Cash flow properties consistently generate very high rental income (high ROI) but the prospect of large capital gain tends to be low. Cash flow property’s biggest negative is that capital gains may be sacrificed for regular cash flow.
Cash flow properties are often smaller, less well located, lower priced condos, town homes or starter houses because lower purchase price increases the ROI. These investments are typically purchased for cash, or paid off quickly or leave a substantial monthly profit after mortgage expenses. Regular costs such as Home Owner Association (HOA) fees need to be minimized to keep net ROI high. See the cash flow property examples and compare the gross verses net return of each property type. This difference is mainly because of the HOA.
Cash flow focused investments are good for anyone needing to increase or supplement income. Younger people starting out, a single parent needing extra income, a family planning the reduction in income of a partner, an acrobat looking to replace an income by a certain age, a person or couple approaching retirement needing fixed income or anyone in a lower tax bracket looking for a little extra!
The best Las Vegas cash flow property deals are currently in the $40,000 - $70,000 price range with gross ROI above 15%. Nevada has a lending guideline that prohibits loans on properties where 15% or more of a HOA community have defaulted on mortgages in the previous twelve months. In these locations properties could only be purchased with cash, which further destroyed home values and lead to more defaults! Large condos and town home complexes were most heavily impacted. The graph of pre-boom, boom and post-boom prices in ‘Boom, Bust, Recovery – A Las Vegas Perspective’ highlights this. Purchase prices for these homes have heavily over corrected to the point where they are less than a quarter of previous value and available at early 1990’s prices! ROI’s on these properties in 2006 were 6% - 8%! I do not expect this to remain the case for too long.
Next we'll talk about Balanced Return Investments.
Author:Steve Bland Phone: 702-751-7071 Dated: September 7th 2013 Views: 5,452 About Steve: ...
View our latest blog posts in your RSS reader. Click here to access.
The Steve Bland Group (SBG) is an international, investment focused, Real Estate Company. Our focus is on loyalty, generosity and professional excellence to each other and our clients. Understanding the local market with respect to the global economy is paramount to our clients. We encourage an international culture and creative approach to traditional real estate.
I’ve learned many things about hosting an open house. First-place yo
"My family and I are in the home of our dreams thanks to US Property Made Easy's investment manager Steve Bland.
A little over a year ago we had sold an old house we had been living in for almost 20 years and found that it was going to be extremely difficult for us to obtain conventional financing on another home as I am almost 73. Additionally, we had some credit problems from our past which, when combined with my age, made it almost certain that we were not going to obtain a conventional solution in a speedy time period. We were fortunate at this time to be introduced to US Property Made Easy.
They were able to bring their innovative approach to the solution of our problem and in a matter of weeks we found the house we are now in and bought it. In the year since we bought the house, it's value has appreciated about 50% (verified very recently by appraisal).
We now have a built-in profit of about $150,000 to take as desired, and if it weren't for US Property Made Easy and their strategies we would probably be in a rental home with no equity or profit.
I am an adjunct faculty for a university and instruct in accounting and finance at the graduate and undergraduate levels. I believe US Property Made Easy's business strategy to be sound and one that works. I have found them to be completely ethical with the best interests of their clients constantly in mind.
It is a pleasure to endorse them and tell others about their good works."