Want to learn the best tips on always having a positive cash flow income property? Keep reading!
The number one goal for every real estate investor is positive cash flow. When purchasing an investment property, you have to keep in mind that it is not only your investment property but also your income property. A positive cash flow income property is what’s going to help you become a millionaire. Therefore, you have to be wise when dealing with and managing your property.
Furthermore, here are some of the best tips on always maintaining a positive cash flow income property. But first, let us explain what a positive cash flow income property is:
What is a positive cash flow income property?
A positive cash flow income property is a real estate property that brings you rental income that covers all expenses and still leaves some money left over. In other words, you should have ALL your investment property’s expenses covered and still have some money for yourself to use however you want.
What can you do to always have strong positive cash flow income property?
Positive cash flow income property: Find an investment property in a hot location
No matter how many blogs you are going to read about real estate investing, you are always going to see the word “location”. Location is a vital factor in a positive cash flow income property. Do not just look for a location that is convenient for you but look for profitable locations. Check the investment properties around you, and make sure to inspect the location well.
Positive cash flow income property: Perform proper real estate market analysis
The real estate market analysis is a must in this case. You should learn how to perform real estate market analysis in order to be able to evaluate the market value of your investment property. In other words, you compare the value of your investment property to other similar ones that were sold recently or are listed for sale. This process will help you decide whether the rental property is a good investment or not.
Positive cash flow income property: Perform investment property analysis
After you have performed a real estate market analysis, you should learn to perform investment property analysis. This one deals with all aspects of the rental property in terms of cap rate, return on investment, cash on cash return, and other factors that affect the value of the income property.
Positive cash flow income property: Know your rental expenses
A huge part of having a positive cash flow income property is managing your rental expenses. You must know what you have coming in and out of your rental income. Make a list of expenses so that you know where and how much you are spending. For instance, estimate the cost of the property maintenance. Keep a record of property management costs, as well as the fees you pay for the investment property. It will make it easier for you to keep track of your finances and the financial state of your income property.
Positive cash flow income property: Select your tenants wisely
Choosing the right tenants is a part of the process. Make sure you run a financial background check on them. The first thing to look for is whether they are capable of paying the rent on time. The second thing to consider is whether they have a bad history of renting. The last thing you want is tenants who are going to damage your rental property and cost you a lot in property maintenance.
Positive cash flow income property: Apply some improvements
Make your rental property appealing to tenants. Only then you will be able to maintain a positive cash flow income property at all times. Apply some improvements and fix whatever needs to be fixed. Just keep in mind not to overspend. If you manage to do the right renovations, this will help increase the value of your investment property as well as your rental income.
Positive cash flow income property: Charge extra
As a landlord, you can always charge extra for facilities. Rent out the garage or basement or whatever other facilities associated with the rental property. This will help keep your cash flow positive. Another way to make extra money is to charge lease fees. There is nothing wrong with doing so since these fees are associated with either having pets or with late payments. These fees will serve as a penalty for breaking the lease agreement’s rules.
You can also consider adding new amenities based on your tenant’s demand. You should be sure they will appreciate your investment property. However, you should not expect a huge increase in rental income, but if you are patient enough, it will be a good bonus to your rental income in the long run.
Services are also another option. Find out what kind of services your tenants would appreciate and won’t mind paying extra for. Add that to the rent as well. Again, it will not make you a lot of money instantly. You are going to feel the difference after a while.
Lastly, you can use a couple of methods to increase your rental income at the same time. You can provide a service and add amenities as well. Just make sure your tenants need them. Otherwise, you will be spending for nothing. Remember not to overspend on any amenities or services as well.
Positive cash flow income property: Hire an asset management firm
An asset management firm is always there to help you make more money. Basically, these real estate professionals aim to minimize the rental expenses while maximizing the benefits on your investment property. Therefore, you should let professionals do the work for you if you do not have enough experience. This is especially important for beginner real estate investors. Work with real estate professionals if you do not feel confident doing the work alone.
Positive cash flow income property: Of course, use Mashvisor!
Mashvisor is the place to go when it comes to real estate investing. Besides providing real estate investors with real estate education, there are predictive analytic tools as well. You can use these to analyze your investment property in terms of cap rate, cash flow, cash on cash return, and so on. These are the most important aspects of maintaining a positive cash flow income property. Therefore, by signing up for Mashvisor, you will be able to learn all that is essential for being successful in real estate investing.