Cash Flowing Assets
Astute investors purchase assets that generate positive monthly cash flow. These cash flowing assets (CFAs) include:
- Rentals ... multiple tenant properties (i.e. apartment complexes, storage units, mobile home parks).*
- Notes ... first and second position mortgage-backed promissory notes. Created by seller financing a property's equity to someone buying that property; or acquired by purchasing an existing note.
- Companies ... businesses that successfully operate without an owner’s day to day involvement.
* Single tenant dwellings (i.e. houses) are only acceptable as cash flowing assets IF monthly income from the property exceeds expenses.
Renting vs Home Ownership?
Homeownership, like baseball and hotdogs, is an integral part of the American culture. Over the past 70 years, the U.S. government has devoted significant public resources to encouraging and promoting homeownership. NMHC
Renting has been more common in other parts of the world, and the United States is headed in this direction as well; largely due to Millennials, now the nation's largest consumer group. Owning a home can certainly provide benefits, yet the reality for two of the biggest reasons to do so may be different than many expect.
Renting has been more common in other parts of the world, and the United States is headed in this direction as well; largely due to Millennials, now the nation's largest consumer group. Owning a home can certainly provide benefits, yet the reality for two of the biggest reasons to do so may be different than many expect.
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Reason: I'll reduce my tax bill if I buy a house.
Reality: A majority of homeowners reap no annual tax benefits from owning a house (opt for standard deduction). Additionally, the latest tax plan trimmed the deduction for mortgage interest and property taxes. |
Reason: Paying rent is throwing away money.
Reality: For the first five years of ownership, you are simply giving away your money to a bank. Nearly one-third of all buyers move within five years before they start building any real equity. Source: NMHC |
SO...WHICH IS BETTER? Renting or Owning?
EITHER ONE WORKS...as long as someone ELSE pays your rent/mortgage!!
Let me explain. A fundamental building block for net worth and financial freedom is to purchase a cash flowing asset to pay for anything you want in life (house, car, boat, etc). Therefore a person's first purchase needs to be a CFA, and their tenants/clients pay for the CFA itself AND the rent or mortgage payment. Added bonus is that once the house, car, boat is paid off, you still have the monthly cash flow from the CFA. This is how the wealthy do it...and you can too!
EITHER ONE WORKS...as long as someone ELSE pays your rent/mortgage!!
Let me explain. A fundamental building block for net worth and financial freedom is to purchase a cash flowing asset to pay for anything you want in life (house, car, boat, etc). Therefore a person's first purchase needs to be a CFA, and their tenants/clients pay for the CFA itself AND the rent or mortgage payment. Added bonus is that once the house, car, boat is paid off, you still have the monthly cash flow from the CFA. This is how the wealthy do it...and you can too!
Net Worth Insiders
The founder of Net Worth Insiders and his associates purchased >3,000 properties from 2007 to 2012 ... most for <$50K per door. It was a time when rental single family homes (SFRs), duplexes, triplexes and 4-plexes, that were purchased for cash from banks selling off their inventory, could be rehabbed/rented to yield double digit cap rates in several good markets, such as Georgia, Florida and Texas. Although managing properties in 27 states was logistically challenging, it was worth it for the aforementioned cap rates combined with the increase in property values. SFR prices have soared in recent years making multifamily properties once again a more attractive option for long term cash flow.
Cardone Capital
INVESTING
If you don’t have much time to invest in real estate, Cardone Capital might be a potential solution. They specialize in the multifamily space, have acquired ~4,000 units to date and is owned by our colleague, Grant Cardone, an international sales training expert, mega-entrepreneur and New York Times best-selling author.
EDUCATION
If you want to learn more about the basics of the multifamily niche and prepare yourself to purchase larger apartment complexes, watch the Real Estate Investing show every Monday ... and/or past episodes below.
If you don’t have much time to invest in real estate, Cardone Capital might be a potential solution. They specialize in the multifamily space, have acquired ~4,000 units to date and is owned by our colleague, Grant Cardone, an international sales training expert, mega-entrepreneur and New York Times best-selling author.
EDUCATION
If you want to learn more about the basics of the multifamily niche and prepare yourself to purchase larger apartment complexes, watch the Real Estate Investing show every Monday ... and/or past episodes below.
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