How to Make Properties Go Positive

| Posted: 05-07-2007 | Comments: 0 | Views: 3 | Rating: (50)

(?)

Many investors will agree that cash flow is the secret to successful investing. Whether it is a property or business, the key to success is to have a strong grip on your cash flow situation. Interest rate increases, like the ones we have recently experienced, can significantly eat into the cash flow. Many people think that one needs to amass great sums of money to build wealth, but building a strong inflow of cash can also bring about financial freedom without having piles of cash.

The trick is not to focus on all the debt, but to build your strategies around cash flow. It is highly evident that many investors don’t know what to do in order to generate positive cash flow from an investment property. By asking yourself “How do I make money from an investment property I already own?” you will come to the conclusion that you need to generate more income or you need to reduce your expenses on that particular property.

How to Reduce Expenses on a Property

* Your biggest expense will be the monthly instalment that you have to pay the Bank. By extending the Bond over a longer period (like 30 years), you will reduce your monthly instalment. Don’t focus on the extra interest that you have to repay, it is the tenant that repay’s it for you.

* Negotiate a better interest rate with your bank. Normally when you extend the bond period to 30 years they are more than willing to drop the rate. In the process, negotiate a discount with the lawyer (up to 20% is normal, some investors get no less than 30%).

* Do your own management on your rental properties. It is a simple exercise of monitoring your bank account to see that the money has been deposited. Especially if you only starting out with a few properties. Once you have a strong, positive cash flow and enough properties, consider using an agent.

How to Increase Income on a Property

* The easiest is to have a rental escalation clause in your lease Contract. Normal escalations are 8 - 10% p.a.

* Consider converting a storeroom or double garage into a granny flat. Having more than one tenant on one property can generate substantial cash flow.

* Considering adding a granny flat if possible. It can be FAR cheaper than buying a new small flat.

* See if you can subdivide the land. Either to sell the divided part or to build a second unit on.

* Have you ever bothered to ask your tenant what he would like? A second carport or security gate can generate more income.

* Look at the security of the property. Can you add more security to increase the rent (e.g. burglar bars, alarms, etc)? If you don’t know, ask the tenant if such additions would add value.

* You can change the nature of the property? Rezone farming land for residential use or changing residential to business rights can be most rewarding.

* By adding additional businesses to you student housing like a Laundromat facility, games room with coin operated pool tables or put vending machines that sell sodas or sweets you can generate additional income. This will also make your property more appealing in comparison with the one next door.

* Convert a 4 bed 2 bath house into two 2 bed apartments. Not only will it generate more income but you reduce your risk as well.

By combining some of these ideas can easily make you property go positive. Also take note of what to look for when you buy your next property. The more space you have, the more options to consider. Each property has unique opportunities like extra space, additional buildings or it might be the ideal location. It is your job as an investor to identify the opportunities that others don’t see. Use your imagination to see with your mind and not only with your eye’s. In the mean time, with all the interest rate increases, exercise your imagination on your current property investments.

Rate this Article:

Current: 0 / 5 stars - 0 vote(s).

Article Tags: Real Estate, Propery Investor, Investment Properties

Article Source: http://www.articlesbase.com/real-estate-articles/how-to-make-properties-go-positive-176121.html

Print article

Send to friend

Publish this Article

Author feedback

About the Author:

As a property investor and real estate agent in South Africa, Karen Wheller is actively engaged in helping local and foreign investors find property investments and beginning investors climb the property investment ladder through education and sharing of knowledge. Karen Wheller is a co-founder of Property Axis and Property Investor Network.

Submitting articles has become one of the most popular means of generating quality backlinks and targeted traffic to your website. Join us today - It's Free!

Article Comments

Add new Comment

How to Make Properties Cash Flow Positive
By: Karen Wheller | 05/07/2007 | Real Estate

The Basics Of Investing In Real Estate
By: Edwin John | 22/06/2007 | Real Estate

How You Can Choose A Great Realtor
By: Craig Chambers | 28/08/2007 | Non-Fiction

Will My Children Be Able to Afford a Home?
By: Nef Cortez | 12/01/2006 | Finance
Free Finance articles for use on your Finance related website. Find articles of the subject of Finance

Be Shrewd When Buying Real Estate!
By: John Mejia | 08/01/2008 | Real Estate

Why Real Estate Investors Have Their Own Investment Criteria
By: Brad Wozny – INSTANTRealEstateSolutions.com | 12/05/2008 | Business
Business Articles, learn about busines - An organization created with the objective of making a profit from the sale of goods or services.

Ways to Stop Foreclosure
By: Marina Clark | 26/05/2008 | Real Estate

Children Facing Foreclosure And Homelessness Beg Your Understanding!
By: Mike Payne | 02/05/2007 | Business
Business Articles, learn about busines - An organization created with the objective of making a profit from the sale of goods or services.

Got a Question? Ask.

