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The Truth About Finding Great Cash Flow

Often, investors scour through various online portals and investment clubs to find the property that might bring them great cash flow. They compare a few of them and settle for the one which holds the most appeal. Nothing beats rent in terms of passive flow of income (a fair assumption in today’s times).

Despite a few hindrances here and there, the investor rides merrily on the “great cash flow” vehicle. Larry Arth for the blog EBG writes why the cash flow thing is no more an elusive idea.

Let’s first find out what may obstruct cash flow.

  • You may have to fund for more repairs than you had bargained for; a broken toilet here and a backdrafting furnace there.
  • Higher competition in the rental market forcing tenants to opt out of lease renewal
  • Skyrocketing rental prices might keep your properties unoccupied for long, thus nullifying any cash flow.

You can avoid the “drying rental income” scene

All such situations definitely stunt your flow of income but they can be avoided with some Due Diligence.

  • To begin, always buy in those areas which display diverse growth factors. Any local economy that is dependent on a single industry (quite like the areas dependent on mining industry) might crumble down when that industry suffers. As a result, the property prices in the area may suffer too.
  • Population growth is a key factor as housing needs always run in direct proportion to the growth in population.
  • Job growth is another key aspect. Find out from the local municipality if they have started any incentives to attract workers.
  • The rent to purchase ratio should be in the vicinity of 1:100 and not less at any rate.

Seasoned investors perform Due Diligence

Seasoned investors hardly miss out on earning a good cash flow from their property. This is because rental income never dries out for those landlords who do their homework well. Perhaps nothing like the support of a Buyers Agent Sydney who can conduct his/her own Due Diligence before advising you on a property.

You can read the original article here.

Exhibiting Diverse growth factors is a must for property locations

In my opinion, the first bullet point is a prerequisite. You must look to buy properties in areas that are supported by multiple industries. Take the example of Albury-Wodonga. It is not dependent on one single industry and hence it is likely to sail through property troughs with minimum dents.

You cannot visualise Albury-Wodonga’s economy collapsing at all, thus giving its properties an edge over other areas.

In your opinion, what factor should be uppermost on a property buyer’s mind?