How do you reinvest your profits?

Question

Good Morning BP Nation. I'm new to investing and I wanted to throw a topic out there to get some feed back. I suppose this is more directed to the rehabbers out there, once you sell your property and you receive your profit, how do you reinvest it? Is it a percentage of the profits you reinvest and what factors do you consider when deciding how much you will pay yourself as your personal income? Basically I'm just trying to get an idea of how to reinvest my profits back into the flipping business to put towards my next properties.

Craig Smith · Answer

Account Closed's house hacking technique, lol. Is that what you were referring to when you said to live in a multi family? Basically live there and rent out the other units and try to break even or cash flow a little?

Craig Smith · Answer

Account Closed, I couldn't have said it better myself, and I'm the same way as far as listening to podcasts or reading Real Estate books whenever I have a free moment. I just want to teach my kids the value of money and how to attain it. I never had that growing up so I don't want them to have the same struggles I had but at that same time know how to build success from the ground up. Good Luck on the new potential rental!

Craig Smith · Answer

Account Closed, yeah that was a great podcast. I'm going to go back and listen to it again. I was trying to listen to it Thursday but having a 7 year old and 2 year old running around is pretty distracting, lol. I agree 100% with your idea of quality over quantity. I want my investments to be very well thought out so that they are a great asset I can pass on to my children and not a liability. Thanks again for all your advice.

Craig Smith · Answer

Thank you Account Closed, I agree that the least amount you can keep for yourself the better and make those sacrifices early in your career. This reminds me of the BP podcast 113 with Jay Papasan where he said him and his wife set a strict budget to live off of and invest the rest. I guess it just takes discipline and always keeping in mind what your long term goals are.

Account Closed · Answer

@Craig Smith Yes! The kids will turn your life upside down. I listen to the podcasts the second I drop off at daycare and every little second I have free. Knowledge is power and you are setting a good example for your children. I like to focus on my assets now. Passing them on is a good secondary outcome, but you have to set yourself up. You have your whole working life, then retirement, then old age care... The kids will be able to follow your role and do this for themselves if you show them the way. I have seen both sides and the ones you work the hardest to keep are the ones you appreciate the most (assets).

Not to get too deep on you! haha! Hope you have a great day! Out to scope out a potential short term rental! Wish me luck!

Raven

Account Closed · Answer

@Craig Smith It was BP Podcast 126 with Brian Murray. I like his business plan and hands on investing that builds value from the first day. (Most of the time) haha! Every house you live in must have a plan. I wish I had started off thinking like this. I have always known I could make any House my Home. It helps when you look at your personal house as an investment from the start. And most people think it is about Quanity. I would rather have 3 quality properties than 10 just-barely-gettting-by properties. Hope this helps!

Account Closed · Answer

Yes! I was going to tell you there are some great investors on the Podcasts! I just listened to a newer one yesterday where the guy continually reinvests profits into the properties to add value. He then refinances or cashes out equity to get another property. But, like you asked, when do you stop and start paying off those loans and paying yourself? I am not a fan of Over Leveraging. I thing there has to be a happy balance. Everyone has different comfort zones.

@Craig Smith Have you and your wife considered living in a multifamily? I love that strategy to start!

Account Closed · Answer

I have had the same question: 'When do I get paid?'

Everyone has their own way of dividing up the money. I have heard investors that don't spend any of the money. Thy dump it into the next project and just keep rolling it...I have also seen full time investors that don't have a traditional 9-5 to pay bills take 30% and reinvest the rest. Do what works for you, but remember living on less and maximizing your investments only benefits you in the long run! Good Luck!