Cash flow, it’s the lifeblood of any household or business. Frankly, you can never have too much cash flow. Don’t get me wrong, it’s great to get bulk sums of money, but if there is no consistency or frequency in receiving that money, life can get pretty rough quickly. That’s why it’s so important to cultivate multiple streams of cash flow. Investing in real estate provides a fantastic opportunity to do just that without the need for you to turn it into a second job.
Our present reality during this COVID pandemic is a perfect example of why everyone needs more than one source of cash flow. I know that if I didn’t have the properties, I have now producing extra cash every month that we would have struggled. Instead, I could take advantage of opportunities that presented themselves, and once the pandemic is over and the world returns to normal, I will prosper greatly.
What is cash flow?
In terms of rental property, cash flow is the money left over after all the monthly expenses are paid for from the gross monthly rent received. I add 5% to my costs for my rentals when calculating cash flow because there are always unforeseen expenses that have to be paid for at some point.
Why is cash flow so important?
Imagine yourself as a farmer trying to grow a crop of vegetables. What happens if your field gets a lot of rain at the beginning of the season and then nothing for the remaining weeks? You might have some growth happen at first, but soon after, everything would wither and die. On the other hand, if that same field received a smaller amount of water on a steady, predictable schedule, that field would blossom and prosper long term. The same is true when you have consistent cash flow coming in.
What if owning and managing rental property is not for you?
Are there alternatives that are just as lucrative without the work of managing tenants, repairs, etcetera, etcetera? Of course, there is. Typical options that you will find are joint venture partnerships where one partner puts up the capital to buy the property while the other partner does the work or private lending, where you lend your money at a set interest rate.
Unfortunately, all of the well-known alternatives still require good-sized chunks of cash to be attractive until now…
Stay tuned! Shortly we will be launching a very special alternative that lets you invest directly into real estate with as little as $1000.
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