Max Cash Flow Now

Max Cash Flow Now: Take Yourself on Vacation with Increased Rental Property Profit

Take yourself on vacation using your increased rental property income.  I was driving home in 11-degree temperatures from a meeting with one of our rental property owner/students.  He was telling me about his upcoming vacation to warm and sunny Mexico.  While some of you reading this are in warmer climes, most of us have been hit by an unusually cold winter and our minds go on vacation more often than our bodies!  We all could use a vacation to break up the winter months.

Our student mentioned that he skimmed a little off his rental income every month to add to his vacation fund.  Not a bad idea I thought as I watched the snow blowing along the side of the road.  In most rental situations, the property owner does not have anything at the end of the month to skim. What I heard our student/rental property owner say was “Before I worked with your program my gross rents were barely getting the expenses paid; now it does that twice over and leaves me a little play money.”  Oh, the joys of having a little play money – practically unheard of in this economy.

Not everyone would take this approach with the additional income they generate from their rental properties.  I understand.  Some would even think it bad business not to put the entire added profits back into their investment, but then again . . . live once and enjoy it!

There is so much room in the deal after transforming your rental property with our unique approach that considering taking a little every month and padding your vacation fund may not be such an imprudent idea.  How many rentals do you have right now that would help pay your way to Mexico or Hawaii this winter?

To learn more about our method download the FREE Ebook from 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.

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.

Blog Intro 01-08-10

Max Cash Flow Now: Rental Property Profits. Sell your real estate portfolio as a business and cash in!  That’s just one of the exit strategies for owners of transitional or alternative housing.  This strategy works for those who have multiple properties or who want to pick-up several properties with this program in mind.  The idea; selling a group of homes as a package.  Not just a real estate portfolio, but an active business package with systems, forms, experience, contacts and a profitable track record.  The result; selling for much more than the value of the underlying real estate alone.  As a working model it generates double or more the market rents normally charged and it is set up to be doubly attractive in terms of resale.

Another exit strategy is a modification to the standard fix-n-flip model.  Purchase a single distressed property, well situated to public transportation and other conveniences, rehab to rental level, furnish and equip, fill with tenants for the purpose of making an active yet small venture.  Enjoy the increased cash flow this investment generates while you are waiting for your buyer. Turn around time has been is from 3-6 months.

So in summary, you won’t be selling a normal rental unit(s) that is rented out for market rates, you’ll be selling an entire working system – one that generates 3 to 4 times the cash flow than any other home in the neighborhood.  The new buyer will pay a premium over the normal appraised value or comparable home values in the area, to acquire such a lucrative producer.  Don’t you just love creative options?

Learn whether you should consider Transitional Housing for your investment portfolio by downloading our free eBook by typing in your email address in the space in the right side bar.

Max Cash Flow Now: Rental property cash flow can be thought of in different ways.  It’s that time if year when most of us are thinking of what we can give, what we can bring, what we can share.  Our daily blog however is mostly centered around receiving.  Receiving is, without question a good thing, but it is at the Holidays that so much of our focus shifts to giving.

Business shouldn’t be only about what we can get out of it – ideally there must be a mutual exchange of goods or services in which all parties experience value for a healthy balance to exist.  Many of our students take up our program for the sole purpose of what is it they can receive. No problem, after all business is based on smart decisions regarding how to make the most of a good investment – so naturally we applaud their thinking.

However, our program innately carries a business balance where everyone involved receives and gives within a healthy mutual respect.  In tough times or good times, offering someone a clean, affordable place to call home is foundational to the spirit of giving.  At the same time, receiving a maximum return on an investment is ultimately the purpose of good business.

Times are changing more rapidly than we would have ever conceived possible just a few short years ago – business is not “as usual”.  In this hard economic period, doesn’t it make sense to enter a business arrangement knowing that it not only benefits you, but countless others?  Think outside the box.  Remember receiving has the additional bonus of feeling even better when you are giving back in return.

