Invest in properties with positive cash flows!!

If you’re keen in civilizing your lot in life by becoming a property tycoon and investing your hard-earned capital into income-producing properties, there are some general tips that should increase your chances of maximizing wealth.

One of the better ways to improve your wealth is to reduce your risk on the properties you purchase. This will allow you to buy lower-risk real estate, which hopefully will earn a fair amount of wealth for you over time. Go for these:

Owning your property for a longer time span!!

The most important tool in real estate investment property in Pakistan is to keep owning it for a long time — in fact, forever is the optimistic approach. So be careful and buy quality properties that you really like for all the right reasons, and plan to own them for good. That’s your best stake to make wealth on real estate.

Grab Properties with decent quality tenants in place!!

There is nothing better than purchasing a property with a potential tenant already in place. You get the security deposit and pro-rated rent, and you don’t have to go in and clean, paint, update or fix too many things in the unit. If you buy properties in areas that have decent credit quality tenants, that’s hopefully the type of tenant you will inherit. Also take a look at the current tenant’s lease, credit application and credit report, if you can, before you make the decision to purchase the property.

Properties in very good shape!!

Skip fixers and in its place buy properties that are in as good shape as possible, which should get those rental checks coming into your bank account in as short a period as possible.

Too many people are with the perception that they’ll add value by doing a renovation. But instead they get caught in a much more costly and time consuming property than they ever expected. More money into the property means lower investment returns for you and less wealth-building than you expected.

Properties in moderately priced areas bring fruitful results!!

Real estate is all about locality, location, position! The properties in the finest locations generally have very negative cash flows, so those are the location, location, locations you want to avoid. The moderately priced properties in working-class areas are the real charm; they generally have the boring locations, but bring positive cash flows. Of course dig out any deal with conformist rents and expenses, and go for beginning year cash on cash return of at least 4 to 6 percent, based on your conservative estimates.

 Vacant areas lead to vandalism!!

Vacant places get robbed, incur damage and don’t have any rent coming in to cover the bills. If you buy in places with really high vacancy, it will lead to cover months or years before you get the property rented out at a fair rental rate. So really think through buying properties in areas with many unoccupied units.

 If you buy properties with ALL the above characteristics that will greatly increase the chances you will add wealth from your real estate ownership. So try to acquire properties that have as many of the above good qualities as possible, and skip the ones that don’t make the cut!