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Read Transcript for “How Do I Solve My Cash Flow Problems?”
I’m going to explain why it’s important to bring in steady cash flow for your real estate business and how to do it so that you can start building wealth by holding the properties that you buy.
“I have 163 properties. I bought these over the last ten years and I’m managing them and my question is, how do you deal with cash flow problems when you have this many properties, and trying to keep everything on track? What’s the best way to increase your cash flow in a situation like this?” – Fred Wilson
Joe: Everybody I know that owns a lot of properties that doesn’t have a lot of equity in those properties has cash flow issues. There’s going to be problems with maintenance on the property; there’s always going to be an expense on that. There’s going to be problems with getting your tenants to pay on time and every month. There’s going to be problems selling those properties in order to liquidate some of that money and get cash out, then you’re going to have tax implications because of the capital gains that you’re making on those deals.
Joe: So, you have to think of a different way to bring in cash flow. I look at the business in two different parts. One is long term investment. You have these great properties. They’re going to be good long term investments. They’re going to pay for themselves. You’re going to have to put up with the headache of making those things happen, but you’ve got good properties. The thing that you need is a way to make your life better, and that’s to have cash flow. Cash flow will make any business survive. By the way, no business can survive without proper cash flow.
Joe: So what you need to do to create cash flow is you need to get big chunks of income coming in. That doesn’t happen through rental income. Rental income may give you a small percentage coming in every month but it’s not going to give you the big chunks that you need. In your case, it’s going to be much more than this, but on the average person, if they just had an extra $5,000 or $10,000 or $20,000 a month, it’s going to make a huge difference to their business and what they can do and how they live. You want to have enough money to live on and you want to have enough money to support your business as its continuing to grow.
Joe: So once you get the cash flow going, and the cash flow, by the way, will come from doing deals by flipping deals. You flip the deals to do the cash flow, you buy the properties to keep long term and hold them either as lease options or as rental properties to get the long term wealth. So you can do both of those things.
Joe: So I’d say focus on flipping the deals and buying properties that are either substantially under market values, or just buying properties that are at market value on terms and then turning around for an assignment fee and then make 5, 10 or $20,000 depending on the price range of the property.
Joe: Good luck with it, though. You’ve got a good business going. Don’t drop the ball on that, but if you don’t get your cash flow in order, you’re going to be in bad shape. So, good luck with it.