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.

Blog Intro 01-06-10

Max Cash Flow Now:  Take yourself on vacation using your increased rental property cash flow.  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 the Caribbean this winter?

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

Blog Intro 12-22-09

Max Cash Flow Now: Discover how to give back and increase rental cash flow this holiday season.  Increasing rental property income is what we have been writing about since the start of this blog.  It is what initially attracted us, and each of our students, who have implemented our system. However, there is an equally important aspect to the system we teach that makes a tremendous impact on the property owner and the tenant population they serve.

It all came about when another real estate investor, told us that he was making incredible profits on a couple of properties he owned.   He was presently looking for more houses to continue growing his strategy (and his bottom line).  He went on to describe that he was renting out individual furnished bedrooms for $400 a month.  Some of the larger bedrooms he let as shared, two to a room. While the idea of a shared room may be a put- off to some, other tenants came into his houses wanting to save money and knew they could upgrade to a private later if they wanted to as one became available.  By offering shared rooms, $700 a month split between two people increased the landlord’s cash flow considerably.  This real estate investor’s gross monthly rent on one little 3 by 2 was $1900, and another duplex was totaling $3,600 a month!

Because the tenant population is derived from particular sources and they agree to a set of house rules and don’t sign leases the idea was even more intriguing and attractive.  Here was a way we could add a fix-n-hold strategy to our existing fix-n-flip one.  This approach would allow us to profit on future higher real estate values, and at the same time pocket $1,000 or more on each rental while we wait.  Equally attractive was letting rooms to a tenant population, which could otherwise be homeless.  We could truly have a positive impact on someone’s life and make a profit at the same time.  Sounds like a win- win all the way around.

Are there really people who would consider such a living arrangement?  YES, and who are grateful and appreciative of the opportunity to have this option over a shelter.  Men who easily pass our screening criteria and who have skills, jobs, but don’t have the funds for a furnished or unfurnished apartment.  Most apartments either way require one month’s rent up front and a damage deposit equal to a month’s rent. ?

What we offer is called transitional or alternative housing. Read what one of our students has to say about this system.

It’s a wonderful feeling to be able to incorporate this work into my successful real estate business and earn great positive cash flow along with the personal satisfaction of knowing I have an opportunity in making a difference in someone’s life.”

Matt Gerace – Freedom Choice Properties

Discover more about transitional housing by downloading the free eBook, see sidebar.

Max Cash Flow Now: Protect your rental property income and investment with landlord insurance.  We found this concise article by Hugh McInnes, an Australian Insurance Broker. Check with your own insurance professional to make sure you are adequately  covered.  If your using our method of multiplying rental income, we would also suggest a very inexpensive medical insurance rider to cover up to $5,000 each occurrence, to help your tenants cover the costs of medical treatments for minor injuries.  It would be rare for our recommended tenant population to be in possession of health insurance.  To learn more about our system to increase cash flow, download our FREE eBook by entering in your email address in the box on the right.

Have a Rental Property? Make Sure You Invest in Landlord Insurance by Hugh McInnes

If you are considering renting a property to turn a profit, it is wise to look into landlord insurance to protect your investment.

Landlord insurance provides similar protection to homeowner’s insurance but includes special protections to insure your needs as a landlord are met in the event you cannot rent your property for profit.

There are several major items that landlord insurance covers:

Building Damage
This is the most similar aspect to homeowner’s insurance. Landlord insurance covers your property in the event of most types of damage. For example, if your property is damaged or destroyed in a fire, the insurance will cover the cost of rebuilding the property. Remember to insure for the proper amount or you will be stuck covering the difference. Also, read your policy carefully as there are certain types of damage that are usually not covered, such as flooding and other “acts of god”.

Loss of Rental Income
This is where landlord insurance goes above and beyond typical homeowner’s insurance. Not only does it help you pay for damage to your property, a good policy will also reimburse you for lost income in the event that your property is uninhabitable by your tenants due to damages. If you rely on these properties for your income, this is a life saver.

Legal Fees and Liability Coverage
As a landlord, you take on addition risk since you have other people living in your property. For example, if your tenant is injured on the premises, you could be held liable for damages. Most landlord insurance covers your legal fees in the event that your tenant sues you for damages. In addition, if the tenant wins the lawsuit, a good policy will cover the judgment against you so your personal property and assets are untouched. Some policies even cover medical expenses that your tenant might incur if injured in your property.

