A quick look at the math will demonstrate that purchasing for cash flow works. Let’s start with the purchase price. You decide to purchase a property for,000,000. You deposit 0,000 as your down payment and earn a 10% cash on cash return on your investment. This investment will pay you ,000 in the first year and as the rent increases, so will your cash on cash return. Plus, while you’re holding the property, your 0,000 loan is amortizing or being reduced by your rental income. This means that you’re recovering your down payment while you pay down the debt.
Second, know what your options are. You do not necessarily have to sell the property investment right after you purchase it. One good thing to do with it is to wait until the value of the real estate increases – and that is when you sell the property. At times, it is worth biding your time while you patiently wait for the industry to boom to make better profits. This is also a two-fold winning situation since as you wait the value of the property goes up higher and higher and you can even make some decent income out of renting it while waiting for its value to rise.
Read up on the latest news. While land is permanent, it doesn’t mean that the investment does not devalue. Keep yourself abreast of the latest real estate investment news. You never know when the real estate market is going to take a tumble.
Then if there is no immediate interest, they will hold a few open houses where stranger after stranger walk through your home with no guarantee of an offer or one that you’d consider. You might then lower your price incrementally week after week until you finally sell at market value (the market — buyers — are telling you what it’s worth via their purchase offers).