How to Make Positive Cash Flow From Investment Property in Any Market
Almost everybody is an investor or at least a potential investor.
We choose to put our hard earned money in various investment that will give us returns and these investment schemes could include stocks, bonds, agriculture, education and even property.
When an individual pumps in money for the purchase of property with the intent of gaining returns on the investment then the property in question is referred to as investment property.
Although it may seem obvious to many that cash flow from property is almost promised, there are certain circumstances that could lead to minimum or no cash flow at all.
Take a look at some of the ways in which positive cash flow can be derived from property: 1.
Income from Rental/Letting Just like any investment, income from property will only be forthcoming if it is managed properly.
In addition to the physical and the financial well being of the property, good management also includes a whole lot of other factors as well.
For example a study of the most expensive suburbs in Sydney indicates that there are certain attributes that attract high rent payers.
Mathew Tiller, an NSW research analyst with PRD nationwide says that rental income is almost always determined by location.
Waterfront properties and those properties in close proximity to the CBD, shops, schools and places of employment are high-value properties.
Properties that have nothing unusual about them will rarely attract reasonable rent.
2.
Viable Options with No Closing Costs When you sell a property, the buyer almost always asks that you pay all or part of the closing costs.
This can be pretty pricey, and if you refuse to do so, you may have trouble finding a buyer.
Instead of selling the house through traditional means, you can opt to keep the mortgage from the bank and finance the house to a prospective buyer.
Known as a wrap around mortgage, this philosophy means you can start making a profit quickly because it takes no longer to complete typically than renting the property out.
By charging more interest to the buyer than you actually pay to your lending institution, you make a profit each and every month.
3.
Manage Paying Unnecessary Taxes Taxation will also determine whether one will be able to receive better cash flow.
It is therefore critical to structure your investment property in a manner that allows you to avoid as much tax as possible.
In Australia, the authorities will look at the following assumptions to determine the tax payable: • Whether the property is personally and directly owned jointly by husband and wife; • Whether both owners are foreigners and non-residents and whether they have a local income; • Whether there is no mortgage or other encumbrance on the property.
However, as you go about your business of managing your taxes, it will be advisable to seek guidance from professionals.
4.
Add Value to your Investment Property Value addition is the one concept that separates good investments from bad investments.
This is a general idea which cuts across all business disciplines.
For property, refurbishment its structures and surroundings will definitely change perceptions in the in the otherwise congested property market.
Examples in point are Darling Point and Dawes Point in Sydney.
While the values of these properties are already sky high, they continue to increase due to value addition.
Buyers and tenants always prefer to have that which they think goes beyond the money paid.
That is the touch of class which may be all that is needed for property to attain a high cash flow.
If you choose to personally finance your home to an individual, you can make even more profit from improving your property.
Often the buyer will want to make improvements to the home because they are living there and plan to own it somewhere down the line.
This means you can get improvements made to the property at little or no cost.
If the buyer improves the property enough, you can even have the home re-appraised and potentially get a secondary mortgage on the it to provide a quick lump sum.
Also because you are sure to get extra cash flow just from the amount the wrapee is paying every month, you will more quickly be able to pay down the principle.
This means when they are ready to purchase the property out right, or when they leave and you sell it to another party, you will have more equity in the home and therefore receive a larger profit.
5.
Use Loans Effectively If you are in the business to develop and sell or buy and sell, lending institutions may be of great help.
Therefore, an increase of property equity will be of much significance.
When extending loans, commercial banks always want to know whether it will be possible for the borrowers to pay the loans advanced.
It will therefore be in your interest to build a better credit rating for the purposes of accessing loans for improvement.
You may also find it interesting to note that as you continue to pay off the loan advanced against your property, the banks may allow you to borrow more using your greater home equity.
We choose to put our hard earned money in various investment that will give us returns and these investment schemes could include stocks, bonds, agriculture, education and even property.
When an individual pumps in money for the purchase of property with the intent of gaining returns on the investment then the property in question is referred to as investment property.
Although it may seem obvious to many that cash flow from property is almost promised, there are certain circumstances that could lead to minimum or no cash flow at all.
Take a look at some of the ways in which positive cash flow can be derived from property: 1.
Income from Rental/Letting Just like any investment, income from property will only be forthcoming if it is managed properly.
In addition to the physical and the financial well being of the property, good management also includes a whole lot of other factors as well.
For example a study of the most expensive suburbs in Sydney indicates that there are certain attributes that attract high rent payers.
Mathew Tiller, an NSW research analyst with PRD nationwide says that rental income is almost always determined by location.
Waterfront properties and those properties in close proximity to the CBD, shops, schools and places of employment are high-value properties.
Properties that have nothing unusual about them will rarely attract reasonable rent.
2.
Viable Options with No Closing Costs When you sell a property, the buyer almost always asks that you pay all or part of the closing costs.
This can be pretty pricey, and if you refuse to do so, you may have trouble finding a buyer.
Instead of selling the house through traditional means, you can opt to keep the mortgage from the bank and finance the house to a prospective buyer.
Known as a wrap around mortgage, this philosophy means you can start making a profit quickly because it takes no longer to complete typically than renting the property out.
By charging more interest to the buyer than you actually pay to your lending institution, you make a profit each and every month.
3.
Manage Paying Unnecessary Taxes Taxation will also determine whether one will be able to receive better cash flow.
It is therefore critical to structure your investment property in a manner that allows you to avoid as much tax as possible.
In Australia, the authorities will look at the following assumptions to determine the tax payable: • Whether the property is personally and directly owned jointly by husband and wife; • Whether both owners are foreigners and non-residents and whether they have a local income; • Whether there is no mortgage or other encumbrance on the property.
However, as you go about your business of managing your taxes, it will be advisable to seek guidance from professionals.
4.
Add Value to your Investment Property Value addition is the one concept that separates good investments from bad investments.
This is a general idea which cuts across all business disciplines.
For property, refurbishment its structures and surroundings will definitely change perceptions in the in the otherwise congested property market.
Examples in point are Darling Point and Dawes Point in Sydney.
While the values of these properties are already sky high, they continue to increase due to value addition.
Buyers and tenants always prefer to have that which they think goes beyond the money paid.
That is the touch of class which may be all that is needed for property to attain a high cash flow.
If you choose to personally finance your home to an individual, you can make even more profit from improving your property.
Often the buyer will want to make improvements to the home because they are living there and plan to own it somewhere down the line.
This means you can get improvements made to the property at little or no cost.
If the buyer improves the property enough, you can even have the home re-appraised and potentially get a secondary mortgage on the it to provide a quick lump sum.
Also because you are sure to get extra cash flow just from the amount the wrapee is paying every month, you will more quickly be able to pay down the principle.
This means when they are ready to purchase the property out right, or when they leave and you sell it to another party, you will have more equity in the home and therefore receive a larger profit.
5.
Use Loans Effectively If you are in the business to develop and sell or buy and sell, lending institutions may be of great help.
Therefore, an increase of property equity will be of much significance.
When extending loans, commercial banks always want to know whether it will be possible for the borrowers to pay the loans advanced.
It will therefore be in your interest to build a better credit rating for the purposes of accessing loans for improvement.
You may also find it interesting to note that as you continue to pay off the loan advanced against your property, the banks may allow you to borrow more using your greater home equity.