Real estate can be a great investment tool. Here are four tips to make sure you’re making a wise investment.
Today we’re continuing our discussion about healthy habits in real estate. The healthy habit that we’re going to explore today is how to create a bigger cash flow for an investment property. When you buy an investment property, you want to find something that’s going to produce a nice, steady cash flow. Here are four things you absolutely must do to make that happen:
1. Buy the property correctly. This means keeping a close eye on distressed properties, like foreclosures and short sales. You should also pay attention to those properties that have been on the market for a long time. Often, those sellers are desperate to sell the home and will come down in price to get a deal done.
2. Make sure your operating costs are low. The best way to do this is by ensuring that the major systems and components of your home are up to date. This includes your roof, your HVAC, and anything else that can be replaced to make the home more efficient. Having low or no homeowner association fees is important to investors, too.
3. Charge fair market rent. I’ve made this mistake the hard way. If you charge near the high end of the market, there’s a chance the property will sit vacantly and you won’t get any cash. Charging fair market rent will ensure that the property is rented out quickly, which will increase your cash flow.
“Not charging fair market rent could cause your property to sit vacantly.”
4. Make sure you have a budget and plan for paying down your mortgage. The more quickly you are able to pay down your mortgage, the wider your cash flow will be. Making an extra payment every now and then is a good idea.
If you’re looking to become a real estate investor in 2018 and you have any questions at all, don’t hesitate to reach out and give me a call or send me an email. I would be happy to help.