Ask the community a question about this article:

Q&A Powered by:

Latest Real Estate Articles

Small is Beautiful
By: Carol Freyer | 06/10/2008
One major bonus of Shafer's homes is the low cost of heating. Heated with propane, his own home—a smaller model—costs him $170 per year to heat, and that's in Iowa, where winters are winters. Plus, a smaller home requires less maintenance. Everything is smaller and therefore the amount of work to be done is less: less to dust, less to vacuum.

Realty Remodeling Rules
By: Carol Freyer | 06/10/2008
If you are living in a lower price area and put in a swimming pool and an outdoor kitchen before you list your house, it will most certainly bring the buyers to your home. It will no doubt bring in offers for your home and all this is good news.

Get Your Heating Bill Down
By: Carol Freyer | 06/10/2008
Some statistics say that as much as 80% of the hot air can be lost up the chimney. If that is added to the amount of cold air that is pulled from the atmosphere, then the old log fireplace could almost be said to be mainly a visual experience.

Astrology, Feng Shui, Magic Spells... and Selling Homes
By: Carol Freyer | 06/10/2008
Astrology has been used to divine the future since before the Common Era. Many people today view it as a harmless amusement. Move.com even has a section for "homestrology" profiles. Realty Times did an article entitled, "Look to the Stars for Decorating Advice", featuring astrologer John Marchesella, who claims that knowing your Sun Sign can help you choose colors for your home.

Americans Want Green Homes!
By: Carol Freyer | 06/10/2008
Heating takes a large chunk of our money during the winter months; have you thought of installing a wood stove with an outside chimney (the easiest to install)? The new stoves that leave almost no residual wood and are almost 'smokeless' are part of a grant scheme offered by some governments.

Real Estate in the Top 4 Louisiana Public School Districts
By: Andrew Stratton | 06/10/2008
Louisiana Public School Districts are great areas to live as they offer excellent school system, security, and lot of enjoyable activities. A realtor can help buyers make a good deal.

The R.E.I. Revolution On The Internet
By: Damian Lanfranchi | 06/10/2008
Understand it and thrive. Ignore it, get left behind. I want to make sure that you truly grasp how the internet is revolutionizing the Real Estate investing world. It's absolutely critical to the success of your business. It's something that a lot of the Real Estate investors and gurus are missing the boat on when it comes to their real estate investing website.

Cyprus Property is Hot! But is it Getting Too Crowded?
By: Steven Clarke | 06/10/2008
The recent interest in Cyprus property has initiated a housing boom on the island. It doesn't matter where you go on the island, you can often hear the sound of construction in the background. Developers are scooping up land at an alarming rate trying to keep pace with the growing...

More from Karen Wheller

The Impact of the Nca on Real Estate Agents
By: Karen Wheller | 18/10/2007 | Real Estate
The estate agent community has expressed extensive concern over the NCA. Is the picture really that of gloom and doom? Just as with other articles this month, the answer is yes or no, depending on your perspective. To help you decide which, this article takes a broader view of the picture so that we all can hopefully make more sense of the situation.

How to Make Properties Cash Flow Positive
By: Karen Wheller | 05/07/2007 | Real Estate
With increase in interest rates and tightening credit from lenders, investors must start to look at how to make more money from their current investment properties. Optimizing the portfolio has never been more important than in the current economic climate.

Investment Property - How to Define It?
By: Karen Wheller | 05/07/2007 | Real Estate
With the increase of buy to let properties and the hype in the property investing market, often an investment property is confused with a simple property trade deal or speculation. Often any property purchased is viewed as an asset and therefore called an investment property. That is true in the wide sense of a discussion. However, a property for investment is not any property purchased just because it is viewed as an asset.

The Property Axis Guide to Selling your Property
By: Karen Wheller | 13/05/2007 | Real Estate
Selling your home will always be a period of stress and anxiety, however the constructive tips in this guide will help you to sell your and achieve the best price possible. Look at the entire process as a business deal.

Negative Gearing for Property Investors
By: Karen Wheller | 12/05/2007 | Real Estate
The term negative gearing is not very widely used in South Africa, in fact if you Google it you will find mostly Australian domain’s. Though the term is not widely used, we found it is extensively employed as an investing strategy and often with little knowledge of its’ meaning and consequences. In this article, we will look at negative gearing and how negative gearing affects property investments.

Article Categories

Article Marketing

Article Notepad

Stop Duplicate Content

Term Papers

Need Help?

Sign up for our email newsletter

Receive updates, enter your email below

Use of this web site constitutes acceptance of the Terms Of Use and Privacy Policy | User published content is licensed under a Creative Commons License.
Copyright © 2005-2008 Free Articles by ArticlesBase.com, All rights reserved. (0.32, 17)

How to Make Properties Go Positive

Article Comments

Related Articles

Got a Question? Ask.

Latest Real Estate Articles

More from Karen Wheller

Need Help?

Site Links

Webmasters

Business Info

Sign up for our email newsletter