Investment in real estate whether on the equity or debt side offers a variety of alternatives for fixed income. Real estate is a good place to start if you are looking for ways to increase the cash flow from your investments. Stabilizing the real estate market can be a huge benefit to the buy and hold real estate investor. Most investors are investing in the real estate for the positive cash flow attached to each property, thus securing their goal and financial freedom. Positive cash flow is the money left over after all financial obligations related to the property have been paid. The buy and hold real estate process is where you buy an investment property and rent it out to a creditworthy tenant.
Many homebuyers and long-term investors are equity rich and cash poor. Sometimes it is good to tap into this equity and reinvest the funds to take advantage of buying opportunities and transforming real estate equity into cash flow. Conduct due diligence and locate properties that may be purchased at discounted prices that once rented would generate positive monthly cash flow. Make the property rent-ready by renovating or implementing mid-level upgrades. Equity offers a ready stream of low-interest funds and can be accessed quickly to finance real estate and development projects.
You can build and grow your real estate portfolio which will help turn your real estate equity into cash flow. In order to survive in today‘s market amid Covid-19 your ability to access financing will play a major role in your survival in the real estate industry. Getting your finances in order, checking and building your credit score, building cash reserves and organizing your financial documents will help increase chances of accessing real estate financing increasing your cash flow in the long-term period.
- Appreciation: Appreciation is the increment in the value of a real estate property in respect of time. Though cash flow is the primary consideration, appreciation in value over time is important. There are two ways in which you can build equity in a rental property, appreciation in value and paying down the mortgage. Intelligence leveraging of your investments can be used to grow your portfolio using the equity in owned properties. A property’s value increases significantly over time.
- Expenses: Owning property comes with major expenses such as taxes. It also comes with the benefit of deducting mortgage insurance, property taxes and other allowable expenses. As you pay down mortgages make sure to leverage with equity and be careful to not overextend. It is positive if you can offset expenses with monthly cash flow left over. This will help you grow wealth.
- Fix-and-flip investing: Pre-foreclosures present an opportunity for investors to locate properties before foreclosure that they can buy at a discount to full market value. Fix-and-flip investors provide a ready-to-rent property and fixed-income payments. It has proven to create wealth and generate cash flow. You can choose anytime to put the property up for sale once completed.
- Property value: Doing a comparative market analysis is key in understanding the market value. This locks in a profit at the closing table. It also makes it easier to generate an acceptable profitable cash flow when mortgage payments are lower.
Real estate investing requires a lot of hard work, patience and business system. Once you find your momentum and hone your skills it will be possible to turn real estate equity into cash flow and grow your real estate portfolio.