy-and-hold real estate (long-term)
- Airbnb real estate (short-term)
- Fix-and-flips (short-term)
- Commercial real estate (long-term)
- Real estate wholesaling (short-term)
Maximize Returns and Push Your Rental Property Cash Flow Up
If you are currently investing in a long-term stratey, aka through the buy-and-hold real estate cash flow strategy, and looking for ways to increase your rental income and push your rental property cash flow up, you came to the right place. Below are the top 6 tips to help you achieve your investment goal.
Tips to Push Your Rental Property Cash Flow Up Up Up
1. Choose positive cash flow areas
The key to a successful real estate investment starts with choosing to invest in the right location. Buy real estate properties in prime locations with nearby amenities, i.e., transportation facilities, parks and recreations, malls and shops, schools, etc. Also, invest in cities with booming economies and high employment growth. Real estate investors will incur a high risk of vacancy and high tenant turnover if they choose to invest in rundown neighborhoods.
2. Be proactive, not reactive
When it comes to fixing the leaky roof and maintaining the overall property condition, you must be proactive when it comes in terms of short- and long-term repairs. Delaying timely repairs will burn a hole in your pocket in the long run as well as eat away into your profits and rental income. To push your rental property cash flow up, you must keep your investment property in a tip top shape. In this way, your tenants will be happy and you will avoid massive repairs with a hefty bill. Tenants will stay away from renting a property that requires major repairs, which might put a rental property at a high risk of vacancy and negative cash flow returns.
3. Rent your investment property at market value
Charging higher rent to maximize your cash flow returns will backfire, and you might incur vacant units for a long time. To avoid the risk of high vacancy, set your rent at market value to attract tenants. Keep in mind that it takes approximately 3-6 weeks to find the right tenant for positive cash flow rental property. And by keeping your rent at market value, you ensure a consistent monthly rental income and mitigate vacancy risk to push your rental property cash flow up.
4. Choose the right tenants
Never be haste in selecting your tenants because choosing the wrong tenants will do more damage than good. Take your time in running background checks and doing the necessary steps to find the right tenants for your investment property. If you find the right tenants, they will be a stable source of rental income for you and keep your rental property in a good shape. The right tenants can be a consistent source of rental income and in turn contribute to pushing your rental property cash flow up overtime.
5. Mitigate vacancy risk
As a landlord, treat your real estate investing as a business and see your tenants as stakeholders in growing your investment business. Treat them well and adhere to all their demands to keep them happy. Happy tenants pay the rent and keep your rental property cash flow up.
6. Improve the appeal of your investment property to tenants
To attract the right tenants, you must enhance the appeal of your rental property in order to gain the leverage to be selective in choosing the tenants and setting the rental income. To push your rental property cash flow up, focus on repairs, renovations, and upgrades.
Related: What Are the Best Locations for Cash Flow Properties in the US Real Estate Market?
Conclusion
Real estate investing is all about the accumulation of passive income and the long-term financial security as a result. To keep your rental property cash flow up, treat real estate investing as a business and formulate the right business plan to grow your real estate cash flow and maximize your profits in the best way possible.
Head over to Mashvisor for more real estate investing insight!