How can I earn cash flow from property?

Many people look to property as an investment for many different reasons - to build wealth, earn monthly cash flow, retirement planning and the list goes on.

Property Guru are a comprehensive property sourcing agent specialising in finding, securing, refurbishing and letting out high yield investment property. Our global client base includes: UAE, Israel, Singapore, China, Hong Kong, South Africa, USA, Canada and of course right here in the UK. So, if you are looking to build a property portfolio, the Property Guru team could be perfectly placed to make your dreams a reality.

A question the we get asked a lot is “how can I earn cash flow from property?”.

You have decided that cash flow is the most important aspect to you and want to potentially supplement or replace your current income. There isn’t one simple answer on how to achieve high cash flow from property investment, however there are a few things to consider which we will discuss in this blog.

We are assuming you have already planned how to fund your purchase and taken into consideration legal fees, stamp duty etc.

Budget: This will dictate where you buy and the type of property you purchase. However, for instance if you have 300,000 to invest that doesn’t necessarily mean buying one 300,000 property would be the right approach for you. You could instead purchase several single buy-to-let properties with a mortgage (usually a 25% deposit is required per purchase but you must check your personal circumstances). This way, you have spread your risk across a portfolio of properties rather than relying on the tenant of one property to pay in full and on time each month.

Area: Budget will dictate whether you can invest in more affluent areas. However, if cash flow is your main goal then maybe an area with high growth but low monthly yields is not the right approach. You could instead look at lower value areas where the initial purchase of a property is much lower but you can command a high rent to property value ratio. Thus, earning higher cash flow from cash invested.

Cash or mortgage: You may have heard the phrase “cash is king”. Well, if you buy a property with all cash and rent out you won’t have the responsibility of a mortgage to pay each month. However, the return on cash investment is usually much lower than if you were to mortgage buy instead. Remember, you might be able to buy multiple properties with mortgages instead of one property outright with the cash you have to invest.

Hands on or hands off: No property investment is fully hands off. You have the legal paperwork when buying, the mortgage applications, finding a property manager, overseeing refurbishments etc. A great way of reducing your work load is to appoint a sourcing agent to do the leg work for you - speak with the Property Guru team to find out more.

A standard buy-to-let investment property is likely the most hands off property purchase if you appoint a letting agent/property manager. Bear in mind you will still need to approve repairs but you won’t be taking calls from the tenants directly. If you are relatively hands off then you are creating passive income from your investment.

Considered a holiday let/serviced accommodation property? Depending on who you have to manage the process will dictate how much time you spend managing bookings, cleaning and repairs. This can be a lucrative approach to building cash flow if done correctly, but make no mistake it is a very hands on investment.

HMOs (houses of multiple occupation) have become the ‘go to’ for many investors and can be very demanding on your time. With the current cost of living crisis HMO landlords are being hit financially as they are responsible for the bills at the property. Ask the Property Guru team for some comparison figures on how HMOs perform compared to buying multiple properties - you may be surprised!

So, as you can see there are many forms of building cash flow from a property portfolio. There is no magic formula however, the figures will always tell you everything you need to know. Diversifying a portfolio by purchasing different kinds of properties in different areas can help future proof your portfolio and protect your cash flow business.

To discuss your property investment needs in more detail, why not arrange a free consultation call with our experienced property sourcing team?