Cash flow is NOT king!

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Cash flow is NOT king!

Arn CenedellaPro Member
Rental Property Investor · Greenville, SC · Member since 2008 · 786 posts · 1k+ votes

“Cash flow is king” is a mantra to many.

It’s repeated over and over in forums and conferences. 

I am not a “cash flow is king” investor

Pending one’s stage in life and career, I submit growing equity and increasing net worth should be the goal of most investors in their 30s and 40s and perhaps even in their 50s - as they enter and are in their prime income years. Presumably someone who has cash to buy investment real estate has a W2 income sufficient to cover their total monthly cost of living - their “job” pays for their lifestyle. So they don’t need cash flow to live off of. From folks in that position, I submit it’s better to invest for capital growth. Properties should pay for themselves with some cash flow left over to cover unexpected expenses. But the focus in my should opinion should be on long term capital growth.

Question: Who will be able to generate more cash flow when they want and need it?

Investor A with $1M of investible assets

Or

Investor B with $3M if investible assets

The answer is obvious, it’s investor B.

I see countless investors talking about buying a cash flow property.

I see countless brokers and owners trying to sell property by indicating “it’s a cash flow property”.

If I may offer my perspective on:

Does the property cash flow?

It’s an incomplete question with no answer.
I believe an additional layer of detail and sophistication is required.

I submit:

Every property will cash flow if you buy with all cash. Right?

So the better question the more informative question is:

What size cash down payment do I need to make so that the property cash flows?

Does an investor need to put 20% down or 30% or 50% down to cash flow?

That’s the better question.

Any question or statement about cash flow only has meaning when connected to the amount of cash required to buy it.

And yes in todays market with todays debt costs, I suspect most SFRs will require 30% to 40% down to cash flow. In my opinion you won’t find cash flow with 20% down unless the property and location are horrible. Even MF assets require 30% to 35% down to provide some cash flow. 

The “popular” opinion isn’t always the best opinion. 

One should tailor their investment approach to their assets - education income capital knowledge experience etc etc - and their goals. 

I’d submit investing for capital growth is by far the better option for many. 

Aim to hit line drive base hits not grand slams. 


[email protected]650-575-6114
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Joe VilleneuvePro Member
Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
3y

 The problem with you conclusion is you are assuming the person buying CF properties is buying properties that won't appreciate.  One without the other is a fools game.  You have to have both, or don't buy.

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  • John Mausteller
    Real Estate Agent · Outer Banks, NC · Member since 2019 · 168 posts · 116 votes
    3y

    I agree with this wholeheartedly.  No one ever talks about it - but buying a property that pays for itself and any suddent expenses and continues to grow in value is the way to go.  If you are in your 30s, then by the time you are in your 60s and retirement age - these properties will be paid off! (Assuming you did not refinance to pull out cash).  Great thoughts above Arn!

    9Reply
  • Arn CenedellaPro Member
    OP
    Rental Property Investor · Greenville, SC · Member since 2008 · 786 posts · 1k+ votes
    3y

    @John Mausteller

    Thank you.

    And the truth is if some starts investing at 30, many will be financially free at age 50.

    Use the power of leverage to increase net worth.

    [email protected]650-575-6114
    5Reply
  • Joe VilleneuvePro Member
    Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
    3y

     The problem with you conclusion is you are assuming the person buying CF properties is buying properties that won't appreciate.  One without the other is a fools game.  You have to have both, or don't buy.

    36Reply
  • John Augustiniak
    New to Real Estate · Austin, TX · Member since 2022 · 2 posts · 5 votes
    3y

    This was a helpful read! I think it's important to zoom out and think about the long-term. I find myself reverting to short-term thinking and discounting the long-term potential when I am looking at homes. 

    4Reply
  • Karl B.
    Rental Property Investor · Erie, PA · Member since 2015 · 1k+ posts · 2k+ votes
    3y

    I think your message should more be aimed at: when buying make certain your numbers work. 

