Avoid These 3 Property Cash Flow Killers

cash flow propertyPicture this, Bill a seasoned property investor has a portfolio of 5 London properties each earning nice steady cash flow income. He’s at a point where he doesn’t need to worry about paying the bills or meeting other commitments.

He’s slowly adjusting to the fact that he now has a lot more money to spend each month on the things he likes.

That car he has had his eyes on for the past year is now well within his means. It might also be time to treat himself to that holiday in Florida. After all, it has been a while since he last had a break.

Soon Bill is dining out in the best restaurants more than once a week and taking more leisure time. He’s never had it so good…

However Bill soon realises that the money he has been spending each month has started to match the amount he is bringing in. That loan he took out to buy the car and the overspend on maintenance of some of the properties and enjoying himself is beginning to take its toll.

Bill is unfortunately about to fall victim to the first of our cash flow killers – comfort. He has become a little too comfortable. He has started to buy wasting assets like the new car that lost thousands of pounds as soon as it was driven out of the showroom.

To avoid this cash flow killer Bill should have remembered that building a property portfolio is like building a business – to avoid comfort creeping in, we need to keep our discipline and that includes paying attention to the accounting side.

The second of our killers is Mr Bank Manager and his weapon of choice – rising interest rates. Bill has buy-to-let property finance secured on his properties, however he didn’t consider that the mortgage rate would rise as much as it has done.

All the predictions were that the base rate would stay the same, unfortunately this time, the low rate has been ignored by the banks and they are putting their own finance rates up regardless. The base rate will soon follow suit as inflation becomes a problem in his country.

To avoid this property investors must always consider future movements in interest rates. If they have reached an all-time low, then there is a possibility they will rise. Factor this in when calculating cash flow.

Finally he meets the third of our cash flow killers, Mr Void. Now Mr Void is the kind of tenant nobody needs. He’s never around when you need him.  Unfortunately for Bill some of his properties are without tenants and his cash flow from those has suddenly dried up.

So how do you avoid ending up a victim of Mr Void?  The first thing to do is make sure your money from renting out the property covers all of your costs including finance with as much as possible to spare.

To avoid all three cash flow killers is easy, the common thread is forward planning. This is something any business owner needs to spend time on and managing a property portfolio is no different.


What are you tips for successful property investment?

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Kind regards


Brett Tudor
Property Expert