Some people who buy investment property think they’ll enjoy positive cash flow right away. That probably won’t be the case unless you’re making a very large down payment. Often, you’ll go three to five years before cash flow turns positive.
The term “positive cash flow” is critical for real estate investors: it means that the rent you collect from tenants exceeds all of your out-of-pocket expenses. This usually happens when the investor makes a large down payment and has relatively low mortgage costs. Most investors prefer to maximize leverage with a large mortgage so it may take years for rental increases to grow, outstripping fixed mortgage interest costs.
Investors also need to have a reasonable idea of how much rent they’ll be able to charge. To set the rate properly, you should do your homework, checking out how much comparable properties rent for, or you can work with a property management firm.
