In real estate terms, "positive cash flow” means that rent collections exceed all out-of-pocket expenses. This can happen if the property is bought with a large down payment so debt service is modest. However, many investors prefer to use leverage–70 percent mortgages are common–which means that interest payments can be substantial.
Property prices have increased so much in recent years that buying a house with 70 percent leverage may raise fixed costs to the point where positive cash flow is out of reach. Nevertheless, such opportunities still may exist.
* Buy in exurbia. You might be able to find good values if you go beyond the city and even beyond the suburbs.
*Buy a "fixer-upper.” A home in poor condition may sell for a lower price. If you buy such a property, you should get it fixed up all at once, even if you have to take out a rehab loan. You shouldn’t try to rent out a property that still needs a great deal of work.
