Posted by phil fernandez on June 05, 2000 at 06:48:09:
Troy,
Investing for positive cashflow is the name of the game. There are numerous ways to ensure positive acshflow. You have already mentioned a couple in your post.
In order to achieve positive cashflow you need property in good neighborhoods that will attract good tenants that pay their bills. Nothing can put a dent into your cashflow than lousy tenants that don’t pay their rent.
There are a couple of times when you have the opportunity to control your cashflow, guranteeing positive cashflow. The first is prior to buying the property. It’s called due diligence. You must verify all income and expenses. You must know your rental market. Are the rents below market or at market? What’s the local economy like. Are there sufficient jobs in the area? Is the property near schools,hospitals, shopping and transportation? You can create positive cashflow on the buy. Buy at the right price and terms so you will have a nice cashflow.
The second opportunity to ensure positive cashflow is after owning the property. Can you raise the rents or make low cost improvements that will increase your cashflow. This second phase is an on going one, where you try to increase your rents without losing good paying tenants. Hand in hand with this, you try to find ways to lower your expenses. Get your tax assessment lowered, negotiate hard on fuel pricing, rubbish service, lawn care etc. Find contractors that will give you good value for your repairs.
These are just some basics that I use in my apartment business to ensure that I have a positive cashflow.
I’d highly reccommend Jeffrey Taylor’s "Mr. Landlord " newsletter. In it there are numerous ways of creating and maintening positive cashflow.