The Power of Positive
Cash Flow

Of all the reasons for investing in rental property, generating a positive cash flow should be your number one priority. Unless you have a mountain of cash behind you and can ride out prolonged periods of having to "feed" your property, a strong cash flow every month is the life preserver that keeps your rental property afloat.

Cash Flow Properties

Generating a consistent and substantial amount of positive income, or cash flow each month takes hard work and proper management of your investment property. Producing a strong cash flow begins with buying the right type of property at the right price.

Multi-family apartment houses have much greater abilities to generate healthy cash flows for their owners than do single-family residences. This is because their net operating incomes as a percentage of their purchase price (their cap rates) are higher than single-family residences.

As a rough rule of thumb, cap rates for multi-family apartment's range from 6 to 8%, whereas single-family residences only range from 3 to 5%. These numbers fluctuate according to the strength of the market and location of the properties. So, that's the reason why it's an uphill battle trying to produce a strong cash flow with a single-family residence. You'll experience a higher return on your investment with a good multi-family.

Also, if a single-family does produce a positive cash flow, wouldn't the tenants move out before long and buy their own single-family house? Their high rent payments could instead be applied to their own mortgage payments and other property expenses.

Developing Financial Security

For your retirement years, a strong cash flow can be one of your greatest financial assets for generating a secure income to live on. With proper planning and work, you can develop your real estate investment portfolio to accomplish this goal of financial security.

For in-depth information on how to develop strong cash flows, please visit The Landlord's Library book collection. It's your complete information resource on the subject of residential landlording.

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How to Be a Successful Landlord