Max Cash Flow Now

Max Cash Flow Now: Don’t let your rental property become a charity shelter.

I just read a blog by Donna in NM, who has had the most dreadful experience with a Section 8 tenant. She wrote that she did not have Section 8 housing experience and her tenant had 10 years of experience scamming the system. No rent has been collected and now she has a squatter and is unsure how to correct the situation. Several good remedies were written in response to her questions and I don’t want to repeat her options here. I can not imagine that this is an isolated case. Probably not your specific circumstances, but even so, many real estate investors, who are holding rental property are making costly mistakes.

Depressed real estate prices and the profusion of very good deals on distressed properties are drawing many new investors into real estate. The smart ones look for coaching or mentoring from others more experienced. The majority most likely feel they can figure most things out for themselves, and then there are areas that they are inexperienced in and can have a harmful effect on their net monthly income. Getting good counseling can save money and headaches.

With our method and transitional housing, our landlords and I have never had these troubles. If the rent is overdue by more than 3 days, I just make a phone call or two, change the locks and wait for the tenant’s family member or friend to set up a time to pick up any personal belongings. I do not return their damage deposit. Within a few hours or a few days, I have the room occupied by another tenant from my waiting list.

It’s just that simple. It doesn’t involve an expensive eviction process and a minimum to no loss of rent. Squatters are absolutely unheard of, there are no legal fees, no court fees, and no fee made to local law enforcement.

Discover how I can get away with this by downloading our FREE Ebook from the side bar.

Max Cash Flow Now: Property Management of income property done differently with transitional housing.

Some of our students have found unique ways to reduce the time needed to manage transitional housing.  Transitional housing is defined by renting out individual furnished rooms in a single family or multi-family dwelling to those persons who are in transition. We are not referring to migratory workers or students, but to an additional vastly underserved tenant population. (Download free Ebook on side bar at our main blog site to learn the tenant population we’re talking referring to).

All tenants share common areas like kitchen, dining room, living room, laundry conveniences; and both private and semi-private bedrooms are “let” on a weekly or monthly basis.  The income benefit for creating this type of rental dwelling is extraordinary.  A large master bedroom could generate $750 per month rented as a semi-private (two beds) room; smaller private rooms could rent for $450 a month.  Take any rental unit you own and add it up.  I think you will quickly discover that you have effectively doubled the gross rent you could be collecting for the unit.

The model is for our real estate investments to provide us with passive income, right?  But how passive is it really?  If you are an veteran rental property owner, you either do the property management yourself, to maximize your net rental income, or you hire it out to a property management company.  You pay them to advertise, screen tenant applicants, collect rents, do credit and background checks, perform property maintenance/repairs, and handle evictions.  The cost for those services will reduce your net cash flow significantly.

Property owners doing transitional housing concern themselves with all the same issues, but in a different way.  Once the house is set up and fully occupied, the cream will come to the top.  By that, I mean a particular tenant could become your property manager.  For a small discount in their rent, they would carry out many of the same functions of a property manager.  Check in tenants, perform minor maintenance, carry out property inspections, and even handle evictions, which are a cinch with this type of housing; (see Ebook).

A virtual assistant can even deal with advertising of your property to established referral sources when you have vacancies.  All that is left is tenant screening, which does not include traditional background or credit checks.  Just a chat with one or two individuals that are informed about the candidates background.

To learn about offering alternative housing, please download our free Ebook, on the right side bar.

Max Cash Flow Now: How does your rental properties cap rate compare to other income producing properties.

Since our method guarantees such a vast difference in cash flow from what is normally received from a single family and multi-family investment property we wanted to illustrate what investors in apartment houses do when they asses a deal.  They evaluate the profit potential of the property as opposed to what comparable properties recently sold for, to establish value.  Basically, how that investment is going to pay them back, similar to annual interest rate paid on an investment in a CD or Bond.  So the ratio between the sum invested and the net profit the asset produces is the cap rate.

By applying a certain criteria, someone investing in larger money producer, such as apartment buildings can determine a worthwhile investment and the same criteria can be used when looking at our system applied to your single family and smaller multi-family rentals.  A good deal for an investor in apartments is a cap rate of 10% or better.

annual net cash flow / total dollars invested in the property = Cap Rate

For illustration, if a single family residence (SFR) were acquired for $85,000 and it required $15,000 in remodel costs so the total investment would be $100,000.  Market rents for the neighborhood suggested that you could rent the property for $1,250 a month gross or $15,000 annually.  Deduct your total annual operating costs; principle, interest, taxes, insurance, property management/maintenance costs, (lets use $1,050 a month) to arrive at your net positive income.  So annualized operating costs would then be $12,600 annually, which leaves $2,400 in net annual cash flow.