If you are a landlord and you chose not to purchase this insurance, your homeowner’s insurance will not protect you in any of these events. It’s like any other insurance. If your building is never damaged, your tenant is never injured and you never lose any property, you’ll never need the insurance. However, life isn’t predictable and if any of these events ever happen you will have nothing to worry about. Sometimes it’s worth paying a little extra for the piece of mind that a good insurance policy offers.

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.

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Max Cash Flow Now: Discovering the zoning of your unit might allow you to increase rental property income.  That’s right, especially if you own a multi-family dwelling, e.g., duplex, triplex or fourplex.  But even rental income on SFR’s can be maximized, usually 3 to 4 times what you may be earning in net income, and with surprisingly little additional property management commitment.

Most cities and counties allow mixed uses, defined as a rooming house, boarding house or group home.  You just may discover that your rental property can qualify for another use that would increase the rents you collect.  Our of our student here in Denver has.  He discovered that the zoning on his single-family residence would permit him to run a rooming house.  He was thrilled, because he could use our system to gross $4, 500 a month for his seven bedroom, five bath old Victorian.

City Planning, Zoning Department, Community Development or The Office of Community Planning & Development are the most commonly used names for the area of local government you should be contacting.  Simply call up and ask to speak to a planner of the day about additional uses approved for your specific zone.  Even if your rental is an SFR, check to see how many un-related individuals would be allowed to share the house.

In addition, most cities I’ve contacted around the country have online access to their codes.  Don’t be intimidated by the code itself… look for the definition section.  There, you will discover what actually defines a SFR and Multi-Family structure, also look for the definition of a family, which will state how many un-related individuals would be allowed to live in that dwelling.

To learn more about this subject and what we’re suggesting, download our FREE eBook, see sidebar.

Max Cash Flow Now: You’ve quadrupled your rental property income, now what?  Every business needs an exit strategy and you have three unique options, IF you’ve used our system to maximize rental income. (FREE eBook, see sidebar)

The first requires you to hold the property for at least a year to establish a believable income stream.  That’s right, I say believable because most people won’t believe the money your rental property will make for you.  You won’t be selling a normal rental unit that is rented out for market rates, you’ll be selling a system, one that generates 3 to 4 times the cash flow (net rental income) 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 money machine.

The second exit strategy is for those who use our system and have multiple homes or dwellings.  That is selling the group of homes as a business.  Not just a real estate portfolio, but an actual business with forms, systems, and profitable track record, consequently selling the “business” for much more than the underlying real estate.

The third scenario is – a shorter version of option number one, – once you’ve acquired the property, rehabbed it, and once your property is occupied, sell to another investor that would like to carry on the same system, earning substantially more per month than a typical rental.

Again, learn how to do it at downloading our FREE eBook on the side bar to the right.

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: To find the best deals for your investment portfolio and increase rental property income, ignore the MLS.  That’s right, you may find some real gems by getting to know the wholesalers in your area.  So, what is a real estate wholesaler, you ask?  An unlicensed individual who primarily uses direct marketing techniques (mail campaigns) to find distressed sellers and match them up with buyers.  Distressed sellers come in a variety of flavors; it’s not just home owners facing foreclosure.  One successful wholesaler I know obtains information from probate cases and informs remaining family members that he purchases houses for cash.  This is most successful when family members are out of state and don’t know a local real estate agent in the area.  Another sends mail to couples involved in divorce and who may need to liquidate property.  And we’ve all seen cars with signs on them that proclaim “We Buy Houses,” not to mention bill boards and bandit signs (yard signs).

These wholesalers are looking for bargains, because they need to include their margin, normally anywhere from $5,000 to $10,000 and still be attractive to a buyer.

How do you find one?  The best way is to attend your local REIA (Real Estate Investors Association) where you can find a list clubs for your area at;http://www.nationalreia.com. Start by introducing yourself around and let anyone you meet know you’re a potential buyer that wants to meet wholesalers.  The regular members of that REIA Club will then introduce you to the wholesalers they know.   Wholesalers are eager to get to know you.  Their business model depends on a healthy list of sellers and buyers.  Once in the loop, you’ll get emails daily of potential deals you can now evaluate.

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