Increasing Cash Flow
If you have an income producing property, the amount of money
you are left with at the end of your property expenses is
considered cash flow.
Here is how it works . . .
Lets suppose you own a duplex and your monthly mortgage payment
including taxes and insurance is approximately $1200.00.
Now lets suppose you have a tenant on each floor with a one year
lease, and you charge each tenant $850.00 a month to live there.
This is a total of $1700.00 paid to you on a monthly basis.
Once you have paid your mortgage of $1200.00, you are left with
a balance of $500.00, this would be your monthly cash flow from
the income producing property.
If you are looking to increase your monthly cash flow, one of
the easiest ways to do it would be to raise the rent. This is by
far one of the most effective and common ways of increasing cash
flow.
Another way to increase cash flow depending on the amount of
equity you have established in a property would be to use some
of that investment property's equity to purchase another income
producing property.
Using the same principal of charging more than the amount of
your total expenses on the property, you will once again be
increasing your cash flow.
Keep in mind, when doing any kind of repairs to the home,
including landscaping, make sure you save the receipts to be
used as a write off. This to will help to reduce earnings,
resulting in cash flow in the way of an annual tax return.
About the author:
Jennifer Hershey has more than twenty years of experience in the
Mortgage Industry as a loan officer. She is the owner of
http://www.explainingmortgages.com/, a mortgage resource site
devoted to making mortgage terms and products easy to
understand.