    I invest for cash flow (value-add) and do well for myself. Real estate investing isn't brain surgery: it's about numbers, knowledge and having a plan (especially in value-add). 

    8Reply
  • Austin F.
    Investor · MI · Member since 2015 · 227 posts · 478 votes
    3y

    Cash flow lets me take 6 months off every year to travel, ski (100 days last season), mountain bike, whatever. But yeah, I should invest in appreciation and enjoy life when I'm 60 (which is when my loans mature and I can start selling AKA retire).

    19Reply
  • Austin Paige
    Member since 2023 · 12 posts · 8 votes
    3y

    Very interesting read. I think this comes back to what is the investors goal. If your goal is to replace your W2 then cash flow is king. If you are using REI as a retirement fund break even and appreciation is a great long game. I think what gets a lot of people so heavily interested in REI is the ability to replace their W2 which from my understanding would need cash flow.

    5Reply
  • Shiloh LundahlPro Member
    Rental Property Investor · Gilbert, AZ · Member since 2016 · 3k+ posts · 4k+ votes
    3y

    Better than a cash flow model, and better than an appreciation model, the trade up model is hands-down, the better model. The trade up model is basically buying properties under market value that have a value add component. Then after you have adeed the value, keeping the asset for 3 to 7 years in order to get tax benefits and experience appreciation, depreciation, and debt pay down. Then using the 1031 exchange to take all of the gain from the asset and rolling it into another property and then doing the cash out refinance, which then allows you to take out a chunk of cash without incurring a taxable event. And if you really want to accelerate the process, use the lease option strategy rather than just the regular rental strategy.  This is how I went from 330k to 5 million in 6 years. 

    480-206-1209Podcast Guest on Show #287
    25Reply
  • Joe VilleneuvePro Member
    Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
    3y
    Quote from @Shiloh Lundahl:

    Better than a cash flow model, and better than an appreciation model, the trade up model is hands-down, the better model. The trade up model is basically buying properties under market value that have a value add component. Then after you have adeed the value, keeping the asset for 3 to 7 years in order to get tax benefits and experience appreciation, depreciation, and debt pay down. Then using the 1031 exchange to take all of the gain from the asset and rolling it into another property and then doing the cash out refinance, which then allows you to take out a chunk of cash without incurring a taxable event. And if you really want to accelerate the process, use the lease option strategy rather than just the regular rental strategy.  This is how I went from 330k to 5 million in 6 years. 

    ...and, add to that using LLC's to buy the property with seller financing,...then sell the LLC.  New buyer inherits the original terms and the seller isn't selling RE, so...
    10Reply
  • Arn CenedellaPro Member
    OP
    Rental Property Investor · Greenville, SC · Member since 2008 · 786 posts · 1k+ votes
    3y
    Quote from @Joe Villeneuve:

     The problem with you conclusion is you are assuming the person buying CF properties is buying properties that won't appreciate.  One without the other is a fools game.  You have to have both, or don't buy.

    Yes of course you want both - cash flow and appreciation. 

    Then the question is: How does each investor weigh cash flow against appreciation?

    in my 45 years of investing experience, I have noticed that more dramatic growth areas those that offer higher probabilities of significant appreciation comes at a cost in terms of reduced cash flow. Conversely I have found that areas that offer more predictable stable cash flow generally offer low appreciation. 

    Most knowledgeable investors understand investing in Boise or Austin or Phoenix or Nashville or Charlotte may provide less cash flow than investing in more stable markets like Tulsa or Indianapolis or Kansas City for example. 

    So for me I will choose investments that offer lower cash flow in exchange for higher rates of appreciation.  

    So I choose appreciation over cash flow but I still get both. 

    Other investors can choose how they want to invest. Hope there is no problem with that. 😀


    [email protected]650-575-6114
    11Reply
  • Arn CenedellaPro Member
    OP
    Rental Property Investor · Greenville, SC · Member since 2008 · 786 posts · 1k+ votes
    3y
    Quote from @Karl B.:

    I think your message should more be aimed at: when buying make certain your numbers work. 

