How to Get Cash Flow From Rentals

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Topics: Landlording, Master Leasing

Cash flow can provide financial security and financial freedom.  Cash flow can support you if you lose your job or just want to take an extended vacation.   When you get enough cash flow coming in every month, you can quit your job!

Monthly cash flow from rental properties can increase your retirement income so you can maintain your lifestyle when you stop working.

Cash flow is money that comes in month after month without working 40+ hours a week at a job.

So, now that you know some of the benefits of cash flow, let’s talk about how to get cash flow.

An ideal way to make cash flow is with rental properties.  There are several ways to get cash flow from rental properties:

The Traditional (Slower) Way:

The traditional way to acquire rental properties is to save up for a down payment to buy rental properties then get a loan to buy a house.  It’s important that the rent you collect is more than your mortgage payment – the difference is cash flow.   You need to be careful not to spend all the cash flow because you need to set aside money for repairs, maintenance and vacancies… and of course, saving up more money for a down payment on another house.

Your tenant goes to work every day to make the money to pay you rent. The rent pays off the mortgage.  Until the mortgage is paid off, your cash flow for each house will only be a few hundred dollars.  So, it will take a lot of houses to get enough cash flow to replace your job and support your lifestyle.

Some additional benefits of owning rental properties — over time the house will be worth more than what you paid for it so you are also accumulating equity.  There are also tax benefits to owning rental properties.

But, the traditional way to acquire rental properties takes a long time to generate enough cash flow to give you financial freedom and security.

The Faster Way to Get Cash Flow:

A much faster way to generate cash flow from rental properties is Master Leasing, also known as sandwich leasing.  With master leasing, you don’t need to save up for a down payment or get a loan to buy houses.  You simply lease a house from an owner with the right to sublease to your tenant.  The difference between the rent you collect from your tenant and the rent you pay the owner is your cash flow!  Because you don’t own the house, you are not responsible for repair costs or maintenance.  If you structure the master lease correctly, you will not need to pay rent if the house is vacant so this reduces your risks.

Because you don’t need to wait until you save up a down payment and you don’t need to qualify for a loan, you can acquire master leases (cash flow) much faster.  So, instead of maybe buying one to two houses a year, you can do one to two master lease per month – maybe more.  You’ll be able to generate cash flow much faster with master leases.

Another benefit…after you prove to the owner that you will make payments on time, you are sometimes able to buy the master lease properties with seller financing.
Because you do not own the house, you are not building equity.

Some CashFlowDepot members have been able to generate $10,000+ per month in cash flow from master leases in just a few years.

Alternative Ways to Acquire Rental Properties:

You should always be looking for opportunities to buy houses subject-to the mortgage or with seller financing.  These make ideal rental properties if the underlying loan is a low fixed interest rate with no balloon.

When you buy real estate subject-to the mortgage or with seller financing, you usually don’t need much cash to buy the houses and you don’t need to qualify for a loan or pay any loan fees.  So, you can buy more houses faster.

Cash flow will set you free! 

If you sell every house you find, you will never accumulate wealth, equity or cash flow.   Make accumulating cash flow a priority.

Tags getting started, landlording, master lease, sandwich lease

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1 Comment on “How to Get Cash Flow From Rentals”

  1. What are some of the ways people using to find these home owners who will do a master lease.

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