Increasing your cash flow or passive income is one of the main reasons for investing in property in the first place. Whether you currently own a property, are looking to buy a property, or wish to build a second dwelling on the back of your main home, renting out property is a smart way to increase your cash flow. Now is the time to consider your investment portfolio and how you can make your income work for you whether you are looking to invest in positive geared property or increase the value of your equity.
Getting your first property is often the most difficult one of all. You may find you really need to cut back on your expenses or even look for cheaper accommodation while you scale down how you much spend on a daily or monthly basis. Reducing your expenses, in most cases, is often preferential to finding ways to increase your income as the latter could be very difficult, given your current situation, lifestyle or available time. Remember there are on 24 hours in one day! Most people don’t want to unnecessarily take on a second job to save up for a house, but needs must in some cases depending on how motivated you may be.
Speak To The Experts
When searching for your first or even your fifth property, look for areas which may rise in value more quickly than others. Speak to realtors and familiarise yourself with property prices, rental values and growth areas in your city. It may be even worth investing in properties in regional areas close to city centres to improve the rental yield and return. Speak to the experts to try to garner as much information as you can. You can never have too much knowledge when it comes to property investment.
Positive Geared Property
If your rental income works out to be more than the total sum of your expenses, then you have managed to use positive geared property to work in your favour. In doing so, it will be quicker to start making a profit and subsequently faster for you to save up for your next property or investment. Consider looking at loans that offer interest-only payments in the first instance, to help you get started. The rental income you earn from your positive geared properties will enable you to directly pay off your loan and can also be used as a deposit on any future properties you may wish to purchase.
Another way to generate passive income is by exploring the current equity you have available. If you purchased a property, over time the property will see an increase in value, then the difference between the sum paid and the current value is known as the equity. With equity, you have two choices to increase your cash flow. Number one, you can sell the property for the recognised market value thus having a lump sum of money in your pocket or borrow directly against the equity to increase the size of your property portfolio.
Remember, it is all about accelerating your property growth and thus increasing the amount of passive income you have coming in at any given time. Of course, shares are one way to make money, however borrowing against your shares to grow your portfolio is subsequently more difficult. While you may not be able to achieve complete financial freedom with your properties depending on how late in the game you started investing, you may be able to make the most of what you have by understanding the market as much as possible and investing wisely.