    I invest for cash flow (value-add) and do well for myself. Real estate investing isn't brain surgery: it's about numbers, knowledge and having a plan (especially in value-add). 


     Question:

    When you ultimately sell your value add investments, what percentage of your “profit” comes from cash flow and what percentage of your “profit” comes from increase in value?

    Doesn’t “value add” imply an increase in value or equity?

    [email protected]650-575-6114
    2Reply
  • Karl B.
    Rental Property Investor · Erie, PA · Member since 2015 · 1k+ posts · 2k+ votes
    3y
    Quote from @Arn Cenedella:
    Quote from @Karl B.:

    I think your message should more be aimed at: when buying make certain your numbers work. 

    I invest for cash flow (value-add) and do well for myself. Real estate investing isn't brain surgery: it's about numbers, knowledge and having a plan (especially in value-add). 


     Question:

    When you ultimately sell your value add investments, what percentage of your “profit” comes from cash flow and what percentage of your “profit” comes from increase in value?

    Doesn’t “value add” imply an increase in value or equity?

    I don't sell my MF investments. Why would I sell something that generates money every single month? 

    Value-add - to a buy-and hold investor like me - implies VALUE - which in my case refers to an increase in monthly rents (buy a mismanaged, dumpy property and fix it up... then charge a higher rent). 

    I couldn't care less about appreciation on a property I have zero intent on selling and would be fine with zero appreciation if it means not receiving a higher property tax bill. 

    4Reply
  • Arn CenedellaPro Member
    OP
    Rental Property Investor · Greenville, SC · Member since 2008 · 786 posts · 1k+ votes
    3y

    @Austin Paige

    💯. Each investor is different. 

    And so one’s investing strategy should align with their goals.

    If leaving W2 is the goal, that might call for a different approach than say leaving a legacy or paying for your kid’s college education. 

    If for example one needs to replace one’s $120,000 a year W2 income, how much capital does an investor need?

    Can one generate $120,000 a year cash glow with $200,000 in equity in “cash flow” real estate?

    I’d say NO. For $200,000 in equity invested in real estate to generate $120,000 a year, one needs cash flow investments that generate a 60% annual cash on cash return. 

    Even $1M in real estate equity would need to produce a 12% annual cash on cash return to generate $120,000. Maybe that’s doable but is actually unusual. 

    So in my mind, the goal should be accumulate $1M to $2M in equity in capital to generate that $120,000 a year income. 

    Just my opinion, cash flow is great but I believe one needs to have a significant amount of capital to generate quit the W2. 

    [email protected]650-575-6114
    3Reply
  • Austin Paige
    Member since 2023 · 12 posts · 8 votes
    3y
    Quote from @Arn Cenedella:

    @Austin Paige

    💯. Each investor is different. 

    And so one’s investing strategy should align with their goals.

    If leaving W2 is the goal, that might call for a different approach than say leaving a legacy or paying for your kid’s college education. 

    If for example one needs to replace one’s $120,000 a year W2 income, how much capital does an investor need?

    Can one generate $120,000 a year cash glow with $200,000 in equity in “cash flow” real estate?

    I’d say NO. For $200,000 in equity invested in real estate to generate $120,000 a year, one needs cash flow investments that generate a 60% annual cash on cash return. 

    Even $1M in real estate equity would need to produce a 12% annual cash on cash return to generate $120,000. Maybe that’s doable but is actually unusual. 

    So in my mind, the goal should be accumulate $1M to $2M in equity in capital to generate that $120,000 a year income. 

    Just my opinion, cash flow is great but I believe one needs to have a significant amount of capital to generate quit the W2. 

    You are probably correct I am new to REI.

    In theory would it be possible to replace a 120k W2 with creative financing therefore not needing as much capital to obtain cash flow properties? 
    Also with the BRRRR method after your first down payment on your first property after the refi and reinvestment into a new property you are not using anymore of your own capital to grow your portfolio. With those models cash flow is still important and you can obtain a large portfolio without needing large capital. Or am I completely wrong on this? 

