Cashflow is king

Cash is king, how many times have landlords heard this in the recent economic climate? But, it’s true. If you just take a trawl along to your local property auction you will be left in no doubt that if you have cash in your back pocket you have every chance of bagging yourself a property investment bargain.

My property cashflow analysis

I’ve recently needed to use the Property Manager 3.0 to investigate the financial strength of my property portfolio. I was pleasantly surprised. After updating some of the details like my most recent tenant and updating my mortgage payments (some lenders have changed the mortgage rate – despite interest rates remaining unchanged). It seems that my small portfolio is throwing off cash “hand over fist.”

Accessing your cashflow

To go to the Cashflow function within the Property Manager 3.0 just click the Investment icon on the left hand side you will then be taken to the Cashflow screen. The cashflow will automatically draw on the rent generated by your investment property but also allow you to enter in additional income for example if you rent your garage out separately (you could always create a separate tenancy for the garage even if strictly speaking it’s not let using an Assured Shorthold Tenancy.

The Property Manager 3.0 also allows you to take off regular deductions such as your mortgage payments. The figure for this is entered in via the Loans screen. Other costs affecting your cashflow could be : insurance, ground rent, service charges.

What’s cashflow all about?

In essence cashflow is a snapshot of the current financial state of your property portfolio. This snapshot allows you to make future decisions relating to your rental business. Do I have enough cash to think about expanding, should I be paying down some of my mortgage debt? Do I need to cut costs? These are all vital aspects of the financial management of your rental portfolio.

Cashflow is not profit or loss

Remember that cashflow is not a measure of the profits or loss of your rental business. This is because in the commercial property world any profit or loss statement would have to take account of other fluctuations in the value of your rental business such as the capital values of your properties. For most landlords this is neither that easy to do or for day to day management purposes that useful. Property Manager 3.0 does allow you to keep tabs on the profit within your portfolio through the Values function within the Investment tab. Enabling landlords to keep a running tally of the Net profit of each of their buy-to-lets, accounting for the sellers costs, cost of any improvement works and sellers costs.

Questions and suggestions on PM 3.0

PM 3.0 is Property Hawks unique free property management resource for landlords and letting agents.
If you have any questions, suggestions about the Property Manager 3.0 please sign up to our new landlord forum and post your questions / suggestions there. We will reply. If you are a bit of ‘wizz’ on PM 3.0 it would be great if you could help others to use it more effectively.