Increasing Cash Flow in Single Family Homes
Cash flow is what is left
over at the end of the month, after all, the bills are paid. It is one of the
cornerstones to building our portfolios and continued wealth creation. Cash
flow is probably the most important thing we look at when investing in a
property. With interest rates where
they are, it has helped on the cash flow front. However, as anyone shopping for
a home today can tell you, property prices have been pushed up very rapidly,
making it harder to find properties that make business sense. One way to combat this,
and continue to grow, is to find ways to increase your cash flow on single-family
homes. You can then open up new business opportunities where you may not have
had them before. These opportunities can
include investing in new cities, buying at different price points, or just being
able to grow and expand your portfolio faster. Some
ways to increase cash flow include: Implementing
a Rent to Own strategy Our rent-to-own strategy has
been tested and used over and over again. By giving a tenant the option to buy
the home after a pre-determined time, you are creating monthly cash flow. You collect an up-front down
payment to increase the amount of cash you pull out of the property from day 1,
and in addition, you can get a higher rent by offering the tenant monthly
credits to increase their down payment. A nice bonus is that the tenant
has a vested interest in the home and therefore, they tend to take better care
of the property. Increasing
the down payment you put down on your home This is a fairly straightforward strategy. The higher down
payment you have, the lower your carrying costs. Some members are using this as a way to put their money to
work where they have control, instead of relying on a stock or bond that can
have unpredictable returns. Buying a cash flowing piece of real estate allows you to
ride the ups and downs of the market. Providing student housing Clean, safe, and well-located student housing will always
be in demand. A major positive of these types of investment properties is that
you can typically charge between $350-$600 per bedroom, depending on the school
and location of your property. There is more work with a student home, but the payoffs
can be impressive. Just recently, we worked with someone and we found a great
single family home close to Western University. This one student rental would
have a revenue of $2,000/month. To make things even better, we looked at the
numbers and found by investing around $2,500 in repairs, we are going to be
able to increase our monthly income by approx. $500/month. That brought the
total revenue of the property to of $2500/monthly. Creating a secondary suite Secondary suites, in-law suites, or basement apartments,
are a cash flow strategy that has been about for years, but the changing market
in Ontario has expanded this option. Soon, cities in Ontario will no longer be able to outright
ban secondary suites in homes. They will now need to come up with rules
surrounding their existence. This is a great opportunity to take the right home and
greatly increase the monthly income it creates. To give you an idea of the numbers we are talking about,
if a home would rent out for approx. $1,500-$1,600, you can most likely bring
that up to $2,300-$2,500 by renting it out to two different families.
NOTE: The rules will be different for each
city, so make sure to research the rules and regulations for your city. Regardless of which strategy
you feel is best for you and your goals, remember that there are strategies to
help you evolve and grow as an investor. Some Cool Free Stuff... Step 1: Grab a free digital copy of our real estate investing book, Income For Life For Canadians, right here. This book has been downloaded over 22,597 times and has helped hundreds of investors kick-start their investing with simple and straight forward strategies that you can implement right here in Canada. You'll also receive our weekly [Your Life. Your Terms.] email newsletter with the latest investing updates and videos. Step 2: Free Weekly Investing Videos & Articles: Get the latest updates and join the over 10,000 other Canadians enjoying the weekly [Your Life. Your Terms.] email newsletter. The email is sent out each Thursday. And as a little bonus we'll give a FREE digital copy of the book, Income For Life For Canadians, too! Your Life. Your Terms. Step 3: Free LIVE Investing Class: Do you live in the Greater Toronto or Golden Horseshoe Area? Come out to our next introductory "Investing in Nice Homes in Nice Areas" Real Estate Class. It's 90-minutes and you'll learn a ton - promise!Thousands of investors have now joined us for this class and the feedback has always been amazing.