    This discussion is actually extremely helpful in how I am learning the different strategies. 
    1Reply
  • Arn CenedellaPro Member
    OP
    Rental Property Investor · Greenville, SC · Member since 2008 · 786 posts · 1k+ votes
    3y
    Quote from @Karl B.:
    Quote from @Arn Cenedella:
    Quote from @Karl B.:

    I think your message should more be aimed at: when buying make certain your numbers work. 

    I invest for cash flow (value-add) and do well for myself. Real estate investing isn't brain surgery: it's about numbers, knowledge and having a plan (especially in value-add). 


     Question:

    When you ultimately sell your value add investments, what percentage of your “profit” comes from cash flow and what percentage of your “profit” comes from increase in value?

    Doesn’t “value add” imply an increase in value or equity?

    I don't sell my MF investments. Why would I sell something that generates money every single month? 

    Value-add - to a buy-and hold investor like me - implies VALUE - which in my case refers to an increase in monthly rents (buy a mismanaged, dumpy property and fix it up... then charge a higher rent). 

    I couldn't care less about appreciation on a property I have zero intent on selling and would be fine with zero appreciation if it means not receiving a higher property tax bill. 


     @Kari B

    Never sell is a good strategy. 

    [email protected]650-575-6114
    2Reply
  • Arn CenedellaPro Member
    OP
    Rental Property Investor · Greenville, SC · Member since 2008 · 786 posts · 1k+ votes
    3y
    Quote from @Austin Paige:
    Quote from @Arn Cenedella:

    @Austin Paige

    💯. Each investor is different. 

    And so one’s investing strategy should align with their goals.

    If leaving W2 is the goal, that might call for a different approach than say leaving a legacy or paying for your kid’s college education. 

    If for example one needs to replace one’s $120,000 a year W2 income, how much capital does an investor need?

    Can one generate $120,000 a year cash glow with $200,000 in equity in “cash flow” real estate?

    I’d say NO. For $200,000 in equity invested in real estate to generate $120,000 a year, one needs cash flow investments that generate a 60% annual cash on cash return. 

    Even $1M in real estate equity would need to produce a 12% annual cash on cash return to generate $120,000. Maybe that’s doable but is actually unusual. 

    So in my mind, the goal should be accumulate $1M to $2M in equity in capital to generate that $120,000 a year income. 

    Just my opinion, cash flow is great but I believe one needs to have a significant amount of capital to generate quit the W2. 

    You are probably correct I am new to REI.

    In theory would it be possible to replace a 120k W2 with creative financing therefore not needing as much capital to obtain cash flow properties? 
    Also with the BRRRR method after your first down payment on your first property after the refi and reinvestment into a new property you are not using anymore of your own capital to grow your portfolio. With those models cash flow is still important and you can obtain a large portfolio without needing large capital. Or am I completely wrong on this? 

    This discussion is actually extremely helpful in how I am learning the different strategies. 

    @Austin Paige

    BRRR is a great way to grow your capital quickly.

    A clarification is in order perhaps and it involves active investing v passive investing  

    BRRR, flipping houses etc are more active ways to invest in Real Estate - self managing your rental properties is more active too

    My comments about growing one’s capital or equity are about being to buy enough real estate to generate sufficient income passively without your daily involvement - ie your capital does the work and generate the income rather than you doing the work. 

    My main comment is early on I believe new and younger investors should focus on growing their capital. With greater capital one can then buy into real estate to live off of. 

    So by all means BRRR as many houses as you can as quick as you, grow your capital on each deal and then you might reach a point where you can buy a larger MF property which passively will generate the income you want.

    Doing BRRR is not about cash flow it's about growing your equity which was the point of my original post.

    Hope this makes sense. 

    New investor get active generate capital and then at some point you can kick back and let that pile of capital generate the income you want.  

