Positive Cashflow

How to Quickly and Easily Invest in Property so That you Make a Positive Cash Flow from Day One

Real estate has been, and always will be, a hot commodity. Even though some houses may see a slight decrease in price, over the long run, the real estate market is consistently on the rise. What this means for potential investor’s is that real estate is a great way to make positive cash flow.

In fact, with smart investing, research and cash flow analysis, it’s possible to start making recurrent income from day one.

Here’s how:

First and foremost, you will need to undergo a cash flow analysis whenever you are considering investing in a property. Essentially, when you are making more each week than you are taking out of your pocket, then you have a positive cash flow. So, take into consideration the weekly/monthly repayments, materials, taxes and interest rate and compare that to the incoming cash from your weekly rental fee for the property (or mortgage rate if you are planning on wrapping real estate). If you are bringing in more than what is going out, then you are in the green and making a positive cash flow.

Here’s an example: let’s say you buy a house for $100,000 with payments of $800 per month for the next 10 years (make sure you always include interest and tax). If you are renting the property out for $300 per week ($1200 per month), then you are making an extra $100 per week or $400 per month each and every week for the next ten years. Once the house is paid off in full, you will be making an additional $1200 per month, or most likely more with the rising cost of living. This is a positive cash flow analysis that benefits you from day one.

In order to quickly and easily invest in property, you need to know what you are looking for. You should look at your income, your tax position and your level of comfort with debt when determining what property is right for you.

Next, make sure you do the research. Check the statistics of housing prices and rentals in certain areas. Search the net for properties all over the world. With Google Earth, you can see a clear view of any property, even if it is across the world. Consider properties that are lower value, blocks of units, motels, hotels and boarding houses as they offer the best positive cash flow analysis. It’s also a good idea to talk to a real estate agent or appraiser and property managers who can fill you in on the local trends.

Finally, be creative when it comes to your search. Look for easy fix-me-uppers, split level houses that can be converted to two different rental units and old motels that can be transformed into permanent residency.

Positive cash flow real estate investing is not rocket science. Furthermore, you can benefit from this investment almost right away if you follow these steps, think outside the box and always weigh your investment options carefully.

Positive Cash Flow- How to Stay out of the Red from Day One

With the economy in the state it is today, more and more people are turning to real estate to build up their investment portfolio. After all, the stock market seems as reliable as a broken inflatable device and the real estate prices are lower than ever. It makes perfect sense right?

However, in order to be sure you are actually going to profit from real estate investment, you need to ensure that the property you buy guarantees positive cash flow. What this means is that the property should return cash to your pocket every single week from day one. While some investments take a few months, or even years, to start paying out, positive cash flow with real estate should not. You should be able to make a profit from day one.

But how?

First of all, you need to look at the rental income, the current rate of interest on your loan, the deduction allows and the current rate of taxable income. When looking at the rental price in regards to all of these things (in other words, compare what’s going in and what’s going out each week), a positive cash flow should provide you with an income greater than the property cost you. A positive cash flow is usually anywhere between 6 and 10%; however, it is possible to make 25% or even more with positive cash flow real estate investments.

Here’s a real life example:

John and Julia bought an investment property for $200,000. Their repayment plan requires them to pay $1000 per month to the bank. However, if they rent the investment property for $1500 per month, then they are making a positive cash flow of $500 each month. Keep in mind, however, that John and Julia also had to take into consideration labor, materials, taxes and interest when determining if this was a good investment.

One of the reasons investing in property is such a hot commodity is because, unlike stocks in companies, for the most part, real estate will constantly go up in price. A home that was worth $100,000 twenty years ago is most likely worth $300,000 now! Neighbors from across the street, who have been in their home for only 10 years, bought their house for $320,000. Now it is appraised at over $800,000! The trends may rise and fall, but in the long run, investing in a house is always going to pay off.

Do the research, calculate the math and determine if your real estate investment will grant positive cash flow from day one. There is honestly no reason to go into the red when it comes to real estate investing. Once you have made that initial payment, you should be able to stay one step ahead of the repayments and the interest and pocket the positive cash flow for later. Investing in positive cash flow from day one will ensure that you are well on your way to investment success for the future.

