I am sure you have heard “Cash is KING.” Having cash ready to deploy for opportunities is always a good position to be in. Cash flow is also king. Let’s be honest, cash flow from anything is financial freedom.
Let’s get real for a minute. There are lots of people who own investment properties, and many people claim to make cash flow. But are they truly making monthly income after all expenses? I know and have met lots of real estate holders, owners, and investors in my 20 years in this real estate business. Have you ever seen someone you know drive up in a fancy car, have a fancy house, clothes, vacations, etc., and then one day you find out that they live paycheck to paycheck? That they are three (3) bad months away from losing it all? You always thought this person was rich, super successful, had tons of money and the list goes on. This is how I feel about cash flow and the reality of making cash flow. I have the privilege to talk to lots of real estate investors all the time and have helped them with financing. I see financials and get to know what is happening with properties and know the truth if properties are cash-flowing.
Cash flow is KING because not everyone who owns real estate is truly making cash flow. Cash flow can take time. To buy a property and expect cash flow from day one is a bit aggressive and not reflective of reality. Don’t get me wrong, if you pay cash or put a big down payment, I could see cash flow coming in right away. Most of the time you buy a property, rehab it, lease it up, reposition it, and then start collecting rent. All that costs money, is an investment that you put into the property that you want to get paid back on through cash flow or a cash-out refinance. You could have tenant issues, unexpected issues/repairs, and things that can come up that cost money.
The good news is that in time once you do all these things to the property and get it stabilized the cash flow can start rolling in. There is no better feeling when you start getting those checks and all that hard work, discipline with your money, the risk you took, and the list goes on to pay off. It is like starting a business, some businesses take many years before they start becoming profitable. The same is true for real estate, owning property is just another business and once it gets stabilized it can be a profit center for you.
Starting young buying property is the best, you can keep buying, trading up, and eventually land into bigger buildings. Then you wake up one day with great cash flow that can change your life and give you that freedom you always dreamed of. It is work, it is sacrifice and it could be risky but if done right it will change your life and your family’s life.
The two (2) important factors when it comes to owning real estate in my opinion are how you manage the property and how you manage your debt. That can make or break you.
FYI We are always here if you have real estate questions 😊