Should Long Term Real Estate Investors Focus On Cash Flow or Growth?
SAN ANTONIO - Jan. 25, 2017 - PRLog -- Per Bruce Myles, owner and founder of Proactive Commercial Lending Group, LLC,"a Texas Commercial Lender,"To answer this question, it's best to first define what the two terms mean. Cash flow, of course, is the net money gain/Users/denny/Desktop/ALL LEAD INS/PRESS RELEASE LEAD INS.txted or lost on a monthly basis.
One mistake many rental property owners make all too often is believing just because the rental charge covers the mortgage expense, they are "making money." However, that's simply not the case. The rental income must not only cover the home loan payment, but also, the property taxes, insurance, and other carrying costs.
As for investors who buy real estate to rehab and flip, underestimating the costs of renovation causes undue financial strain. It not only causes many to hold longer than they first intended, it also puts them in a anxious position.
Growth is the amount of properties owned, free and clear of mortgages. In order to obtain this goal, some real estate investors will leverage one or more properties in order to purchase another. While this is possible, it is a precarious method for growing a real estate portfolio. This is because with every new property, the owner is more financially exposed. It also puts their primary residence at risk.
All of this means it is a more sound approach to improve cash flow, starting with one property. When the mortgage is amortized, the cash flow will rise significantly and allow the owner to purchase another property.
After buying another rental house, focus on paying off the home loan as quickly as possible. Once the mortgage is fully amortized, cash flow will be substantial. In fact, cash flow will be large enough to save enough cash to buy yet another property outright. By following this methodology, both goals are obtainable. You'll receive a healthy cash flow and continue to grow your real estate portfolio.
Keep in mind, you should not put your primary residence at risk to obtain more investment rental properties or to buy houses to flip. If you take a smart approach, be patient, and take your time, you'll make better decisions. This way, you'll enjoy a nice cash flow as well as grow your number of properties.
Proactive Commercial Lending Group, LLC was formed back in 2003 by Bruce Myles with the thought that many good, hard working business owners were not getting the Banking Services they needed to survive, maintain and grow their business. This was due to the restrictions on banks (FDIC) or banks not willing to take a chance on their own customers and communities (or Lazy Loan Officers)!!For help getting Texas commercial loans, contact http://www.proactivelendinggroup.com
SAN ANTONIO - Jan. 25, 2017 - PRLog -- Per Bruce Myles, owner and founder of Proactive Commercial Lending Group, LLC,"a Texas Commercial Lender,"To answer this question, it's best to first define what the two terms mean. Cash flow, of course, is the net money gain/Users/denny/Desktop/ALL LEAD INS/PRESS RELEASE LEAD INS.txted or lost on a monthly basis.
One mistake many rental property owners make all too often is believing just because the rental charge covers the mortgage expense, they are "making money." However, that's simply not the case. The rental income must not only cover the home loan payment, but also, the property taxes, insurance, and other carrying costs.
As for investors who buy real estate to rehab and flip, underestimating the costs of renovation causes undue financial strain. It not only causes many to hold longer than they first intended, it also puts them in a anxious position.
Growth is the amount of properties owned, free and clear of mortgages. In order to obtain this goal, some real estate investors will leverage one or more properties in order to purchase another. While this is possible, it is a precarious method for growing a real estate portfolio. This is because with every new property, the owner is more financially exposed. It also puts their primary residence at risk.
All of this means it is a more sound approach to improve cash flow, starting with one property. When the mortgage is amortized, the cash flow will rise significantly and allow the owner to purchase another property.
After buying another rental house, focus on paying off the home loan as quickly as possible. Once the mortgage is fully amortized, cash flow will be substantial. In fact, cash flow will be large enough to save enough cash to buy yet another property outright. By following this methodology, both goals are obtainable. You'll receive a healthy cash flow and continue to grow your real estate portfolio.
Keep in mind, you should not put your primary residence at risk to obtain more investment rental properties or to buy houses to flip. If you take a smart approach, be patient, and take your time, you'll make better decisions. This way, you'll enjoy a nice cash flow as well as grow your number of properties.
Proactive Commercial Lending Group, LLC was formed back in 2003 by Bruce Myles with the thought that many good, hard working business owners were not getting the Banking Services they needed to survive, maintain and grow their business. This was due to the restrictions on banks (FDIC) or banks not willing to take a chance on their own customers and communities (or Lazy Loan Officers)!!For help getting Texas commercial loans, contact http://www.proactivelendinggroup.com
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