The Three Biggest Benefits to Real Estate Wrapping

If you have never heard of the term real estate wrapping, then don’t worry, you are not alone. Many people are unaware of real estate wrapping and what it can do for first home buyers. Essentially, real estate wrapping is an alternative to buying a house from the banks.  For first home buyers who do not have perfect credit or for those who cannot be approved for a loan, then real estate wrapping offers an alternative you can appreciate.

There are several different reasons why a loan application may not go through; your job may not be 100% stable; you may have too much looming debt from college loans/etc; you may have bad credit from a credit card in the past. Whatever the reason, many people assume that after they are denied from the bank, they are destined to rent forever.

This is not the case.

How real estate wrapping works is, instead of going through the bank, you go through an investor, or a wrapper. A real estate wrapper has already mortgaged the house and will put you on a payment plan to work towards buying the house. Wrapping eliminates the banks as well as the fuss that goes along with it.

For the first home buyer with less-than-perfect credit, this is an ideal situation. However, the first home buyer is not the only person benefiting from this real estate investment option.

The real estate wrapper also does. In fact, for smart real estate wrappers who have done the research, weighed the options and calculated their cash flow analysis, the benefits are endless. Here are three of them: 

1. First of all, real estate wrapping offers a recurrent monthly repayment income. While you automatically pay the bank a certain amount per month for repayments (say $800), you will be getting that money back from the buyer. Smart wrappers will charge a little more per month (such as $1000) which means you are pocketing an extra $200 per month for the span of the loan.
2. Second of all, this money comes in right away. With a deal like this, called positive cash flow, you are making an additional income as soon as the deal goes through. Although you will be paying the bank starting on the beginning of the month, you will also be making money each and every month as well.  
3. Third of all, this will go on for the span of the loan which could be anywhere from 10 to 30 years. Imagine an extra $200 per month for the next 30 years? That equates to over $50,000 extra just lying around. You haven’t had to put in extra hours at work and you didn’t have to risk your rainy day fund on the stock market. The money you save can be put to excellent use: save up for a vacation home; set up another retirement fund; invest in your children’s education; plan a trip around the world; buy a yacht. It’s entirely up to you.

Let me tell you a little story: it’s about a young family. Both the husband and the wife worked and they were doing fairly well for themselves. However, both we a little concerned about the future, especially with the economic trends of today. They were half way through paying their mortgage and had a little money to invest. The wife wanted to blow the money on a trip to Europe. The husband (after many long arguments), convinced her that it would be better to invest in real estate. So they did. They did the research; they found a perfect (and cheap) property online; and they determined their cash flow analysis.

They applied for second mortgage, got it, and then looked for a buyer. Because of the current state of the economy more and more young couples are having troubles getting approved for the loans they need to purchase a home. So the husband and wife found a young couple that was currently battling the banks for a loan approval. They offered to help them out- they pay a mortgage to them at a set interest rate. No banks, no credit approvals, no muss, no fuss. It was a done deal- this deal is known as wrapping.

So what became of the young family? The young family was able to charge a higher rate because of the elimination of the banks and thus, even with the monthly repayments, they were able to pocket well over $400 per month from day one. This is a positive cash flow real estate investment that gave the family an additional savings account for the next twenty years of their life.

The wife got her European vacation after all, and the husband had saved up enough to buy a speed boat. They both retired five years earlier than planned. The other young couple who bought the house paid off their first home without worrying about confronting banks and interest rate fluctuations. 

It’s a true story with a very happy ending.

But what does it all mean?

The above story is a classic example of real estate wrapping, a term used to describe the process of using a middle man (the wrapper) to make a positive cash flow from the real estate market. Although the wrapper will most certainly benefit- after all, they will continue to receive a recurrent income every single month until the mortgage is completely paid off- so does the person buying the house. The weight and stress of applying for a loan (and then not getting approved) is something everyone wants to avoid. Real estate wrapping is the perfect solution to this 21st century economic crisis. For those just starting out, you will be able to afford your own home sooner; for those in the wrapping position, you have uncovered the perfect way to save up for retirement, obtain long term income or purchase that dream car/vacation/boat/vacation home/etc that you simply could not afford on your regular salary.

Real estate wrapping is recurrent positive cash flow, gift wrapped each and every month. It doesn’t get any better than that!

The What, Where and Why of Positive Cash Flow and Real Estate Wrapping

There’s no denying that investing your money can be a risky thing to do, especially during the global recession. Experts, gurus and physics cannot predict the state of the stock market and the price of commodities in the future. However, one of the safer options when it comes to investment is in real estate wrapping.