Learn about our method of giving and receiving by downloading the FREE eBook on the sidebar on the right.  Happy Holidays!

Max Cash Flow Now: Take yourself on vacation using your increased rental property income.  I was driving home in 11-degree temperatures from a meeting with one of our rental property owner/students.  He was telling me about his upcoming vacation to warm and sunny Mexico.  While some of you reading this in warmer climes I write from the Colorado Rockies where when winter hits there is no mistaking it!  The point though, is we all enjoy a vacation to break up the winter months.

Our student mentioned that he skimmed a little off his rental income every month to add to his vacation fund.  “Before I worked with your program my gross rents were barely getting the expenses paid; now it does that twice over and leaves me a little play money.”

Not everyone would take this approach with the additional income they generate from their rental properties.  I understand.  Some would even think it bad business not to put the entire added profits back into their investment, but then again . . . live once and enjoy it!

There is so much room in the deal after transforming your rental property with our unique approach that considering taking a little every month and padding your vacation fund may not be such an imprudent idea.  How many rentals do you have right now that would help pay your way to Mexico this winter?

Learn how he increased his cash flow 3 to 4 times.  Download FREE eBook on sidebar.

Max Cash Flow Now: Finding an agent’s “pocket deals” for your investment portfolio will increase rental property income.  A pocket deal is slang for real estate a Realtor may know is about to be listed or a present listings price is about to change.

It was a year ago a Realtor called to say she had a listing that a bank had foreclosed upon, but was having difficulty getting any offers and was lowing the price $20,000, (about 20%) and that it would take effect the following day.  We made arrangements to see the property and put in an offer that same day.  As no other buyers were able to submit an offer within the 24 hour deadline of our offer, ours was accepted.  We got a great deal.

Once you have found your great deal, what are you going to do with it?  Rehab and flip, or rehab and hold?  If you’re considering holding and building a real estate portfolio of rental properties don’t settle for a small monthly income while you are waiting for real estate prices to rebound.  Instead, why not go for $1,000 month in net rental income per property?

We learned of our REO agent because we called on another listing which had the term REO in it’s listing remarks.  REO stands for real estate owned, and is the nomenclature for a listing that was probably foreclosed upon by a mortgage lender.  We went on to clear a monthly rental profit of $1,300 on the above mentioned property and then turn-keyed it to another like-minded investor four months later for a $35,000 return.  The new investor kept our program in place and now he is clearing the $1,300 monthly.

You may already know and maybe not but some real estate brokerages cultivate relationships with a bank’s asset manager, who will list many of the properties that it has in it’s inventory.  Therefore, it’s important to build a relationship with these specialized brokers.  We recommend that you avoid signing an exclusive representation agreement with any particular agent, as you’ll build relationships with many of them.

Learn how we make our monthly profits on rentals and how we have helped others do the same by downloading our free eBook, see sidebar.

Max Cash Flow Now:  We were invited to speak at our local REIA meeting about increasing rental property income, in front of a small group of investors.  The room was packed beyond expected capacity and the number of investors interested in the topics for the evening numbered 220.

Our host, Brad, introduced us by telling the crowd how we had found a unique and stimulating approach that had never been presented before on how to increase cash flow on residential rental properties.  Investors who didn’t already have rental properties would also be interested in our program simply because the cash flow was too good not to listen.

We were the first to speak and we were given just a 20 minute slot.  We started by introducing ourselves and telling everyone how we got involved with this exclusive line of investing.  After our power point presentation, the room lit up with dozens of hands in the air with questions.  “How do you know what type of property is best?”  “Where do you get your tenants?”  “Are your referral sources limited to just one or two parties?”  “What about the neighborhoods?”  “How much time is involved?”  “Does the screening process really give you a reliable tenant?”  “How long on average does a tenant stay?”

Over the next several days we were inundated with calls with even more question clarifying how our system could work for a particular investor.  If you would like to learn more about this opportunity, download (see side bar) and read our ebook and tell us what you think.