$2,400 / $100,000 = 2.4% cap rate

It’s not unusual for a usual rental to cash flow $200 a month net. Naturally, the property owner is relying on the property’s ultimate market appreciation, and tax advantages, to evaluate their overall investment also.

Now apply our system, and rent the home at double market rates of $2,500.  Our suggested method does necessitate some additional operating expenses, so the monthly effective operating costs would now be $1,250 a month, thus providing $1,250 a month in net cash flow or $15,000 annually.

$15,000 / $100,000 = 15% cap rate

Now that’s much better and the envy of every apartment owner out there and you did it with a SFR.  It’s not completely passive income, it does call for some extra time, but not as much as one might think.  We teach ways to reduce management time considerably.

To learn how to increase your “Cap Rate,” download our free Ebook, Max Cash Flow Now, from the side bar.

Max Cash Flow Now: Rental Profits quadrupled with great tenants.

When I blog about renting out individual rooms the usual thinking on the subject goes to a rental population of students, seniors and the mentally and physically challenged.  I say think outside the box – it’s a great time to be unconventional and observe your rental properties cash flow like never before.  As written in yesterday’s post, on average a $1,000 a month in net cash flow per dwelling unit.

Our preferred tenant will not fit into any of the above-mentioned categories.  We have found that the renters we work with – ex-offenders of soft crime – can be less of a hassle and less expensive than those most people think of when renting out individual rooms.  With anyone on parole or probation, finding a place to live is often challenging at best and forces men and women into shelters where they are apt to experience the same issues that got them into trouble in the first place.  Those who want to make a change and make their lives work are in need of clean affordable housing that reinforces their goals.

Every tenant comes in knowing that in order to take advantage of this opportunity a set of “House Rules” must be agreed to.  They are a set of living requirements handed down by most States Department of Corrections, as part of the individual’s parole or probation agreement.  They are not impossible to follow and they keep your house safe and healthy.  Who enforces them?  The individuals themselves and their parole or probation officers.  Former offenders don’t want to violate the conditions of their parole/probation requirements and if the House Rules are not being maintained there is always someone waiting to take the room.  This is just one of the reasons why this tenant population is so wonderful to have as renters.

Download our FREE Ebook on the side bar at right, to learn more about what makes these tenants some of the best renters you could ever have.

ROI Calculator

Max Cash Flow Now: Rental Property Cash Flow Wizards meetup.

A group of alternative housing landlords got together recently at a local neighborhood bar to discuss a range of common concerns.  They were anxious to re-confirm a collaborative coalition rather than a competitive one.  There is such a need for this type of work and everyone brought important questions and answers to the get together.  The group was made up of of experienced property owners and others that were just opening up.

It was a great sharing of ideas, solutions, and experience.  Things discussed were; the state’s early release program, vouchers to property owners that pay for up to two months rent, newly discovered tenant referral sources, a free bicycle program, and a group marketing initiative.

Everyone is doing so well.  One property owner commented that even with 2 out of 7 beds opened for a while, she was still making great cash flow on her property.  Presently with a little attention given to her referral sources, she has filled the 2 beds and has 2 guys waiting in the “pipeline.”  The experienced landlords all agreed that it doesn’t take much once a house is established to keep it full and they were all loving the income their properties generated every month.

If you’re a first time reader of this blog post, it’s important to appreciate that these property owners are renting individual furnished rooms to a definite tenant population thus creating great rental property income – on the average of $1000 a month NET.

Learn more about transitional housing by downloading our FREE Ebook by inserting your email address on the right side bar.  And feel free to contact us anytime with questions.

Max Cash Flow Now: Make an outstanding return on your investment with Lease/Options!

People, who have read our blogs think our system of maximizing rental property income is fantastic, and contact us regularly.  Many tell us that they’re over extended and can’t quite swing all the costs associated with purchasing, rehabbing and furnishing a home.  However, they could handle the minimal down payment a lease/option would require and would be able to furnish and equip the property.

It’s important for first time readers of this blog to understand that we promote creating transitional housing.   This type of rental property maximizes the full potential of a dwelling, by letting individual furnished rooms on a weekly or monthly basis in a shared living environment, similar to a rooming house, but with a unique tenant population.

Tenants pay from $400 to $450 per month for a private bedroom and $350 to $400 a month for a bed in a shared (semi-private room).   On average, the sum of the total rents collected FAR exceed market rents, or lease/option payments.

If the seller will allow you to sublet the property then it’s a no brainer.   You could pocket, $700 to $1000 or more, in net income per dwelling, with very little investment.

