Creating Cash Flow From Thin Air

Thunder Bay Real Estate - Know Your Numbers - Part 2

Another example of utilizing an overlooked asset would be something like renting out a parking spot or turning a garage into a rentable storage unit.

In the case of attracting a more upscale tenant you might see a condo for sale in Thunder Bay located near the hospital. You go in and enhance its appearance a bit and furnish it and then put it on the market as a furnished apartment / condo for "locum's" at the hospital and you end up creating a unit that fetches up to double the standard unfurnished market rent.

At the end of the day you can increase your monthly cash flow just by becoming a "Thunder Bay Real Estate Turnaround Expert!"

Find a piece of real estate that has positive or almost positive cash flow and create a higher and better use for it or improve the operating numbers.

Lets now break down the numbers side of determining Cash Flow or Net Operating Profit:

Money In - This is the rent that you collect. That's it!

Do not count the amount of "principal" that you pay down on your mortgage with your regular mortgage payments. That gets counted in another calculation you will learn about in a future article.

The amount you pay down on your mortgage is basically phantom income that in most cases is not realized until you sell the piece of real estate. I say "most" because there are cases where you may purchase and then use a home equity line of credit or something of that nature to free up your principal, but that is for another discussion.

Money Out - Is all your monthly / annual expenses.

This includes your condo fees, utilities, mortgage payments, light bulbs, insurance, lawn mower gas, etc.

At the end of the day there are only two things that can possibly create more cash flow. One is to collect more rent. Either through rent increase, finding a higher and better use, entering a more upscale market or by creating more income streams than are currently present by utilizing overlooked assets.

The second way is simply to cut expenses to the bone. If you can offload the responsibility of a variable expense it is in your best interest to do so as long as it does not harm relations with the tenant. A prime example of this is something like hydro.

You can find an excellent real estate opportunity in Thunder Bay just by visiting http://www.MyThunderBayRealEstate.com.