Making money in real estate is great, but how can you do it? Three words: cash flow investing. 

Real estate investors can make money from real estate investments in two main ways. Those would be equity and cash flow. Our focus today is cash flow, ideally positive cash flow. Sure, equity’s great, but cash flow is where the real money’s at. In this blog, we’re going to be talking about how to make money in real estate through positive cash flow investing.

Cash Flow Investing: What is it?

Cash flow investing means what you probably assumed from its name. It’s investing in real estate properties with the intention of producing a cash flow, or steady income from them. These income properties are usually rental properties. The concept behind investing in rental properties is very simple. You buy an investment property, and rent out the units to tenants who would in return pay you rent. The rent that you collect would be referred to as your property’s rental income.

Related: Income Properties – The Best Types to Own During Summer 2018

Everyone’s looking for a profit when they make investments. In real estate investing, the cash flow is what generates the actual profit on rental properties. Positive cash flow investing would obviously refer to investing in rental properties which produce a positive cash flow. A positive cash flow is when rental income exceeds or covers the rental expenses associated with a particular rental property. The opposite of this would be a negative cash flow, which occurs when expenses exceed rental income. A steady and constant positive cash flow from investment properties can really grow your real estate investing empire. Cash flow investing is a great way to maximize your investment portfolio and build a successful career.

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Related: Why Positive Cash Flow Is a Must With Income Properties

This all sounds great, but why aren’t all real estate investors rich even though some have invested in income properties? That’s because it’s not as simple as you might think to just pick any investment property and make money. Following the right steps, and using the right tools, however, can help you make the best real estate investments through cash flow investing.

Cash Flow Investing: How to get started?

There are probably a couple of questions buzzing around your head right now about how to even begin with cash flow investing. Let’s cover some important things you should know.

#1. How to invest in real estate

If you’re a beginner, or still haven’t even entered the game, cash flow investing may seem a bit scary at first. Calculating the associated risk and making sure you’re choosing the right investment property could be tricky. Experience helps, but even professional real estate investors are sometimes hesitant to buy a certain property. What helps them, and can help you, invest in real estate properties? A very convenient and easy tool- an investment property calculator.

Related: Mashvisor’s Investment Property Calculator: Real Estate Investing Made Easier

There are a couple of ways to go around investing in real estate. If you aren’t quite sure real estate investing is right for you, but still want to get a taste, you can rent out a room from your current home. Through a site like Airbnb, you can rent your home to someone on a short-term basis. There’s no long-term commitment and you get a feel of the real estate investing world. Other ways to get started in real estate investing are REITs, using an online real estate platform, or buying rental properties (the best way to get started with cash flow investing). For more on how to get started with real estate investing, click here.

#2. Investment property financing

After figuring out the path you want to follow with your real estate investments comes the important part. How are you going to finance this investment?

If you don’t have enough money saved up to actually buy the real estate property, you’re going to need to get a loan. The typical lender in this case is a bank. When you take a loan from a bank for an investment property, there are a couple of requirements you need to meet. For more on investment property financing, check out the following blogs:

Buying an Investment Property: Cash or Mortgage?Tips For Getting a Mortgage For an Investment PropertyInvestment Property Financing: What Are the Best Options for Real Estate Investors?

#3.Where to invest in real estate

Location makes all the difference when it comes to real estate investing. Even if you’ve chosen the best investment strategy, and got approved for a mortgage, finding a positive cash flow property in the right location is crucial. Using the right real estate investment tools is definitely a way to make this step easier.

Related: Real Estate Investing 101: How to Find Positive Cash Flow Properties in the US Housing Market

Mashvisor’s property finder tool is a quick and easy-to-use digital tool. If you’re interested in investing in your local real estate market, just type in that area. The best listed properties will pop up immediately, making it easier for you to find the right one.Heatmap analysis is also a great way to find the best real estate investments. A heatmap is a map with visual cues of neighborhoods of the best investment properties based on your chosen criteria. In the case of cash flow investing, you could set cash flow as a priority on the map and it’ll highlight neighborhoods with properties with the best cash flow in green.

Related: Finding Income Properties Using a Heatmap

Positive Cash Flow Investing: Making money in real estate

As long as you’ve invested wisely, and have chosen a property with positive cash flow, you can successfully make a profit in real estate investing. Cash flow investing is a great way to maintain your investment properties and build your wealth. They pay for themselves and provide you with the ability to buy even more rental properties. Investing in real estate with cash flow in mind can definitely take you a long way.

We’ve mentioned a couple ways Mashvisor can help you throughout your real estate investing. To learn more about how we will help you make faster and smarter real estate investment decisions, click here.

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