Investing Right For Cash Flow
With real estate investing, cash flow is the result of proceeds from rent payments. It is important to choose the right properties when investing for cash flow. Below are a few considerations to bear in mind when investing for cash flow.
Investing in the Market
When investing in real estate for cash flow you need to carry out a feasibility study that predicts the future of the property located in the market with long-term potentials, such as one with historically high occupancy rates, rather than one subject to volatility. If your rental property is located in a market where property values plummet, your potential for cash flow is much lower. That’s why you need to do your homework and choose your property wisely. Ultimately, you are investing in the market, and not the property.
Planning for Unexpected Costs
While it sounds simple enough to invest based on cash flow, you need to ensure you obtain rental income properties capable of consistently generating cash flow. To do that, you’ll need to plan for the unexpected, like a sudden flood that forces your tenants to evacuate, or other threats that could reverse your cash flow. Making room for unexpected costs in your monthly cash flow calculations will help to ensure you not only have invested in the right market but in the right property, too.
Low Property Values and High Rent
Look for market opportunities that offer lower property values and high rents, this is the magic formula for producing positive cash flow. At BuildCon, if you invest in Pracht Gardens for its lower property value, you get a high rent opportunity. This investment, along with an experienced real estate professional, allows the property to consistently provide above-average returns for you.
Equity Vs Cash flow
Equity is nice, but it won’t pay your bills. In fact, equity might not pay for anything and leave you with a loss after potentially many years of investing. During the time you own that property, you’ll have to pay for taxes, insurance, maintenance, repairs, administrative costs, and other expenses that can cause negative cash flow, which removes money from your bank accounts, instead of making them grow larger.
Even if it does turn a profit, equity only does so once, and never again, leaving you with what typically is a very narrow profit margin. About the only time, it’s good to focus on equity is when you buy a property at well-below market value, rehab it, and flip it for a quick profit. But you’ll have to do that many times over to generate any kind of real cash growth, and you’ll still have the issue of negative cash flow reducing your potential profit the longer you own a property.
Cash flow greatly outperforms equity when it comes to generating a profit. That’s because your cash flow occurs every year when it’s time to collect the rents. So long as you have invested wisely and bought a property with BuildCon Global Services that generates a consistent profit via high occupancy rates and low maintenance and ownership costs, that property puts money in your bank account every year.
When you invest with cash flow in mind, your investment goals generally don’t take into account equity. That’s because you are looking at one thing only – the potential for cash flow. So long as you choose a property that can produce consistent cash flow year after year, you don’t want to sell that property. It’s paying for itself, and it’s putting money in your bank accounts, which you can use to buy more rental properties that generate cash flow.