Getting a Rental Property for Cash Flow

The is a guest post by Robert.

If you are looking to diversify your investments, or want an investment that is based on cash flow, then getting a rental property can be a great investment.  However, it is important to remember that a rental property is part investment, part business, since it does require some work on your part.

The Mortgage

The first piece of that is figuring out what you can afford.  This means looking at cash flow minus expenses, and the biggest expense is usually the mortgage. Since you are looking at this property as an investment, it is essential that you calculate your mortgage payment using a buy to let mortgage calculator.  Buy to let mortgages are ones specifically designed for investment properties, as they factor in different information compared to a standard mortgage payments calculator.  For example, it will take into consideration the cash flow from the property, instead of just relying solely on your income as the borrower.

Other Key Expenses

Beyond the mortgage, you should also take into consideration expenses such as insurance, property taxes, maintenance, utilities, and more. 

With insurance, you can usually get a fire policy that is specifically designed for rental properties – it excludes personal property, and as such, may be cheaper than a traditional home owners insurance policy. 

You also need to remember to save money for maintenance and repairs.  It is inevitable that something will break or need your attention, and repairs cost money.  Make sure you save some money each month to plan for this.

The Cash Flow

Rental properties are about cash flow, so make sure that your investment will deliver.  Take your estimated rent, and subtract your expenses, and that is your cash flow. 

It is important to note that you also get one important tax benefit – depreciation.  This is counted as an expense on your tax returns, but you don’t technically lose that money.  As such, if you had income that matched the amount you depreciated your property by, you would not pay any income tax on it since it would be a wash.  That is one of the biggest benefits of rental property ownership.

Save Money This Winter By Greening Your Utilities

Most of the country has experienced a mild winter thus far, with the number of cold days, the amount of snow, and the general gloom of the season well below normal January levels. This has translated into lower utilities bills for those who live in colder regions. Heating costs, which can skyrocket in winter and take a hefty bite out of your budget, just aren’t at those same levels this year.

But don’t get too complacent. Meteorologists predict that the cold will finally arrive in the next couple months, bringing with it those higher gas costs that we dread. If you act now, you can take steps to reduce these expenses and save some money this winter – and, moreover, go green in the process. A greener home can also be more convenient for you and it can translate into lower insurance costs. Getting an Insurance quote can help you determine that with certainty.

Here are some tips for being more eco-friendly and wallet-friendly with your utilities this winter:

Get Energy Efficient Lights. These lights cost more money, but they also last longer and save more energy in the process. At the end of the day, they should result in noticeable savings.

Get A “Smart” Thermostat. High-tech thermostats, developed by a company called Nest Labs, have the ability to learn your habits and regulate your home temperature in a way that best maximizes heating efficiencies. As with light bulbs, this can translate into savings – substantial ones, in fact – despite costing more than traditional thermostats.

Insulate Your Attic.  Adding insulation to your walls may be a costly and time-consuming undertaking, but in many homes it is not to difficult to add a layer of insulation to your attic floor. Since heat often escapes through the roof, this layer can be incredibly helpful in the winter.

Caulk Your Windows. Similarly, adding extra insulating protection to your windows can help trap heat in your home. If you live in an older structure, you may be surprised how much heat you are losing around your windows every day.

Taking all of these steps are all great ways to improve the efficiency of your home’s energy use, in the process making your house a more environmentally-friendly place. And, as an added bonus, this efficiency will extend into the area where to you it matters most – your personal finances.