How To Find Positive Cash Flow Suburbs
Investing in positive cash flow property can be a great investment strategy, but often it can be difficult to find the diamonds in the rough. In this short article I am going to teach you how to find positive cash flow suburbs, so you can narrow your search and increase your chances of finding a positive cash flow property.
1. Get Out Of The City
Positive cash flow properties can be extremely hard to find in large cities and especially in the good suburbs in those cities. If you get out of the city, often only by a few hours drive, and start looking in rural town centres.
You don’t have to look in tiny towns to find good rental returns, often towns with around 10,000 or more people will have good rental returns but will also have enough rental demand that your property shouldn’t be vacant for months at a time. Don’t be afraid of country towns, just because they don’t have millions of people in them doesn’t mean they can’t be a good investment. Always do your research and find the town that is best for you.
2. Get In To The Heart Of The City
Often inner city suburbs can provide a surprising rental return. Studio apartments and one bedroom apartments are more popular in the inner city rental market than in the suburbs and you can sometimes get a good rental return for these properties.
If your inner city unit/house comes with a garage/car spot then you could see your rental income increase dramatically by renting out the property separate to the car space and receive rental income for both.
Just as you shouldn’t be afraid of the country, you also shouldn’t be afraid of the inner city. It can provide great rental returns and, if you buy in a good area, can give you the security of a large population and large rental and purchasing demand which should hopefully fuel growth.
3. Look For Dual Occupancies
Dual occupancies are where you can rent out on property to two different people. This may be a 4 bedroom house that you can split in half, add a kitchen and have 2 x 2bedroom rental properties. Often 2 lots of 2 bedders will give you a higher rental return than one 4 bedder and in many areas the demand for two bedroom properties is much higher so there could be less chance of vacancy.
You could also find a property that has a granny flat attached to it. Often granny flats don’t add a lot of value to a house, but they can bring in extra rental income if you rent them out separately.
Dual occupancy properties aren’t that common so you will need to look hard to find them, and if you wish to turn a single residence into a dual occupancy residence then make sure you abide by appropriate government regulations, but this can be an effective way of achieving a positive cash flow in areas that would normally produce a negative cash flow.
4. Look For Opportunities To Turn A Property Into A Cash Flow Property
Look for opportunities to turn a dud into a diamond.Don’t neglect a property because it appears to be negatively geared in the beginning. Maybe you can make some adjustments to turn it from a negative geared property into a positive cash flow property.
You may be able to do some minor renovations and increase the rent, maybe you can create a new layout for the property or do larger scale renovations. You might be able to rent out the garage or granny flat separately. There are a lot of things you can do to turn a negatively geared property into a positive cash flow property you just need to think outside the box a little bit.
5. Look For Rental Growth Areas
Rents go up and rents go down, but the overall trend is that rents go up over time. It is important to look for rental growth areas, where you believe rent will go up over time.
If your rental income increases then it can quickly turn a negative or neutral cash flow property into a positive cash flow property. So even if you start with a negative cash flow, if rental growth is strong then you could find yourself with a nice cash flow in a year or two.