Lower your costs and increase your revenue! Sound like a winning business plan?



“I was seldom able to see an opportunity, until it ceased to be one.” –Mark Twain

1. Supply Exceeds Demand

There’s still a lot of product on the market, at least, more than there are buyers.  Things seem to be moving a bit more than they have in the last few years of the recession; however, buyers still have the upper hand in most negotiations.

There are many ways to buy property and a lot of investors tend to specialize in one area or another. Right now there are seemingly more ways than ever before to get a good deal purchasing a house: Short Sales (pre-foreclosures), Foreclosures, Bank-owned, distressed sellers, Owner-Finance, Wholesale. You name it, there’s a ton of ways to get out there and find a great deal on an investment property right NOW!

2. Low Interest Rates (And other favorable terms)

We still have lower interest rates than we ever have in history. If you’re a home owner looking to buy a home to live in, consider making your purchase an investment. Use your ability to obtain a 30 year loan at a record low interest rate. Live in the house as long as you have to, then keep it forever and rake in the large cash flows every month.

If you’re considering upgrading to a larger home and possibly selling the home you live in, this is a GREAT opportunity to capitalize on that low interest rate you have fixed in for 30 years. Why would you give that away to either cash out a small amount of equity now with the depressed value of your home, or maybe even break even? You will never again be able to get financing that will allow you cash flow as well as you can with that loan. Consider taking less of an upgrade than you could if you were able to sell your existing home, maybe even make a lateral move simply for the opportunity to keep the existing terms on your current home and obtain great terms on your new home. Rent your current home out and let someone else pay down that mortgage. In only 5 years you will be many, many thousands of dollars better off than if you sell the house today.

3. Discounted Prices

Prices have dropped drastically in the past few years as everyone is aware of. An investor does not look at this as a negative. This is a HUGE positive! You can now buy at a discount! One day prices will come back up, but this is not what a savvy investor should focus on. Focus on the cash flows. If you’re receiving positive cash flows every month for doing little or no work, then you won’t be worried about selling the property. If it appraises for less than what you paid for it (highly unlikely considering today’s values)—Who cares?! It’s making you money every month and you can wait until prices do come back up. Or you can wait until the mortgage is entirely paid off and watch your cash flow triple or quadruple.

4. Rents are up!

As the percentage of homeowners has dropped, the percentage of renters has climbed. This means more demand. More demand means higher prices.

“The average rent is up by just about 20% on average around the country at a time when there’s no meaningful inflation in the economy to speak of. In addition, the latest numbers show that 20 million households are paying more than 30% of their income for rent, which is a big amount by historical standards.” – Clark Howard

Click here to read the entire article about rising rents from Clark Howard’s website.

5. 1+2+3+4= MORE CASH FLOW

Each of the four above reasons all add up to one thing: more cash flow. This means a greater ROI, a healthier business, and more money in your pocket every month as passive income.

If you attach real estate investing from the position of creating large positive cash flows. It will be difficult to fail. This has been done throughout history. There are many more creative ways in making money in real estate these days, most of which just try make more money, faster.  It’s difficult to fail with the traditional approach, it just requires patience and the wealth you dream of can be obtained without “reinventing the wheel.”

This approach can work in almost any market, however now is possibly the best time we have ever seen to begin.

How do you increase cash flow? Just like in any business who wants to increase their profits, you have two options.

  1. Increase Revenue
  2. Lower Costs

Let’s review the 4 reasons above

  1. Supply exceeds demand. This helps you buy at a discount which lowers your overall cost.
  2. Low interest rates. This also helps you lower your costs by decreasing the amount of money you throw away to the bank each month. This adds up to HUGE savings over the life of a loan.
  3. Discounted Prices. Lowers your overall cost to obtain real estate which lowers your monthly payment.
  4. Rents are up. This is your revenue stream. This increases your revenue by being able to charge higher rates than any time in recent history.

The market conditions today allow you to both increase revenue and lower costs, a CEO’s dream! These conditions allow you to easily see a 12%-15% ROI, simply based on cash flows. This does not even take into account any appreciation in value which will only be icing on the cake with the market turns around tomorrow, or in 2 years, or in a decade.


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