Don’t Confuse Cash Flow with Building Wealth

[Don Konipol]

Don’t Confuse Cash Flow With Building Wealth

Many investors, and most “wanna be” investors confuse cash flow and wealth building

While there may be some “overlap”, they are two different and distinct concepts.

Cash flow will increase your income, allow you to live in a nicer, bigger, better located house, drive a luxury car, and possibly increase your savings/investments.

Advanced use of wealth building techniques will result in changing your LIFE, achieving REAL financial freedom, and possibly generating what’s now being referred to as “generational” wealth

Most wealth building techniques I utilized produced little if any “cash flow”, many resulted in NEGATIVE cash flow.

Allow me to provide a simple example of a deal I did many years ago. I purchased a building being utilized as a automotive upholstery shop for $185,000. I paid $15k down with seller carry back financing for 5 years at 0% interest. My payments on the mortgage were $2,833 per month. The tenant in place was paying $1500 per month triple net. There was a rent increase after 2 years.

So over 5 years I collected about $99,000 in rent, while paying out $170,000 in debt payments. So Including the down payment, I had a total negative outflow of $86,000. However, after year five I now owned a property which five years before was worth $185,000, and now with a new rent increase was bringing in $2500 per month in rent.

At this time the tenant came to me and asked if he could put up a wall dividing the space into two equal parts, and use the newly created space for an auto parts store, we agreed with him paying for all the work, including new offices, and a rent increase to $3100.

Utilizing another “wealth building” strategy, I sold a 50% interest in the property to a passive investor for $143,500, and I agreed to “manage” the property for 10% of the collected rent.

HIGH INCOME EARNERS are found everywhere, some are as temporary as the next AI release. WEALTH is a much more “defendable” position.