Cash flow is king when it comes to property investment in the credit crunch.

You don’t have to be rich to be successful at property investment in the credit crunch. You just have to be smart. Rental properties are available at reduced rates right now and the urge to over-invest can be overwhelming. Don’t let bargain prices fool you and don’t count on the value of your property to increase substantially anytime soon. Cash flow should be your main concern. If you do realize an increase in your investment property value, that will be the icing on the cake!

No matter how cheap you buy a property, if you don’t watch expenses and make sure you have the proper cash flow, you could lose money in the long run. A good rule of thumb is to only buy investment property that will produce cash flow when it comes to rental properties. After all of the associated property expenses including mortgage payments, insurance, utilities, repairs and incidentals, you should net 30 percent of the rent you collect.

You need liquid funds that will allow you to cover your costs if a renter moves out unexpectedly, if a pipe breaks and the home becomes unlivable, or if regular maintenance exceeds your expectations – it’s critical that you have cash set aside to recover the cost.

If it is your dream to make a solid property investment in the credit crunch, put your pen to paper and be realistic about your costs. Factor in periods during which a rental home may be unoccupied. Above all, be sure to set your net profits aside for emergencies.

Before purchasing investment property, be sure to research mortgage loans. Get the best interest rate possible and strive for a fixed-rate mortgage that won’t surprise you when the economy rebounds and interest rates go up.

Good luck in your next property investment.