Let’s say your investment to gain control of the property and furnish it is only $5,000.   And you earned $700 a month on that investment.  Would that make you $8,400 a year on your $5,000 investment?   Sure there is property management time involved, but once you are up and running – it’s not as much as you might think.

It’s still a hell of a deal!

Learn more about transitional housing by downloading our FREE Ebook by inserting your email address on the side bar at right.  And feel free to contact us anytime with questions.

Outstanding cash flow for new student!


Newly opened transitional single family residence is producing outstanding cash flow for new student.

“We opened a 7 days ago, and we already have 2 renters. Both of these fellows were referred directly from the DOC and we can already tell they’re good guys who simply need a nice place to call home. The income potential on this place, even after paying the mortgage and utilities and maintenance is in excess of $1400.00 net profit per month.”

“Thanks Alf & Jeannie for talking with us initially, then educating us, and through your outstanding program. Your expertise, knowledge, experience and compassion are making a difference in peoples lives’. The benefits are not just the money, although great and needed, it is the heart that throbs and lives with excitement knowing everyone comes out a winner in using your method.”  Charlie Jackson, Sonrise Properties LLC

Here are some pictures of Charlie’s new home in Arvada Colorado.

The students we coach increase their net cash flow by as much as a thousand dollars in most cases.  Learn more about our method by download FREE Ebook, “Max Cash Flow Now” on the right sidebar.

Building ROI on your investment properties.

Max Cash Flow Now: Be a leader in your area by building ROI on investment properties.  A reader of this blog wondered why, “if this (our method) was such a good idea, why wasn’t anyone else doing it.”

We understood his concern and we can only respond with what we know to be true in our overwhelmingly successful Denver market.  This area is booming with transitional housing in all types of neighborhoods throughout the city and surrounding counties.

Presently when someone from this region calls us for information on opening a transitional house, we mildly discourage them.  That might not sound like good business on our part, but due to the number of investors who have witnessed this niche come alive and thrive over the past 18 months, we are approaching a saturation point.

It took about 12 months for the looky-loos to stand back and watch and collect information before they ventured into this lucrative opportunity.  Therefore, I really do understand the concern about being the first one to take a new path.  Consider though what those looky-loos lost in cash flow, property repair costs, bad tenants and evictions until they finally started thinking out of the box and work with a now proven system.

When we started, the local area boasted 12 beds in alternative housing.  With our very first house we brought the total up to 17.  We are now responsible for 64 beds.  There are other companies and individuals who have turned their rentals into transitional housing and we don’t have an exact count on them, but suffice it to say when the word gets out that something good is happening it doesn’t take long for others to jump on board.

It is an idea of the times, but few people have even thought about the need that is out there.  It boils down to a lack of awareness and education.  One in 6 people in the US has been or knows of someone who has been incarcerated.  We as a nation have the highest incarceration rate in the world.  Are they all bad guys?  When we think of men coming out of prison we think of gangstas and thugs, but often the crime is “soft” and the guy was in the wrong place at the wrong time hanging with the wrong people.  We teach our students how to screen applicants who are desperate to make their lives right again and not make the same stupid mistakes that got them into prison in the first place.  But really – who thinks of them – has the idea ever been brought up in a Real Estate Investment Association (REIA) meeting?  No – because it just has not yet been thought of, investigated and worked as a viable investment strategy in your area.

When we first started in this work we stood in front of a group of 220 investors and several wide-eyed individuals thought we were nuts!  However, we were bombarded with questions from every angle imaginable.  Denver has a pretty savvy investment climate yet no one had ever thought about this approach to increasing their cash flow and now as I said earlier the local area is saturated with transitional house landlords.

Find out if this concept is right for you.  Download our free Ebook, “Max Cash Flow Now,” on the right sidebar.

Pic’s of Transtional Housing

Max Cash Flow Now: Build ROI with investment property through transitional housing.

We write a lot about increasing rental income 3 to 4 times by renting out individual furnished rooms.  But, what does a furnished transitional home look like?  Here are some interior pictures of some of our student’s homes.

Commen Area

Private Room

Dining Area

Kitchen

Private Rm

Semi-Private

Each home has been furnished with reconditioned, used or gifted furniture, fixtures and appliances at very reasonable costs, normally in the range of a one time cost of $400 to $600 per bed.  A schedule to repay yourself for this investment in furnishings either can be very short, or over an extended period of time depending on the advice of your accountant.

Our philosophy is to provide a warm, clean, comfortable environment that fosters a growing sense of self-esteem, which is so important for individuals seeking employment or struggling with getting their life back on track.

Be the difference in someone else’s life and at the same time prosper financially.  Read our free Ebook, which can be downloaded on the side bar to the right of this post.