Directory Menu Information

Different Views on Medical Malpractice? Category:   Book Review For Starting Home Based Businesses Through Affiliate... Category:   Hypnosis - Clinical or Metaphysical? Category:   A Victim of Medical Carelessness Category:   Finding Cheap Domain Hosting. Is It Worth It? Category:   Take The Fastest Route to St. Lucia’s Paradise Category:   Try A Registry Cleaner Download For A Speedier Computer Category:   Golf Umbrellas Make Perfect Promotional Gifts Category:   Avoiding Residual Income Home Business Opportunity Scams Category:   Promotional Mugs - What Should Yours Say? Category:   Home Improvements: Getting Ready to Sell Category:   Cheap Christmas Present Category:   Cheap Apple iPods Category:   The Benefits Of A Promotional Mug Category:   Marriage counseling: perfect way to save your marriage Category:   US Election Campaign Nearing the End Category:   Printed Mugs And Promotion: Attention for Your Business Category:   Andre Agassi Set to Retire after US Open Category:   Why Use a Business Coach Category:   Why is the tide shifting in the favour of unsecured loans? Category:   Unsecured Loan Poor Credit History Offers Category:   Is Business Coaching For You Category:   Directory Submission Service - A Reliable Home Business Model wi... Category:   Mantle Clocks - Great Deals And Huge Selection Category:Home And Family   Finding A Quality 0% APR Balance Transfer Credit Card Category:   Innovative Ways to Find Scam-Free Data Entry Jobs Category:   Acupuncture Quit Smoking Category:Health / Fitness   Why Do Some People Have It All, While Others Stumble and Crawl? Category:   Work at Home Opportunities: What Are Your Options? Category:Business   THE REAL ESTATE BUBBLE Category:   Having Sex: Tips For The Best Sex Ever Category:   View Ellen Altfest Artist Exhibitions and paintings Category:   How To Drive Safely In Winter Category:   P-l-a-n Your Personal Safety On The Road Category:   Road Safety Guides - What To Do If You Break Down Category:   Trading : Online Trading India, Internet Trading, Net Trading, ... Category:Finance / Investment   Being in the Moment Category:   Protect Your Home with Spy Camera Category:Home And Family   7 Cost-Effective Marketing Tips Category:Business   Avoid Stress to secure Energy and Vitality Category:   Plastic Patio Furniture Paint Will Transform Your Outdoor Furni... Category:   How to Make a Free Web Site Category:Business   Small Business Information Center Category:   Best Online Auction Sites and Web Design as a Business Category:   'One hit wonders' in your marketing Category:   Never Belittle The Power of Visualization Category:   Simple Steps to Healthy Treatment of Your Hair Category:   Ventrilo and free computer to computer voice communication Category:   Do You Really Know Your Self? Category:   The three most destructive thoughts when making new year's resol... Category:   Sony Ericsson W880i: The chosen one for music lovers Category:   Advertising Corporate Identity through Logo Design Category:Business   Popcorn and Other Marketing Mistakes In a Changing Economy Category:Business   Domestic and international calling cards Category:   Affiliate Marketing - A business Without Hassle? Category:Marketing   General Motors Cited For "Commitment to Consumers" Category:   A Guide for Student Credit Cards Category:   The prepaid calling card process Category:   Protecting Your Affiliate Commissions Category:   Find Discount Scuba Diving Vacation Popularity Of Destination Category:Travel   The Best Exercise For Weight Loss Category:   Dust Mites and You Category:   Money Saving Tips to Remember Before Planning That Vacation Category:   The New Bankruptcy Law: Information You Need To Know Before You ... Category:   5 simple ways to get kick-ass ideas for your articles Category:Business   Global warming. Should we heed the harbingers of doom? Category:Home And Family   Elements Of Great Websites Category:   Japanese Grandpa Finishes School Category:   Cyber Warfare Category:Site-security   Starting an Ebook Online Business in Just 3 Easy Steps Category:Business   Give a man six inches and he'll want a ... Category:Health / Fitness   Debt Management - What you Ought To Know Category:   Category:   10 Reasons Why Selling eBooks on eBay May Not Be a Bad Idea. Category:   No win no fee Accident Claims Category:

