When we ask about cash flow investment and income-generating assets we often hear about funds, bonds & trusts. Unless you search with the exact keyword, real estate investment for cash flow, it almost never comes up on top of the search results of Google.
Here are the top results on Google for cash flow investment:
- Certificates of deposit (CDs)
- Real estate investment trusts (REITs)
- Dividend-yielding stocks
- Peer-to-peer lending
- Creating your own product
Investing in Certificates of Deposit (CDs) for cash flow investment
This type of investment is relatively low risk, but the returns are also relatively low. And there are a few drawbacks:
- Inflation. The average inflation rate in the U.S. over the past 60 years is 3.7% — which stands on the high end for most CD interest rates. This means you can actually lose money if you keep your money in CDs because of inflation.
- Low aggressiveness. If you’re young, that means you can stand to be a lot more aggressive with your investments because you have more time to recover from any losses. This should not be a good motivation to invest in this cash flow investment strategy.
Investing in Bonds for Cash Flow Investment
Much like CDs, bonds are like IOUs. Except instead of giving it to a bank, you’re lending money to the government or corporation.
And they work similarly to CDs as well — which means they’re:
- Extremely stable. You’ll know exactly how much you’ll get back when you invest in a bond.
- Guaranteed a return. You can even choose the amount you want a bond for (one year, two years, five years, etc.).
- Low in their returns, especially when compared with aggressive investments like stocks.
Investing in Rental Property for Cash Flow
Investing in rental properties for cash flow seems simple enough:
- Buy a house or apartment building.
- Rent out the rooms to tenants for a nominal fee.
- The rental checks come in like gangbusters each month while you sip piña coladas and make passive income.
Hell, that DOES sound awesome — but it’s also a complete oversimplification. In fact, renting out property is anything but relaxing. That’s because you’re responsible for all facets of the building you’re renting out as the owner. That includes repairs, maintenance, and chasing down tenants who don’t pay you rent.
And god help you if they do miss a rent payment. If that happens, you’ll have to find another way to pay your monthly mortgage payment.
You CAN make money from renting out properties (many people do!). It’s just that doing so can negatively affect your finances in a BIG way.
A hotel room investment can give you a regular passive income together with an exit strategy that can deliver a lump sum profit when you decide to sell up. As an investor you can enjoy the regular, passive rental income along with the lump-sum profit on exit without having to do any work at all – these are truly hands-free investments! As the investor, all you need to do is write the cheque and then sit back and collect your assured returns as everything is fully-managed on your behalf.
This article will consider the basics of a hotel room investment, the advantages that come with such a specialist investment. With a low entry price, regular income, the readily available advice in the market place and research at your fingertips, the risk is low. We will also go over how to mitigate common risks that come with investment in hotel rooms to give you an all-around guide to the hotel investment sector and how it can make you more money on your investments.
Why Investors are Turning to Hotel Rooms for Cashflow investment
A hotel room investment is a great way to turn your savings into a steady income and increase the health of your finances through serviced and fully-managed property whilst retaining and even growing your original lump sum. These investment opportunities make great investments because they can give you an average yield of around 10% each year. If you invest £50,000 into this type of investment, you can expect to receive an annual income of £5,000 from the rental returns of £600 each month!
Compared to other forms of investment such as an FTSE 100 company shares portfolio (4%), cash deposit accounts (1%) and 10-year gilts (0.95%) these investments offer a much better return than any asset class outside of property investment at this time.
Cash Flow Investment Return on Investment Compared with other Investments
In terms of high annual yield, a hotel room can give you great returns on your savings compared to other assets.
In comparison to other types of property investment, when you invest in a hotel it will offer higher returns despite the lower entry requirement. With a regular buy-to-let investment, depending on the area, the NET yields will only be around 7% or less in 2019, and generally the further down south you go the lower the yields due to expensive overheads. This brings us to another advantage of hotel room investment – there are no ongoing or hidden costs – once you have purchased the unit you will not be asked to make any further payments and the assured returns are NET returns which means that no deductions will be made from this income.
Furthermore, when you invest in a hotel, unlike a regular buy-to-let where the property market is a big factor in the profits you can make, a hotel investment doesn’t rely on the trends in the UK housing market. Similarly, the sector doesn’t rely on students coming to the UK like the student accommodation sector. When you invest in hotels it is classed as a commercial property transaction rather than residential and so this means that there is the added advantage of being exempt from stamp duty tax.