Cash or Cash Flow?


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  • The survey results are coming in. We really appreciate the feedback. It helps us know what training to offer, how to plan the Coaching Calls, and helps us know how to help you the best. If you have not sent in your survey yet, please do so. We don’t ask for your name.

    A question that has come up often – and showed up on the survey’s – is which should I focus on first, cash or cash flow.

    My opinion is that you should focus doing deals that will produce CASH if you are in debt and/or if you don’t have much money saved up. Once you get your debt paid off and some savings built up, then you should focus on cash flow.

    #1. Some safe ways to generate chunks of cash are wholesale flips and highest bidder sales. You get paid fast with both of these techniques and you don’t need to buy the house so there is less risk. Rehabs could also produce chunks of cash but it takes a lot longer to get paid and there is much more risks because you have a lot of your cash tied up in the deal so it is better to wait to do rehabs once you have a lot of experience.

    #2. A safe way to start generating cash flow are master leases. Yes, you could do lease options too. But, it is actually easier to get an owner to agree to a lease than a lease with an option. You can always ask for the option later. You don’t need to buy houses to create cash flow with master leasing. You’ll even be able to buy some of these master lease houses with seller financing later.

    Once the cash flow from master leases is enough to support your lifestyle, you have the freedom not hot hustle for the next deal and the next deal. A secure monthly cash flow also also makes it possible to use the proceeds from the “cash” deals to pay off more debt or to use the money to buy rental properties…

    But your ultimate objective (after #1 and #2) should be to buy houses that you keep long term. These properties will produce cash flow plus you’ll be building equity/wealth too. Ideally, you will buy these houses with seller financing or subject-to the mortgage instead of bank financing. Once the houses are paid off (with rents from your tenant), your cash flow will go through the roof. Plus you will have a huge nest egg of equity. This is the best retirement plan you could possibly have.

    Every year, your rents will go up so rental properties (and master leases) are an ideal hedge against inflation.

    If you owned 10 houses worth $200,000 each – that’s a $2,000,000 net worth. Let’s say each house generated only $1,000 a month in income after taxes, insurance, maintenance and vacancies, that’s still $10,000 a month. Need more cash flow? Add a few more houses.

    You don’t need a lot of houses to live a very comfortable life.

    That $200,000 house today will be worth $500,000 later. So your net worth is growing every day.

    If you really needed some cash for something you could sell one of the houses then replace it with another one later if you needed to increase your cash flow.

    Another plan is to acquire 30 rental houses. When they all have good equity, sell 15 houses so you can get the other 15 free and clear as fast as possible.

    or….

    Instead of waiting 20 or 30 years to pay off the houses, you could continue to do wholesale flips and highest bidder sales then use some of the proceeds to pay off your houses much faster. It is best to target one house to pay off every couple of years. Set goals!

    The plan I just described is only one way to accomplish your goals. There is not one right way. But you do need a plan.

    What’s your plan for this year and beyond?

    If you spend the rest of the year either focusing on cash OR cash flow, you’ll have more successes than if you are trying to do both at the same time.

    Excellent read Jackie. Thanks for all that you do!!

    I love this program. Best plan I have heard in my lifetime. I am grateful jackie

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