    [email protected]650-575-6114
    1Reply
  • Joe VilleneuvePro Member
    Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
    3y
    Quote from @Arn Cenedella:
    Quote from @Karl B.:
    Quote from @Arn Cenedella:
    Quote from @Karl B.:

    I think your message should more be aimed at: when buying make certain your numbers work. 

    I invest for cash flow (value-add) and do well for myself. Real estate investing isn't brain surgery: it's about numbers, knowledge and having a plan (especially in value-add). 


     Question:

    When you ultimately sell your value add investments, what percentage of your “profit” comes from cash flow and what percentage of your “profit” comes from increase in value?

    Doesn’t “value add” imply an increase in value or equity?

    I don't sell my MF investments. Why would I sell something that generates money every single month? 

    Value-add - to a buy-and hold investor like me - implies VALUE - which in my case refers to an increase in monthly rents (buy a mismanaged, dumpy property and fix it up... then charge a higher rent). 

    I couldn't care less about appreciation on a property I have zero intent on selling and would be fine with zero appreciation if it means not receiving a higher property tax bill. 


     @Kari B

    Never sell is a good strategy. 

    ...and you'd be losing money, exponentially. 
    1Reply
  • Joe VilleneuvePro Member
    Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
    3y
    Quote from @Arn Cenedella:
    Quote from @Joe Villeneuve:

     The problem with you conclusion is you are assuming the person buying CF properties is buying properties that won't appreciate.  One without the other is a fools game.  You have to have both, or don't buy.

    Yes of course you want both - cash flow and appreciation. 

    Then the question is: How does each investor weigh cash flow against appreciation?

    in my 45 years of investing experience, I have noticed that more dramatic growth areas those that offer higher probabilities of significant appreciation comes at a cost in terms of reduced cash flow. Conversely I have found that areas that offer more predictable stable cash flow generally offer low appreciation. 

    Most knowledgeable investors understand investing in Boise or Austin or Phoenix or Nashville or Charlotte may provide less cash flow than investing in more stable markets like Tulsa or Indianapolis or Kansas City for example. 

    So for me I will choose investments that offer lower cash flow in exchange for higher rates of appreciation.  

    So I choose appreciation over cash flow but I still get both. 

    Other investors can choose how they want to invest. Hope there is no problem with that. 😀


    All that means is the areas you've investigated, don't work for both.  What about the areas you haven't investigated?
    0Reply
  • John Kunick
    Investor · Broken Arrow, OK · Member since 2016 · 210 posts · 314 votes
    3y

    @Arn Cenedella, while the title of this thread is provocative, I honestly think it's misleading.  Perhaps Cash Flow is King IF the goal of the investor is to build cash flow to replace W2 for whatever reason.  In my case, Cash Flow was my #1 objective as I wanted to build up enough cash flow so I would have the choice to leave (or not) my W2 corporate gig..  Fortunately, after several years of buying cash flowing properties, I did get to point I could make that choice.  I still kept working for a couple more years, but ultimately did retire and now spend my time managing my various real estate holdings.

    I've had the honor of mentoring several others, several that I've met on BP, as they were getting started in their REI journey. I always tell them the #1 thing they need to define is "what are your goals".. Depending on your goals, your strategy will be different. To your point, those in their earlier years may decide capital appreciation is king. But, it all depends.

    8Reply
  • David M.
    Morris County, NJ · Member since 2020 · 5k+ posts · 2k+ votes
    3y

    @Karl B. the reason why appreciation is so important because it can, and generally does, significantly outpace cash flow income.  Real estate investment is speculation by definition.  that's how the "old money" was made in this country.  The people who try to "get rich quick" on cash flow and scaling are missing out, have drastically different goals than "traditional" real estate investing, and / or just "sold" on these ideas and potentially missing out.  Oh, and you might sell so that you can access the "generatedwealth" to better your return / yield as your life / goals changes. 

