What is the prime objective of a property investor? The answer is to generate capital, and in order to generate a satisfactory amount of capital in the case of properties, you need to invest in real estate which will yield a good/positive cash flow. In this article we will be discussing 5 reasons you should invest in properties that yields good cash flow and why.
1. A steady passive income
Perhaps the biggest motivator behind investing in property with good cash returns is the fact that they generate a steady passive income. This cash may be used by investors in many different ways, like starting a retirement plan, saving for a rainy day or investing in additional properties in the future. What one does with one’s income depends entirely on the investors own investment goals.
2. These properties are self-supported
Properties that yield a positive cash flow are self-supported; that is to say they pretty much pay for themselves. When it come positive cash flow properties, investors do not need to worry about putting their hands into their own pockets each month to sustain the property as part of the money earned from the property can be used to maintain it.
3. Subsidise Mortgage
Investors can use positive cash flow properties to subsidise the mortgage repayments they may have on any other properties in their possession. This has the added bonus of making an investor’s portfolio cash flow ‘neutral’ and opens up the possibility of investing in other properties without having to draw out from personal finances.
4. Less risk when vacant
One risk property investor’s face when they rent out property is times of vacancy; i.e. times when the property is not occupied by tenants and hence is not producing income. The impact of this is made considerably less when it comes positive cash flow properties as the cash flow generated during occupied periods may cover the costs incurred during vacant periods.
5. Increased borrowing power
Another major factor that may tempt investors to invest in positive cash flow properties is that they increase an investor’s ability to borrow more money from the bank. This is because when an investor applies for a loan, the bank takes into account the fact that they have more than one source of income and will therefore be more willing to lend more money since an investor with good income sources are more likely to pay back their loan on time.
There are many different ways that an investor can increase their income; the important factor is to know what those ways are how to use them. Investing in properties with good cash flow is a useful strategy through which one may earn income which can be used to meet current and future investment goals. Our hope is that with the help of this article you may make a more informed choice when choosing your property investment strategy.
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