I know a lot of people need to flip properties, whether it is wholesale or retail, to generate cash to pay off some bills and to have money to enjoy life, but as you get your cash flow needs taken care of and start to build your portfolio, I want you to remember that it is not the number of houses that is important; it is the amount of income from each property. You want to find quality versus quantity. So many new investors have told me that they want to own 50, 100 even 200 properties or more, but that is the wrong approach. Let me explain.
Look for Quality versus Quantity
For example, let me ask you this question, would you rather have fifty houses with $100 a month in cash flow or would you rather have ten houses with $500 in cash flow each month? They both have the same amount of income. But, which is going to give you the biggest bang for your buck? Which is going to be the least or most amount of headache?
I would like to suggest that you start out with a goal to set yourself a minimum amount of cash flow you want on each property, ours is $200. Now, $200 may not sound like much, but we never buy them unless we get paid. After we purchase, fix up and re-finance the property, we put $5,000 to $10,000 cash in our pocket.
Now, as you get your bills paid off and you become debt free, you will not have to get as much cash out. Remember, that even though your cash out re-finance money is tax-free and you don’t pay taxes on borrowed money, it is a debt and it must be paid back. So, if you don’t need the money when you get to that point, do not cash out as much at that point.
You Know What’s Even Better than Rent?
Why worry about tenants or toilets when you yourself can become the bank? Even after Dodd Frank, seller financing properties is a great way to generate monthly cash flow. In fact, it is what we are primarily using in our business right now. The great thing about it is you can have your cake and eat it, too. Sell a partial note to get the immediate money you need to continue investing or pay off debts, and then still get the monthly payments at the end of the partial term.
Just like with rentals, you want quality versus quantity with notes, and just like you want to hold the property, you want to hold the note. But, if you need to, you can sell the whole or partial note a lot of the time with very little or no seasoning, depending on the buyer.
Are you interested in how you can earn more with seller financing than you can with wholesaling? And without the headaches of rentals? Please take a look at Nothing But Seller Financing, it’s the definitive event on how the average investor can use seller financing to build wealth.
I want to learn more about Seller Financing
Learn how to get quality versus quantity in your real estate business.