How do you turn net worth into cash flow?

Question

We’re just getting started with BRRRR. We currently own a duplex that cash flows $1,200/mo (total rent is $2,400, mortgage is $1,200 with taxes/insurance). We flipped a house and made decent money, and the. Just bought another house we intend to renovate and rent. This one won’t cash flow nearly as much. Maybe get $200/mo out of it.

Question is, after we get a bunch of properties all renovated and rented... Do we eventually consolidate them all into something bigger? 10-15 years down the road, how do we turn the equity into cash flow?

Brandon Frulla · Answer

Hi Jake, welcome to BP!

If you are looking to sell it all off and consolidate it into one property, you will want to look into doing a portfolio sale paired with a 1031 exchange. There are hundreds of articles on this process, so don't worry about not being able to find a how-to to accomplish this. Basically, you'll get to tell the government that you'll pay them capital gains taxes 'later on' on your next sale. The sweet part is that you can keep doing it forever, so you never really need to pay them as long as you continue to purchase larger and larger properties. There are a few timeline requirements, so be mindful of those. Here's a link that will explain it much better than I will:https://www.investopedia.com/financial-edge/0110/10-things-to-know-about-1031-exchanges.aspx

You're off to a great start already man, keep it up!