Achieving Positive Cash Flow from Your Real Estate Investments

Even if you're counting on rising property values to eventually make a profit on an investment property, it's far more desirable to have a positive cash flow each month. If you're losing money on a property every month, it may not take long until your future profits will have been lost. Owning investment property is much more enjoyable if you're making money along the way.

Here are a couple of ideas for keeping your investment property cash flow in the black:

If you don't already own your own home, your first goal should be to live in your first "investment" property. Interest rates and down payments are considerably lower for a primary residence, and you won't have to deal with finding and managing tenants or absorbing the cost of an occasional vacancy.

Once you begin looking for your first "official" investment property, you'll want to concentrate your search for less expensive homes, because they're generally easier to rent for a profit than higher cost houses. You can also purchase two or three smaller homes for about the same cost as one larger one, thus giving you an even greater cash flow.

One of the easiest ways to achieve a positive cash flow is by obtaining a loan with a very low interest rate for the first several years. One example is known as a "payment option" loan, although these types of loans may not be available in all states.

These loans allow you to set up an optional minimum payment, which can result in low monthly payments, often for the first five years. During that period, your minimum payment will increase by a small amount every year, although it's usually no more than a factor of 1.075. During the minimum payment period, your interest will still continue to accrue at whatever rate you've agreed on (such as 4.5%), but the interest that your payments don't cover will be deferred. At the end of the first five years, that deferred interest is then added on to the loan, and the loan becomes a standard variable rate loan. Normally, that's not a problem, however, because the property's value probably will have increased enough to cover the deferred interest.

Another way to minimize monthly interest payments is through an interest-only loan. The period of most such loans is usually 5-10 years, during which time, you'll be paying only the interest on the loan. To make this type of loan work most effectively, it's best to sell or refinance the property by the end of loan period.

There are many other ways to realize a positive cash flow on your investment properties, depending upon the financing options available in your area of the country. But regardless of where you live, it's always desirable to have your investment properties pay for themselves, and can move you a long way toward your goal of financial success as a real estate investor.

(c) Copyright 2004, Jeanette J. Fisher and Robert S. Kramarz. All rights reserved.

Jeanette Fisher, Design Psychology Professor, is the author of "Doghouse to Dollhouse for Dollars: Using Design Psychology to Increase Real Estate Profits," the only book to reveal interior design secrets on how to make top dollar investing in real estate. For real estate and interior design psychology books, articles, tips, and newsletters: http://www.doghousetodollhousefordollars.com.

Robert S. Kramarz is a loan officer for a major loan brokerage. He has over 20 years experience in finance and business management and comes from a family a long background in real estate investing and banking. He specializes in providing financing for purchase of investment real estate. He can be reached by email at MrFunding@22cv.com. Further information is available at the website http://www.sweetloan.info.

---

Why it is Important to Hire Just One Real Estate Agent to Buy a Home

In our fast paced and frantic real estate market, buying... Read More

Pricing your House to Sell

Most Sellers set their initial asking price at an amount... Read More

Selling Your Home: The Power of a Great Sales Flyer

Even though its importance is often overlooked, a great sales... Read More

The Real Estate Bubble-When Will it Burst?

More and more individuals are realizing that real estate is... Read More

Buying A Holiday Home in Rural Ireland

Ireland has recently witnessed an upsurge in the number of... Read More

Secrets of Making Money from Real Estate - Part 1

There are three investment vehicles which can make you rich.... Read More

Is Second Home Ownership In Your Future?

According to the National Association of REALTORS® (NAR), a record... Read More

The Benefits of A Real Estate Agent 101

Buying and selling property is not as easy as you... Read More

Nobody Loves A Landlord

The typical landlord starts off life as a light hearted... Read More

Why Move to the Poconos?

Awaken to the sounds of softly rustling trees and tranquil... Read More

Commercial Real Estate: Assessing The Unique Features Of Commercial Real Estate Parcels

As commercial real estate development progresses into the 21st century,... Read More

What is a Loft Apartment?

What is a loft apartment? At the most basic level... Read More

Budgeting Your Log Home: Where Do You Start?

The Log home industry has matured these last many years,... Read More

Selling Your Own Home ? Pet Issues

If you are selling you own home, you need to... Read More

Selling Your Home ? What Can Go Wrong With Pricing and Loans

So, you're selling your home (house, townhouse, condo, apartment, land,... Read More

Home Equity Loans ? Beware of Appraisal Fraud

A new report by the independent Demos group has revealed... Read More

Buying a Home ? Dealing With Lender Letters

Most people who set out to buy a home, be... Read More

The Real Estate Agent Alphabet

Alphabet Letters after a person's name seem to bestow some... Read More

Hurricane Katrina And The Impact On Real Estate Prices

In the wake of Hurricane Katrina's wide path of destruction,... Read More

Types Of Real Estate - An Investors Choice

There are different types of real estate, and different ways... Read More

Ten Steps for Becoming a Successful Real Estate Investor

The secret to success in real estate investment is finding... Read More

Top Tips for Buying and Selling a Home

BuyersLooking for a home-Use Internet for overview of properties, communities,... Read More

Will a 1031 Property Exchange Solve Your Problems?

If your problem is listed below, a 1031 exchange may... Read More

At Home In Your Overseas Home

Homeownership, in any form, is a big step for most... Read More

Conventional Financing For Wholesale Deals

This info is very important for both new and experienced... Read More

Becoming A Battle Hardened Real Estate Veteran Without All The Scars

Step 1 is always to determine the fair market value(FMV).... Read More

Investment Concerns for Selling Your Home

Besides the emotional upheaval of uprooting from your home, your... Read More

Property Investing Secrets 7

Property Investing Secrets:How Buying Real Estate Is Like Planning a... Read More

Choosing Your REALTOR ®

With so many realtors competing for your business, how do... Read More

How Much Home Can You Afford In Todays Market?

If you haven't figured your credit worthiness and borrowing power... Read More

Easing Your Way Into Homeownership: A Guide To Low Down Payment Mortgage Programs

There's no question about it: Buying a first home is... Read More

Questions To Ask The Landlord Before Renting His Apartment

Apartment hunting is not the easiest thing around. You may... Read More

Young Couple Buys Ranch with Government Money

Kirk and Tina Sczepanik had a dream. They wanted a... Read More