Cashflow ...it flow in ..it flow out

A pretty cashflow diagram

I awoke this morning with the words of my DH ringing in my ears - 'cashflow makes or breaks businesses' ... and then wondered why I found myself tossing and turning for ten minutes unable to get back to sleep. I admit, there are better thoughts to wake up with on a Saturday morning (is there enough bacon for us all for breakfast or can I hide the smell before everyone else gets up) kind of thing.  Of course you may have other suggestions too ...

While breakfast calls, I make do with a cup of Rooibush tea (my favourite early morning cuppa) and spend some time pondering my decisions and my fate... no that should read outcome. My decision a few days ago to make an offer on another property which does have fantastic potential and offers an exciting prospect of the eventual rate of return, has also presented me with certain mental challenges to do with the finances!!

In order to purchase this one, we will have to remortgage another property in our portfolio, which does have a good return (level of rental income compared to mortgage repayment). Even with the increased mortgage payments the rental amount will still comfortably cover the mortgage repayments, and in doing so we get the deposit (and some cash for refurb purposes) for this new property. So on paper, it looks like a win-win.

However, juggling these finances is not an easy task. I have a cash flow spreadsheet that I use to plot the income and expenditure of our portfolio, and it includes all the incidental costs that arise including insurance, safety checks, an amount for emergency work etc etc

Usually the spreadsheet ticks over month by month, and is a great tool for ensuring we've got some contingency funding should any surprises occur! However, with a refurb project like the one I'm about to embark on, I know that this is gonna get a LOT more complex. We are not going to have any income on the property for a few months while it is being refurbished, so I must prepare for payment of the mortgage and bills with no income. So, I am pondering my dilemma as I write - do I 'borrow' from our savings or do I borrow from the bank or do I get a loan? Each has its pros and cons to do with interest rates, rate of payback, complexity of financial accounting associated with it. I am going to spend some time this weekend analysing the cashflow forecast to identify exactly where our pinch points are going to be and then make a financial plan to ensure there is cash available to cover all costs on time.

However, for the time being there's a much more pressing dilemma. A bacon buttie or full fry up? Ah, decisions, decisions ...