Having positive cash flowing rental properties is a sure way to make money from real estate. The question for real estate investors here is how do you get the best cash flowing rental properties? Do you find them or do you make them? The answer is pretty simple: getting the best cash flowing rental properties on your real estate investment portfolio consists of both finding and making them. You need both components if you want to have the best cash flowing rental properties. Even if you purchase the greatest rental property there is, not investing enough effort and diligence in it by choosing the right investment strategy, for instance, might result in a negative cash flow and vice versa. No matter how much effort you put in a rental property if it has not been chosen correctly, you are likely to face problems with your rental business. However, neither finding such real estate investment properties nor making them is easy. Let’s review some of the key components that will help you in developing your real estate rental business.
How to Find the Best Cash Flowing Rental Properties
Positively geared properties are real estate properties which generate positive cash flow. This means that the rental income of the real estate investment is higher than the expenses associated with the investment property. The real estate dilemma is how to find and where to buy positively geared properties.
Related: How to Find Positive Cash Flow Properties
#1 Carefully Choose the City
The location of you real estate investment is essential when it comes to finding the best cash flowing rental properties. Focus on a place with more potential tenants rather than “the hot destinations” on the housing market. Such crowded places often have more potential occupants and have higher rents. Higher rents does not necessarily mean higher positive cash flow. This is due to the fact that investment properties in such cities also come with higher costs. Instead, look for other cities which can guarantee you a success in your real estate business. For instance, look for locations which offer various job opportunities as well as cities which have colleges and universities. Both of these factors tend to attract tenants in the traditional rental market. You can also choose cities with tourism potential or such that hold different international business meetings and trips. In this way you can develop you rental real estate business in the Airbnb market.
#2 Do Not Forget to Pay Attention to Selecting the Right Neighborhood
In order to find the best cash flowing rental properties, a real estate investor should carefully select the neighborhood for his/her rental property. It is advisable to select a quiet neighborhood with low crime rates. Additionally, make sure that the location is convenient. For instance, check accessibility to public transportation, walking distance to the nearest food market, etc. The best real estate investments are the ones which attract the tenants not only with the investment property itself, but with the surroundings as well.
#3 Find the Best Real Estate Investment Property
The best real estate investments are not always the ones that have the best qualities. In order to generate positive rather than negative cash flow, find the best investment property for your real estate business. If you have already chosen the location, make research and understand what tenants in this area are looking for. Most importantly, calculate your potential rental income and your possible expenses in order to ensure positive rental property cash flow.
#4 Use an Investment Property Calculator
The investment property calculator is a great tool to use when searching for positive cash flow properties for sale. The investment property calculator analyses the cash on cash return as well as the cap rate. Additionally, it helps you with the rental property cash flow analysis by computing the potential rental income and expected expenses. Mashvisor’s rental property calculator also provides a real estate investor with information about the neighborhood and the real estate investment properties. It gives advice with regards to where it would be best to invest as well as what real estate investment strategy to use. Therefore, the investment property calculator is of great use when searching for the best cash flowing rental properties.
How to Make the Best Cash Flowing Rental Properties
As previously described, positive cash flowing rental properties are not simply found but also made. Here are some of the factors to consider when making your rental property the best:
#1 Choose the Optimal Real Estate Investment Strategy
If you want to be a real estate investor who owns one of the best cash flowing rental properties, you need to choose the optimal investment strategy for your rental property. If a real estate investor runs a multi family home, for instance, he/she can place the property on the traditional rental market or on the Airbnb market. This depends on the location as well as the demand for short-term and long-term rental properties. Make calculations and see what investment strategy is more likely to generate positive cash flow. Do not forget to research what tenants in this area are looking for. Selecting the optimal investment strategy is crucial for the growth of you real estate business.
#2 Keep the Real Estate Investment Property Well Maintained
Needless to say, it is important to keep your rental property well maintained. This is essential in order not only to satisfy the current tenants of the property, but also to keep it in a great condition for future tenants. For example, fix everything that gets broken as soon as possible. Also, keep clean and tidy the rental property if you are an Airbnb host. Make sure that tenants are pleased in order to leave you positive reviews. This is extremely important for creating a good image on the internet. Consequently, the real estate investor needs to maintain the real estate investment property in order to keep his/her real estate career growing.
#3 Attract Tenants
Even if you have the best rental property, it will generate negative cash flow unless you have tenants to pay you rent. Be sure to present your investment property in the best possible way. Think of some unique and interesting ways to show your rental property. Make use of the internet and the free real estate possibilities. Do your best to avoid having your rental property vacant.
Related: How Do You Create the Most Attractive Rental Ads?
#4 Establish the Right Property Rent
Establishing the appropriate property rent is not an easy task, but it is a very important one. In the name of setting up the rent, you need to take some things in mind. First of all, what the type of your investment property is as well as what features your rental property offers. Moreover, calculate the market value of your real estate investment property: the rent is usually between 0.8% and 1.1% of this value. Last but not least, compute the possible expenses. After all, you want to be generating positive cash flow. Thus, you need to receive higher rental income than the money you pay for costs.
Related: Renting Out Your House? How Much Should You Charge?
For more advice on the topics of rental properties, buying and making positive cash flowing rental properties, and many more, use Mashvisor’s available information. Do not forget to check out Mashvisor’s investment property calculator: it can be of great help in growing your real estate investing business.
