How Cash Flow VS Capital Growth Mirrors Bodybuilding VS Weight Lifting
Picture Mr. Universe, the epitome of bodybuilding, workin’ out like he wanted to be the world’s strongest man. Then ask yourself why nobody would ever think that’s effective. Those who want the ultimate bodybuilder’s physique sometimes think it works, or they wouldn’t workout that way. What’s their thought process? Do they have one? If so, how long will it take for them to realize their mistake — which begs the question — will they ever realize their mistake?
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Each month I get half a dozen calls or more from folks in their 20’s and 30’s who’re either already immersed in developing immediate and substantial cash flow through real estate investment, or want to. Their incomes run the gamut from a couple grand monthly to five figures a paycheck. They don’t plan on retiring any time soon — usually at least 15-20 years down the road. They’re saving copious amounts of money after taxes.
Yet they wanna develop cash flow yesterday. It makes no sense whatsoever.
If you’re 33, makin’ $125,000 plus whatever your workin’ wife brings to the table, (often an equally considerable amount) cash flow ain’t your problem. In fact, you have money to invest in real estate because cash flow’s not an issue. It’s akin to stoppin’ at the store for some ice cream when you already have eight gallons of it at home. No, you’d make the stop cuz this morning you noticed the kids were outa their favorite cereal — and you remembered what kinda hell that created last time. 🙂
What’s your real investment need?
In two words — Capital Growth. Ask yourself who’s better off, the guy who bought cash flow properties from Day 1? — OR — The guy who grew his capital as big as possible, as safely as possible over time? Go with me here, OK? It’s the second guy by a mile.
Maximum cash flow at retirement
What most people never quite catch on to, is that capital growth and cash flow are exactly analogous to bodybuilding and weight lifting. The former’s agenda is a perfectly symmetrical body, while the latter’s end game is brute strength and nothing else. To the extent you adopt bodybuilder principles, you defeat weightlifter results. Try doing both in a so-called compromise, and you’ll end up as a weak weightlifter with a funny looking body. A lose-lose if ever there was one.
When a real estate investor goes for cash flow, they defeat capital growth and vice versa. You can bench press 315 pounds 8-10 times and sculpt a killer lookin’ chest, or you can train to bench press over 1,000 pounds once, and scare the crap outa Zeus. Ya gotta pick one.
Remember — you want the highest cash flow to arrive just as you cross the retirement line.
To do that you must be cognizant of what makes for maximum cash flow any time, anywhere. Maximum cash flow comes from a yield on maximum capital. The way you get to maximum capital is to concentrate on making it bigger each and every year. Capital simply will not grow at maximum possible velocity when the investor’s main agenda is maximum cash flow now. The sound you hear in the background is the Captain Obvious alert. 🙂
This ain’t rocket science. 8% on a million bucks yields more than 8% on less than a million bucks. Duh. Yet thousands fall in love with their ability to create lots of current cash flow now, completely oblivious to the reality: They’re purposefully discounting what their retirement income coulda — woulda — SHOULDA been. How you might create that capital growth is a different discussion altogether. But please, for the love of common sense, embrace capital growth as if your retirement depended on it.
Cuz it does.