    @Arn Cenedella thanks for bringing this up.  I agree.  I also agree with the other sentiments that it does depend on people's strategy and goals, right or wrong.  I have know so other investors whose properties doubled in 10 years (this is pre 2000 timeframes).  Tell me how cash flow can keep up with that, especially taxed at long term capital gains rates or even if 1031'ed.  Very powerful wealth generation.  We currently have seen dramatic increases in rents in the past ~5years.

    Furthermore, I don't believe in "only real estate investing."  There are plenty of other opportunities to make money / generate wealth.  A diversified portfolio is key.

    3Reply
  • Nicholas L.Pro Member
    Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
    3y

    @Arn Cenedella

    good post and good discussion to have.  David Greene has been pivoting to this message over the last few months, a little bit late in my opinion.  

    and it's going to be tougher or impossible for new investors that need cash flow to invest for capital growth.

    2Reply
  • Sam YinPro Member
    Los Angeles, CA · Member since 2021 · 583 posts · 738 votes
    3y

    @Austin Fogt

    Ditto. My sentiments exactly.

    In all seriousness, and with respect, to each their own.

    I personally enjoy my long vacations and knowing I do not need the W2 to survive. The reason for me jumping into REI was to break free from the W2. It was to get my time freedom and not have to work to 50, 55, 60, 65...

    But i guess if you love your job, and it does not feel like a job, and it pays for all your needs and you already have the time you want, BUT still want to build massive wealth for your next generation, then YES, I agree that you should keep investing for equity growth/appreciation. In 20 to 40 years, you can amass a huge portfolio.

    I did struggle with this for a minute, like maybe 10 minutes. I quickly chose to give up the W2 bu investing for cashflow and spend my time being a house husband. I enjoy every moment with my kids and I see they are kept in line.

    5Reply
  • Sam YinPro Member
    Los Angeles, CA · Member since 2021 · 583 posts · 738 votes
    3y

    @Arn Cenedella

    I'm going to have to disagree with your math a bit. Based on you assessment, you are assuming no movement/exchanges in the initial capital used. Whereas in reality, the strategy should be to continue to work thay capital to get to your FI number.

    In your example, it would seem impossible to generate 120K of income without $1M+ in capital.

    If you take a step back and consider all the facets of REI, and employ sweat equity, value add, 1031x, I will argue that you can easily cashflow $120K with a lot less money, AND leave a large portfolio for generational wealth in short order.

    I have done this recently, with a start up capital of about $130k, initially spread between 3 SFRs. Using what I described above, it has grown close to 100 rental units, well beyond 120K of cash flow, over $10M in assets, and still growing. Children college is set, if they want to go, but I hope they do mot waste their time with the college scam. As the portfolio grows, I grow the reserves to at least 5% to 10% of the valuation... but I get caught up and reinvest when opportunities pop up and start the cycle over.

    This is a great thread with good education. Like many on here, I am still new at this and learning all the time. But I wanted to present a different perspective so that cash flow is in the forefront. Remember, cash flow keeps you in business, not equity. If you have 10M in equity across a large portfolio, but the cash flow is minimal or none, a small emergency can wipe out your business. The unforeseen environmental costs can snowball and wipe out your assets.

    If the model is to invest long term with partnerships or syndication or REITs, then that's a different story.

    In the end, it does really depend on the goal of the individual.

    4Reply
  • Alecia LovelessPro Member
    Member since 2019 · 3k+ posts · 2k+ votes
    3y

    @Arn Cenedella I buy for both CF and appreciation. My market provides both. Even before the pandemic there has been a steady appreciation of 7-10% per year here and while it was much higher during the pandemic it still remains strong.

    Unfortunately there’s been lots of greedy sellers just throwing up astronomically high prices for rental properties that just don’t work for true investors. All of a sudden many out of the area people have come into our market as cash buyers thinking that these prices are 1/3 or less of their big city prices and have been buying these expensive properties anyway.

    You can still find good deals, it’s just been harder as it has been everywhere. But there’s still good deals with both CF and appreciation. I’ve landed two inside of four months.

