5 Reasons Cash-flow Matters

Some philosophies and sayings take root for good reason. You know the saying: cash is king? There are many different approaches to investing, and philosophies of how, and where, to invest. Investing with an eye on your future cash-flow is sound investing. It’s paramount for investors to consider what the future financial picture will be of a property, regardless of your particular strategy. Whether you’re into flipping, or prefer to buy and hold, if the cash-flow isn’t there or it’s a negative cash-flow situation, take pause. Cash-flow is king. Let’s dive in further:

Protection in Declining Markets
Markets rise. Markets flow. Remember 2004, 2005 and 2006? It was gold rush season when it came to investing, and there was great pressure to buy, buy, and buy (without an eye on the long term picture). What ended up happening? The market declined - as it does - and those who invested without a focus on positive cash-flow were left in a negative cash-flow situation.

Compete in a Competitive Market
When you’re not completely maxed out, having that extra cash-flow gives you a certain degree of flexibility. If you find, for example, that your rental property market has gotten a bit competitive over time and you’re having a harder time filling vacancies - cash-flow on hand gives you leverage to reduce rents and get competitive.

Don’t Feed the Monster
Just as markets rise and fall, so do our life and financial circumstances. Things can happen out of nowhere, and it’s certainly not a good thing should something happen when your finances are hanging by a thread. If you don’t plan now, you could end up in a situation where you’re feeding the monster; you could even lose a property. Build a solid foundation, focus on cash-flow, and prepare for those ‘what-if’s’. It’s one of the freedoms and privileges that real estate investing affords us.

An Asset, Not a Liability
Got money to burn? Think again. Having cash in your pockets is an asset, not a liability. You don’t need to figure out how to spend it when. Figure out the best ways to protect it, guard it, and grow it. Spend wisely, invest wisely. Remember: the tortoise always wins the race. Bottom line? Cash-flow increases your cash-on-cash return.

Appreciation is never guaranteed: Don’t Bank On It
We can strategize and plan to our heart’s content, however, that won’t change one immovable fact: appreciation is never guaranteed (though it’s often predictable). Protect your future, stay in the game longer, and keep your pockets lined long-term by keeping your cash-flow healthy!