What is Positive Cash Flow Real Estate Wrapping?

Positive cash flow real estate wrapping is a way for anyone to invest in property and start making a positive cash flow right away. You do this by wrapping the property which means you act as the middle man between the bank and the buyer. It may sound a little confusing but, in reality, it’s not. Let’s take a look at an example.

Rob purchases an investment property for $150,000. He does some touch ups, renos and works out he will need to make monthly repayments of $800 per month to the bank, including the loan, the taxes and the interest. Rob now owns the house. Rob will then look for a buyer who is looking to own his own house but does not, for whatever the reason, want to go through the banks. He finds Joe. Joe has poor credit from his college loan and has been refused a bank loan. Rob sets up a deal that Joe pays Rob $1000 per month as a mortgage payment at a fixed interest rate. In most instances the interest rate and the monthly rent are a little higher than what Rob is paying to the bank. The extra money goes into Rob’s pocket and is called positive cash flow. The process of Joe buying from Rob is called real estate wrapping.

In the end, all parties involved win: Joe doesn’t have to deal with the banks and Rob gets a steady recurrent income for the next several years.

Where Can I Find the Best Positive Cash Flow Investments?

When looking for property to invest, you need to do the research. Make sure you opt for houses that are found in regional areas where renters are abundant.  Lower value homes are often your best bet and units or apartments can benefit you immensely. After all, if you have a building with 8 different tenants all paying $400 per month, then you are making an easy $3200 each month. In most instances, this is a great positive cash flow as long as the taxes, repayments, etc are lower than this.

Take advantage of the internet such as Google Earth and get in touch with realtors, appraisers and property managers to see what the trends of tomorrow look like. This will help you determine where and what to buy.

Why Positive Cash Flow?

Real estate wrapping is a win-win situation for all involved.  Furthermore, it is the perfect way to have a streaming income for many years to come without worrying about taking on a part time job or working extra long hours. When it comes to real estate wrapping and positive cash flow, the sky is the limit.

What is Wrapping? And Why is Everyone Getting so Excited?

When we think of wrapping, we most likely think of presents. Gift wrapping birthday, Christmas, anniversary, graduation and all other presents is a very common thing in our society. However, there is also such thing as real estate wrapping. Real estate wrapping does not involve presents; however, essentially it does involve buying a house, gift wrapping it to perfection and then re-selling it. Furthermore, like gift wrapping, both the wrapper and the wrappee benefit.

Confused?

Let’s try an example:

This is an actual case and typical of how real estate wrappers are able to profit from this positive cash flow investment. John bought an ugly old house for $100,000. John put in $5,000 for repairs around the house including a new paint job, a new garage door and a few touch ups inside. After the repairs he went to a real estate broker and suggested he could sell the house for $140,000.

John then put an ad in the paper for the house at $140,000. Because people could avoid the banks and handle the low monthly payments, there were a lot of offers but John selected Susie and Fred, a young couple who offered $135,000. This is $30,000 more than what he paid for the house. Furthermore, because the monthly payments will continue to come in every month for a set amount of years, John will have a positive recurrent income that he can either spend or save. John may have to pay the bank $800 per month for interest, tax and repayments; however, he is getting $1200 each month from Susie and Fred. This is $400 per month in his pocket.

Real estate wrapping not only benefits John, but it also helps Susie and Fred reach their dream of owning their first home without having to go through the stress and hassles of bank loans and high interest rates. For young couple just starting out with little to no credit, real estate wrapping provides the perfect alternative to renting. Furthermore, for the investors out there, real estate wrapping provides an immediate positive cash flow pay out for a long amount of time.

Furthermore, real estate is a lot less risky than playing the stock market or buying and selling commodities. Although at the moment real estate trends are all over the map, in the grand scheme of things, houses are always going up in appraisal price. In fact, Fred and Susie, who bought the house five years ago for $135,000 now can get over $200,000 for it simply because a new school was built down the road. Their neighbors, who bought the house twenty years ago for $85,000 and have put in a swimming pool, an extra bedroom and recently painted the exterior of the house can now sell for $350,000.

We are living in an unpredictable society where stocks rise and fall each and every day. However, one thing you can count on is the real estate market. If you do your research, calculate your cash flow analysis and buy-wrap-sell smartly, then you can stand secure your future, gift wrapped and all.