    4Reply
  • Account Closed
    Developer · Austin, TX · Member since 2018 · 23 posts · 15 votes
    3y
    Quote from @Arn Cenedella:

    “Cash flow is king” is a mantra to many.

    It’s repeated over and over in forums and conferences. 

    I am not a “cash flow is king” investor

    Pending one’s stage in life and career, I submit growing equity and increasing net worth should be the goal of most investors in their 30s and 40s and perhaps even in their 50s - as they enter and are in their prime income years. Presumably someone who has cash to buy investment real estate has a W2 income sufficient to cover their total monthly cost of living - their “job” pays for their lifestyle. So they don’t need cash flow to live off of. From folks in that position, I submit it’s better to invest for capital growth. Properties should pay for themselves with some cash flow left over to cover unexpected expenses. But the focus in my should opinion should be on long term capital growth.

    Question: Who will be able to generate more cash flow when they want and need it?

    Investor A with $1M of investible assets

    Or

    Investor B with $3M if investible assets

    The answer is obvious, it’s investor B.

    I see countless investors talking about buying a cash flow property.

    I see countless brokers and owners trying to sell property by indicating “it’s a cash flow property”.

    If I may offer my perspective on:

    Does the property cash flow?

    It’s an incomplete question with no answer.
    I believe an additional layer of detail and sophistication is required.

    I submit:

    Every property will cash flow if you buy with all cash. Right?

    So the better question the more informative question is:

    What size cash down payment do I need to make so that the property cash flows?

    Does an investor need to put 20% down or 30% or 50% down to cash flow?

    That’s the better question.

    Any question or statement about cash flow only has meaning when connected to the amount of cash required to buy it.

    And yes in todays market with todays debt costs, I suspect most SFRs will require 30% to 40% down to cash flow. In my opinion you won’t find cash flow with 20% down unless the property and location are horrible. Even MF assets require 30% to 35% down to provide some cash flow. 

    The “popular” opinion isn’t always the best opinion. 

    One should tailor their investment approach to their assets - education income capital knowledge experience etc etc - and their goals. 

    I’d submit investing for capital growth is by far the better option for many. 

    Aim to hit line drive base hits not grand slams. 



    You would think this would be taught in school but it is not.  I taught my boys about money and they are working very hard to accomplish their short and long term goals.  My oldest works two jobs and invested in the ESPP at his job.  He invested every penny allowed into the program and invested the rest in $SPY while living off his second income and driving a used Honda Civic.  It has been 5 years and he just crossed $550,000 in cash (that is he continually reinvest in $SPY (plus the dividends).  He will be a millionaire by 25 and never went to college.  He plans to go to college once he hits the $1M and will drop one job while earning his degree in what ever he has decided to do for his career at that point.  More than likely he will be an Architect.  I am very proud that he listened to me about money and did the work early on.  My younger son is well on his way as well to his first $100k at just 16!  He runs an online store.  Solid boys for sure.  Building up capital is the key.

    When me and the wife hit $10M a few years back we celebrated by purchasing a 2 year old Honda Passport with 25,000 miles.  That is us splurging.  We still rent as we have to be flexible to move where real estate is most lucrative, at least in the areas I am an expert in.  I can do it all day, I have never lost money on a trade or real estate.  I did break even a few times though.  I have a system that is really good and only requires one person to operate.  My plan is to create this system into program in the next 5 years to help others learn how to take cheap land and turn it into 300% profits in less than 12 months.  The entry is affordable by almost anyone but it is not for everyone.  Neither of my boys are interested in real estate investing and both have found other ways to build wealth.  Real Estate is one way but you need to love doing it.

    When we hit $20M (Estimated May 2025) we will slow down and buy a middle class home.  I plan to splurge on a used Ferrari 458 and she plans to get a baby grand piano, those are things we have always wanted that are kind of dumb but whatever.  After that we will travel and continue to refine my real estate system to perfection!  In retirement I want to help others build wealth.  I love how money works and I love helping others.  If I can help anyone on here please feel free to message me.  

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