What is CashFlow?

What is the definition of cashflow? Wikipedia declares it to be the movement of money in and out of a business. In every business, cash flow is known to be king.  It is not enough to know that money is coming, you need liquid cash all the time to keep things ticking along smoothly.  It is the same with property.  There may be maintenance issues and a steady source of income will help take care of that.  A statement of cashflow can be obtained from your accountant and banks love to see this; It helps them decide whether to invest in you and your business or product.

People choose to invest in property in order to build a portfolio of cashflow that can be used as a pension or that can replace their current income. This gives them a fall back plan in an economic time that seems pretty uncertain. I personally consider this to be a great idea.  Property is unlikely every to reach a value of zero as it is a required part of daily living – having shelter.  If you are buying for investment purposes, then property, in my opinion, cannot be beaten by anyone.

Here are a few ways to maximize cashflow.

  • Single residential lets

Single residential letsThis is the most common strategy when considering property investment. Most people consider this to be the only way and maybe they are right. It is the least time-intensive method. It is also the least lucrative in the short term but, of course, you are in this for the long term, aren’t you?

To maximize the cash flow in this strategy, ensure the purchase price is appropriate for the rent that can be achieved on the property (I have a mini-course on this subject here on http://buypropertyhelp.com – Just fill in your email on the sidebar). Too many people make the mistake of over-capitalising on their property purchase usually for emotional reasons.  They stop thinking like an investor and buy the property as though they intend to live in it.  This minimizes the cash on cash return.

  • Multi-lets

Split a house into rooms and rent it out on an individual basis. This is a great strategy for cash-flow but may involve slightly more management than the single let option. Of course, you can always leverage the experience of a local letting agent. This will further minimize the time you need to spend on the property.

In this strategy, a yield of 12% and above is usually easily obtained as long as the investor again has been careful about the purchase price and money spent on updating the property.

  • Flipping Property or Buy-To-Sell

Another viable cash-flow strategy though most think of it as capital gains. Some investors make a steady income without holding a single property. You can sell to investors, estate agents, owner-occupiers, or put it in an auction. All you need is property at a great price (Hint – there is a lot around!)

These are 3 cash – flow strategies to consider.  Mr Kiyosaki, the author of Rich Dad, Poor Dad, has created a game called ‘Cashflow’.  Playing the game gives you more insight into the concept and how to apply it to your life.  Why not look for a local club in your area and go and play with some like minded people?  You will learn such a lot about Cashflow.

Of course, if you have any questions or if you feel I might be able to help you in any way, do not hesitate to send me a message below.  I look forward to being of assistance.