As a rental property investor, I’ve always been amazed at the concept of increasing my cash flow by simply buying a property and renting it. In the very beginning, my plan was to acquire as many rental properties as possible in order to create an endless stream of income. And my plan is still the same, but now I try and find quicker and easier ways to create income from the properties that I buy.
I recently began investing in single-family homes. Considering the state of the foreclosure market, I can get rock-bottom prices ($20K or less) on homes homes located in middle-income markets, then rent them out anywhere between $550-$700 per month (depending on the location, of course). These types of homes can be a great deal because they take little money to purchase and I’m finding they provide higher cash flow per unit than my two multi-family properties. Even better, there are multiple ways to profit from single-family homes, such as wholesaling, lease-optioning, or flipping.
Of course, what most investors don’t like to mention is the hassles with tenants and vandalism to properties when things go bad. Personally, I’ve been lucky enough to avoid vandalism on my properties, but I’m not counting on being lucky forever. As a result, my current strategy is to ask for more money up front on my rentals, primarily through doing a lease-option. In the past, I would only ask for first month’s rent plus a security deposit equal to the same amount. However, this is simply not enough to offset the risks of tenant vandalism or failure to pay rent. By doing a lease-option, you are simply asking for more money up front…..period. Also, you are more likely to find a tenant who is willing to take care of your property.
Finally, I will reward my tenants by owner-financing my properties to them if they perform well during the lease period. This is a great way to make more money by working less too.