Getting into the real estate investing business can be a daunting and tedious task. Positive cash flow real estate properties do not grow on trees. They require meticulous research and hard work. Applying effort at the beginning will place the rental property in a position of success from the start. Real estate investors are making money from their positive cash flow real estate properties, but what do they know that you don’t?
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Successful real estate investing requires a consistent positive cash flow.There are two routes taken to owning positive cash flow real estate properties. There is the hard way, and there is the easy way. Here at Mashvisor we try to set you up for the easy way. What is positive cash flow? Positive cash flow is the money revenue that is generated by the rental income after all the costs and expenses have been paid. Costs and expenses include mortgage, utilities, condo fees, maintenance, etc. All the money that is put into the real estate investment subtracted from all the money generated from the rental income is equal to your cash flow.
Truth be told, the easy way of investing in real estate is not very easy at the start. To gain positive cash flow real estate properties, an investor has to be very resourceful and detail-oriented in order to find the best investment property. Here is a list of 7 factors to consider before buying a rental property.
Before scouring through the internet looking for real estate properties in hopes they will be positive cash flow real estate properties, every investor needs to stop and develop a real estate strategy, beginning with what kind of tenants should occupy the rental property and thus provide the rental income. The answer to this question will help narrow down your property search drastically and place you in a position of success. Once that has been established, it’s time to take another step in the business strategy.
Location is everything!
Cities or Suburbs
Not all locations are created equal just as not all investment property are created equal. The cost of living is simply higher in some cities. This means higher rental income, but it also means that the real estate investment costs more to buy. That is why it is essential to find the city or suburb that is best for your situation. It is recommended to invest in rental properties that are closer by. 1- They are easier to access in case of maintenance. 2- The farther you are from your rental property, the more gas you spend, meaning higher expenses to own the property. Real estate investors understand that high rental income and low rental expenses are essential to owning positive cash flow real estate properties.
Related: How Do You Make Sure to Always Have Positive Cash Flow Real Estate?
School Districts
This mainly applies for families and post secondary students. The main concern for parents every morning is how they are going to get their kids to school. So, finding an investment property near a good schooling system will increase the chances of having the income property occupied faster, which in turn will help you generate rental income right away. The less time the investment stays on the market, the better. The highest cost in owning a rental income is a vacant property.
Recreation
Just like a good schooling system, the proximity of the investment property to leisure recreational activities is also important. After a long hard day, people need a way of kicking back and taking their minds off daily problems. This means going to the gym, going out for a nice dinner, or simply going to the bar. Knowing your tenant is beneficial for this step. It can help real estate investors cater their sales pitch to their tenants needs.
Commute
As a long time commuter, I cannot emphasize enough how much time is wasted commuting back and forth daily to work. People spend most of their adult life at work. So, when looking for positive cash flow real estate properties, look for areas that are near the heart of the income hub, where most people work. The closer the tenant is to work, the more likely he/she will rent.
Practicality
Positive cash flow real estate properties make tenants’ life easy as a whole. So, just as recreational facilities are important, so are the grocery store and the shopping center. Think of all the frequently visited places that you go to, and try to find a location within a small range of these little things that make life easier.
Price
Finding the perfect investment property means nothing if you cannot afford it. When looking for positive cash flow real estate properties, a real estate investor must look at areas that are within his/her price range. For example, a real estate property along the water (whether a city or an ocean) will cost much more than an area further away. This is why it is important to look in a neighborhood that is affordable for you and your budget. It is important to be able to afford to make your monthly mortgage payments even if your investment property is vacant for a few months, which means that your rental income is zero.
Safety
Look for safe neighborhoods. This one is self-explanatory. No one wants to live in an area that has a high crime rate. There is no price on having a peaceful mind when it comes to where you’re living.
Positive cash flow real estate properties are only difficult to find when you do not know what you are looking for. Do not get me wrong, it is still tricky to find them, but not impossible. Finding a positive cash flow real estate properties from the start can save you the burden of dealing with an investment property that is costing more money than it is making. When looking at where to find the best rental property that is going to generate the highest monthly return on investment, the real estate investor needs to know where to look. By becoming a location expert when searching for a rental property, you are halfway there to build a passive income business. The first step in the real estate investing business a well thought of strategy. Know your clientele, get in their minds, and search for the house that they want to live in. For any real estate needs, visit Mashvisor!
Related: How to Find Positive Cash Flow Properties