real estate blog

How to Pick the Right Cash Flow Market

I met Matt Theriault a couple months back. Matt approached me to do an interview for his podcast. I had to agree when he explained how my book Rich Dad Poor Dad had changed his life. Matt told me how he’d purchased single-family homes for cash flow and how great it was working out. It wasn’t until I did the interview that I learned he had over 250 homes plus his company owned another 450!

Matt started a whole company helping people cash flow single-family homes. For that reason, I have asked Matt to share some of the principles he uses for cash flowing single-family homes.

How to Pick the Right Cash Flow Market - Matt Theriault

Making the decision to get started in real estate investing is typically the easy part. It’s a no brainer. With all the data available, it’s pretty clear that real estate presents one of the last, if not the final, frontiers where the average person has a legitimate shot at not only creating financial independence, but real wealth. Real estate has created more wealth for more people than any other single industry or investment vehicle. So, if you want to be financially independent and eventually wealthy, real estate presents the greatest opportunity; And that’s what I mean when I say “Making the decision” to get started is the easy part. The “what” and “where” are other stories in and of themselves.

In What to Invest?

The time-honored logic that you must walk before you run, and you must crawl before you walk is as sound in real estate investing as it is in anything else in life. To get started you must crawl, and in real estate that translates to single-family homes. The ideal single-family home consists of three bedrooms, two bathrooms in a working class neighborhood that sits right at, or just below, the median price point for the area. The reason being that this is where most tenant and buyer demand exists. Should you hit a speed bump or two in the beginning of your investing career, these are typically the easiest types of investments to put back on course, or get out of entirely and start over. Basically, the risk from the majority of angles is probably lowest with this type of property than any other.

Where to Invest?

Location, location, location is the #1 rule of real estate. However, it’s meaning is often misunderstood or overlooked. What you need to know about this rule is that identical houses can have very different values based on their location. Obviously, you want the house that has the better location, but how do you know which location is best for cash flow? The best location is the one with the greatest rental demand. Although not an exact science, rental demand is typically connected to the local economy’s stability. Key indicators of a stable economy can be a diverse employer profile, developing commerce and a stable or growing population.

What location, location, location is to your property’s value; Management, management, management is to your property’s performance. At Cash Flow Savvy, we investigate the basics of every market to confirm our future investments’ value, but we don’t make an actual investment until trusted and proven property management is in place to confirm our future investments’ performance. We will choose a lesser market with good property management every time over a superior market without property management. When choosing an area for your cash flow focus, check the economy for value and confirm property management for performance.

Now that you’ve made the decision to become a cash flow investor, and you now know in what and where to make your investments, what’s next? Go find a deal!

Original publish date: March 17, 2015

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