4 Ways to Create Monthly Cashflow

There are numerous methods to increase your wealth within the real estate market. The 4 most common methods to increase your monthly cash flow often fit into the following categories:

  1. Small Rental Units – These consist of 1 to 4 doors within a building that operates as rentals. 
  2. BRRR – The Buy, Renovate, Refinance, and Rent method, which can apply to any rental.
  3. Multi-Family Rental Units – These consist of 5 or more rental units within one building.
  4. Commercial property – These can range widely but generally are any space in which a business operates ( hospitality, retail, office space, etc).

So how do you know which one is right for you? Let’s dive into each one in a bit more detail.

Small Rental Units 1-4 Units

  • You’re looking for a well priced, move-in ready, or minor repairs needed property.
  • Existing tenants are a bonus as you can start cash flowing immediately
  • You’ll want to confirm the vacancy rate in your area and market rents to ensure the cash flow is there and there are little risks of units sitting vacant for extended periods
  • Additional revenue options with these units may include parking, storage, and coin laundry machines
  • Patience is key. The purchase price is important as it will impact the monthly cash flow.

BRRR – Buy, Renovate, Refinance, and Rent

  • This method actually provides 2 revenue streams
    • 1) Monthly Rent/Cashflow
    • 2) Equity take-out – Using the after renovation value and setting up a new mortgage you can retrieve the money you put into the project and potentially more!
  • PATIENCE is key here. You need the right property that can be renovated quickly and affordably but also in the right market to attract the right type of tenant.
    • Don’t overdo your renovations. You aren’t remodelling for yourself!
  • Look at comparable rentals in the area to determine want rents could be and what style of units move quickly. 

Multi-Family 5+ Units

  • Tenant selection, area, and demographic are hugely important when you are taking on these many tenants.
  • Research, research, research
  • More doors can lead to more headaches put also more rewards. You may want to look into a property manager to alleviate the workload from your plate and limit the number of calls you receive from tenants. Remember, write small checks to earn bigger checks. Paying someone for their experience and professionalism is always a good idea. 
  • Additional revenue options with these units may include parking, storage, and coin laundry machines
  • There is also the opportunity to force appreciation with increasing rents. 

Commercial Properties

  • Monthly cash flow island increased equity is the focus here as well. 
  • Depending on the type of property, cash flow may be slower
    • If you have 5 offices or storefronts to rent, it can take some time to find the perfect tenant to occupy each. Patience is key, you want good long term tenants.
  • Commercial properties can include, but are not limited to:
    • Hospitality (hotels/motels)
    • Industrial buildings
    • Retail
    • Multi-use
    • Office space
    • Etc.
  • Financing these types of properties vary but typically the focus is on the building’s income potential supporting itself and its marketability. 

Each method has it’s pro and cons. It is important to really think about which option is best for you.

Leave a Reply

Your email address will not be published.