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.

---

Get To Know About Building Codes & Town Planning Applications, If You Want To Build A House

These are real building questions that I received from readers... Read More

5 Rock-Solid Real Estate Investment Strategies

Investing in real estate is more complex than simply buying... Read More

You Dont Need Health Insurance!

Seems almost every situation in our lives is centered on... Read More

Youre Not Paranoid: The House Really Hates You

If you've just bought a house, you may be able... Read More

Selling Houses Fast: Basics of Design & Color Psychology

Fixing up houses to ready them for sale includes a... Read More

The Person With The Most Money Wins!

More money can mean better:- Health Care - Relaxing... Read More

Buying Houses: Types of Bargains to Find

To make a good profit in real estate, you must... Read More

How to Choose the Proper Entity for Your Business

First, let me state that I'm not an attorney and... Read More

An Overview of Easements

Title insurance is generally associated with insuring a purchaser's or... Read More

Time Is A Major Real Estate Wealth Growth Tool, So Use IT And Watch Your...

In Real Estate "Time" is a Wealth Development ToolsReal estate... Read More

How To Best Negotiate A House Deal

Whether it's selling your home or buying a home, more... Read More

Real Estate Investing: America Rents

Most people in America rent a personal dwelling!Just think how... Read More

Real Estate Feasibility Study (Cost Side) - $1.2 Billion Developer Tells You How To Do One

There are two sides to real estate development feasibility study:... Read More

Rehab Foreclosed Houses the Right Way and Keep All the Profits!

I've been teaching people how to buy foreclosure properties for... Read More

Maltas Market Battle

With new destinations such as Bulgaria, Slovenia and Croatia offering... Read More

Real Estate Investing - Free Vacations While Searching for Real Estate Acquisitions

Real estate investing professionals look for all possible tax deductions... Read More

Real Estate Investments

Real estate investments come through a variety of different options.... Read More

Buying A Home ? Rain, Sun, and Weather Issues

When buying a home, it can be easy to overlook... Read More

Tax Assessment/Appraisal: How Do I Know What My Home is Worth?

If you are in the home buying or selling market,... Read More

What to Look for in a Real Estate Agent

Real Estate Agents play an essential, critical role in the... Read More

We Buy Houses Scams ? How to Spot Them and How to Avoid Them

There are many reasons why a home owner would want... Read More

Should You Accept A Full Purchase Offer For Your Note or Not?

You could be facing a dilemma when considering payout options... Read More

Investing In Real Estate Investors

With the never-ending changes in our Real Estate Markets real... Read More

The New First Impression in Home Selling

As an ASP Home Stager® I know how important curb... Read More

The UK has Gone Property TV Show Crazy!

The UK has gone property TV crazy. There are now... Read More

Escrow Accounts ? Are You Paying Too Much?

Money in escrow is "dead money". It doesn't earn interest... Read More

Beat the Crowd when Investing in Real Estate

We all are thinking about it and some of us... Read More

Real Estate Web Design - 3 Items You Must Include on Your Site

Real estate web design requires you to do things a... Read More

Is 100% Annual Return On Investments Possible With Low Risk Land Investments?

In last week's article, we discussed how substantial profits could... Read More

Planning for Real Estate with Estate Planning

One of the most important considerations you will need to... Read More

Real Estate Investing - The Motivated Seller

How the heck do you find a "motivated seller?"The motivated... Read More

Late Mortgage Payments Sabotage PMI Cancellation

There's something you should know about PMI!Private mortgage insurance is... Read More

High Tension for the Buyer and Seller of Real Estate Can Be Reduced

Tensions can run high in both the selling and buying... Read More