The Powerful Benefits of Negative Cash Flow Sponsored Links The Powerful Benefits of Negative Cash Flow I recently worked with an investor who withdrew from buying a great one bedroom condo that he was going to use as a rental. By Don Glasgow Category: 0 Submit your Articles Here! I recently worked with an investor who withdrew from buying a great one bedroom condo that he was going to use as a rental. He withdrew because he was going to have negative cash flow the first few years that he owned the property. What really surprised me about the situation is that the investor was buying the condo with a no-money-down loan and despite putting none of his own cash in the property; he still expected to break even right from the start! This is kind of like buying a cow for the milk, but not being willing to feed her! The same goes with buying small rental properties, (the kind of properties that an average person could afford). If you were to make a 30% down payment on a rental property, (the kind of down payment the banks might want on an investment property) you would likely get a small amount of positive cash flow right from the start. Consider the purchase of a $200,000, single family home with 4 bedrooms and 2 bathrooms that could be rented for $1400/month. Here is what could happen when you make a large down payment, and what might happen when making a small down payment or no down payment: --------------------------------------------------------- Example #1: A large down payment & positive cash flow: “Joe Investor” makes a 30% down payment ($60,000) when buying his $200,000 rental home. This leaves Joe with a mortgage of $140,000. At a 6.5% interest rate, Joe’s monthly payment with taxes and insurance would be about $1110. Let’s assume maintenance and vacancy costs of $170/month. Joe’s total monthly cost of owning the property would be $1280/month. The difference between the rental income of $1,400 and the expenses of $1280 gives Joe $120 in monthly positive cash flow. If the home went up in value 2% the first year, Joe will have made $4,000 in appreciation + $1,440 in total positive cash flow. Total profit: $5,440 Joe’s total return on the $60,000 he invested would be: $5,440 ÷ $60,000 = 9% --------------------------------------------------------- Example #2: No down payment, and some negative cash flow: “Jane Landlady” has great credit, but not a lot of cash, so she decides to buy her $200,000 rental home with no money out of pocket. Her mortgage payment is $1,489 per month (PITI). Like Joe, Jane also has vacancy and maintenance costs of $170/month. Jane’s total cost of owning the home is $1,659 per month. Jane is receiving $1,400 per month in rent. Jane has to take $259/month out of her pocket to make up the difference between the cost of owning the property and the rental income she receives. Jane’s rental home also goes up in value 2% ($4,000) during the first year. Jane’s total investment into the home is $259 for 12 months, or $3108. Jane’s return on her cash investment: $4000 ÷ $3108 = 128%. Needless to say, Jane is very happy about this. --------------------------------------------------------- Jane will probably have several years of negative cash flow before she can raise the rents high enough to cover her costs. The good news is that her return on invested dollars (the “negative” cash flow) will always be dramatically higher than Joes. --------------------------------------------------------- P.S. What if Joe & Jane both stop making payments on their rentals due to not being able to get their homes rented? Who will be the first person the bank forecloses on? Not Jane, she has very little equity. It would cost the bank money to take back (“foreclose on”) and resell Jane’s rental home. Poor Joe though, the bank wants his rental house bad. There’s lots of equity in Joe’s rental home. The bank isn’t going to lose a dime foreclosing on Joe’s rental house Joe loses his rental home to foreclosure and Joe kisses his good credit, goodbye. Jane’s no down payment strategy has bought her a little extra time and that might be just enough time to let her save her credit and save her rental home from foreclosure. I am a real estate agent in St. George, Utah. I also have an extensive background in real estate investing. I have owned rental properties in Denver, Phoenix and St. George. The Powerful Be 0 Subcategories Arts & Humanities > Arts Therapy > Arts & Humanities > Criticism and Theory > Arts & Humanities > Thematic > Computers & Internet > Cyberculture > Computers & Internet > Year 2000 Problem > Education > Theory and Methods > Entertainment > Amusement and Theme Parks > Health > Procedures and Therapies > News & Media > Weather > Recreation & Sports > Amusement and Theme Parks > The Powerful Be 0 Articles Google's Adsense is also one of the most powerful weapons in website publisher's arsenal! by Madhu Pandit Viral Marketing The Most Powerful Method of Online Marketing by chaman lal Two Powerful Books That Give The Best Motivational and Inspirational Tips by Lucile Taylor San Diego Chargers - The Powerful Name behind the San Diego Chargers by Rick Grantham 5 Reasons a Powerful CMS is the Key to Custom Website Development by RJ Licata Viral Marketing The Most Powerful Method of Online Marketing by chaman lal Nokia N95 8GB - Coming with the powerful backup by Stephen George Zenerx Ingredients - Which Herbs Are the Most Powerful Aphrodisiacs? by Robert Henderson Hurricane Paloma: the second most powerful November hurricane by Rich Johnson Six Powerful Tips for Blog Online Marketing to Build Successful Blogs & Earn Money on the Internet! by Gurpreet Singh