Finding Positive Cash-flow Property
Rachel Barnes and her partner accumulated a staggering 75 rentals within 64 months. This feat was made possible by locating and buying high yielding cash-flow positive property. No prizes for guessing what the most common question people ask Rachel ... how do you find positive cash-flow property?
Here are Rachel's top 10 tips for finding positive cash-flow property:
1. Know what you’re looking for!
The first thing you need to define is, what sort of return do you need to make a property positive cash-flow. This may depend on your income, your tax position, and your level of comfort with debt.
2. Debt funded Positive Cash-flow options
If debt is something you’re comfortable with, and can manage well, you may consider using equity to fund the short-fall in high growth potential properties. Make sure you understand the pros and cons of this sort of strategy well though, before you choose this option.
3. Check Statistics - eg Australian Property Investor Magazine
API often provide Statistics showing Average rental returns for most areas. If you find the highest ‘average’ and then research properties in that general location or just outside of it, then you have at least a starting point to work from.
4. Trawl The Net
The ability to find properties all over the world and even in your own backyard with the resources available online is magnificent. You have the ability to shop and research 24x7 which gives you fantastic opportunities.
Searching for specific property types, prices, locations, and styles of housing can provide very efficient use of your time. Use alerts (as long as they are instant) to get new listings within your search criteria delivered to your inbox instantly. www.realestate.com.au is ideal for this option. When searching consider:
- Look for lower value properties (often the best returns)
- Blocks of Units
- Motels / Hotels / Boarding Houses
5. Use Google Earth
This is a fantastic free program which helps you survey an area using satellite technology. It’s great for looking at properties which aren’t in your backyard. You can get a fair idea of the layout of the area and look at the properties you’ve found on the Net. The layout of the land might show you potential for increasing the cash-flow of the property.
6. Talking to all Agents in the Area
Talking to all or at least a number of Real Estate Agents in an area can give you an overall picture of the area, help you understand the growth potentials relating to the local economy and what areas potentially to avoid. However, sometimes the areas they tell you to avoid can still be good to invest in.
- This can be done completely remotely by telephone and email. Many agents are tardy in responding to emails so an initial telephone call would be more effective usually with a follow up by email. If you leave a message, make sure you are ready for their call and know the information you’re seeking.
- It is sometimes more rewarding to have face-to-face conversations which gives you the potential to establish good rapport.
- When dealing face-to-face always have a business card with you to introduce yourself as a professional investor and leave it with them when you go in case something comes up that might suit you. Having specific buying criteria on the card and even your picture can really help them keep you in mind for future property listings.
Having a script ready is always good so that you make the right first impression. You need them to feel confident that you are a serious buyer and know what you want. Be specific in what you’re looking for – this will help them understand what a ‘good investment’ is to you!
7. Talk to the Property Managers
If you’re looking to be a Landlord then these are definitely the people to speak to – they’re dealing with Landlords and Tenants daily. They understand where the tenant demand is, what they’re likely to pay for specific style and location of housing.
Important questions you can also find out is if they know any Landlords considering selling? Are there any problem properties where an existing landlord might be motivated to sell and where the property manager would love to have a new Landlord improve the property to make tenancies easier and less hassle. Perhaps you could be their solution!
8. Network with other Investors
Investors often find out about changing areas – where you might still get a relatively low entry level with a good rental return and have the potential for unusual capital growth.
9. Make ‘Ridiculous’ offers
If you find a property that has a higher than usual return or potential but still doesn’t fit your specific criteria – calculate what price you could pay to have it work for you and make an offer. It may seem like a ‘ridiculous’ offer but what do you risk? Remember it’s the offer that could be rejected – not you!
If a property has been on the market for a while or a Vendor is particularly motivated to sell quickly you’ve got a much better opportunity to get the property at a good price – and therefore a better return. Investing is all about numbers – the more offers you make, statistically you’ll eventually be successful in having one of the accepted.
10. Look for ‘Unusual’ properties
Consider unusual properties where you can potentially get a better than average yield for example:
- Old ‘Queenslanders’ or other properties that can be renovated and turned into 2 or more separate living areas
- Consider Granny flats as a potential for double tenancies
- Consider old Motels that might be able to be renovated to provide individual permanent rental accommodation
- Be creative – check out the 13 ways to turn negatives properties into positive cash flow at the Property Women Workshop currently touring the country.
If you are keen to be successful in property investment you'd be wise to get educated. An education could save you from making a costly mistake, or assist you to locate a great deal, or help you when it comes to tax, structures and finance. The good news is you now have some great choices when it comes to great property education ...
Property to the Max Workshop
Take action and start building or accelerate building your property nest egg. This 2-day workshop is a high-intensity; property focused master class revealing market-tested strategies to build a significant property portfolio.
Reno Kings: On the Buses Workshop
The Reno Kings have designed Australia’s most innovative educational opportunity for aspiring property investors.
Property Women Workshop
For the first time ever we have created an opportunity for you to learn and thrive in property with a network of like-minded women.
Renovate on a Budget | Finding Cash Flow Positive Property