Cashflow management is the process of monitoring, analyzing, and adjusting business' cashflow. To achieve positive cashflow, one must bring in more cash than one spends. Applying this to real estate investment is simply - rental income must exceed expenses such as taxes, insurance, repair, maintenance, mortgage payment and management fees. To select a viable income property means maximizing cash inflow and minimizing cash outflow.
In our red hot Canadian real estate market, it is very difficult to find income properties that are priced for "positive cashflow" as carrying cost often exceeds rental income. One may try to find "fixer upper" at deep discount. Yet, the time spent on renovation without income is a source of negative cashflow. If one does not have enough capital to carry through emergency such as building codes violation, renovation project can easily become insolvent.
The smartest move is to minimize risk & hassle and maximizing profit by choosing the "best market" to invest into. This process is defined by selecting the best metropolitan or municipality, the best type of properties and best renters. To do it precisely correct one needs to conduct intensive research and learn from experience. For an investor whose main source of income is not in real estate management, this is certainly a complex process.
Thus, consult your advisors. Find the best "go-to" person in what you are interested in. Do not do it alone. Hiring professional really pays in the long run. To find out more about Millhouse Ventures Ltd's professional management service, visit www.millhouseventures.com and click on "About Us".
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