In Robert Kiyosaki & # 39; s Rich Dad Poor Dad, he discusses how the game of monopoly described the way to wealth In the Monopoly board game, 4 green homes are turned into one red hotel, right?
Well, let & # 39; s apply this to real estate. "4" green houses as your "deals" to generate cash then convert that cash into a red hotel, which is in turn your " cash flow ". The red hotel could be a bigger deal like an apartment, an office complex, even a business, or any anything that can earn money while your not physically there.
I want to cash out at closing and how easy it is to create create cash flow in real estate. I want to to have cash flow in real late night infomercial gurus tell you. inform you of something that they forget to leave out: Single Family homes are not designed for cash flow !!!
Then you should first focus on this building of system to order to flip these types of transactions so you generate cash. Then and only then, you should turn to invest the cash into a larger deal for cash flow.
The benefit of this strategy is two fold.
This way you learn your market. This way you learn yourself and your money at the same time without getting in over head with vacancies, tenants, and property management.
Next, and more importantly this is you to build cash reserves for my career, I made the mistake of trying to build wealth before I had cash on hand. I focused on creating passive income from Single Family Homes and here & # 39; s how the typical transaction went.
So, usually within 30 days, I would find this tenant buyer. Now, after I had a tenant buyer in the property, I would make, at best around $ 100 - $ 150 per month. after a few months, my tenant buyer would move out or I had to evict or something dramatic always seemed to come up. Now after the tenant buyer I would have at least $ 3000 in expenses for fix-ups, clean ups, and miscellaneous expenses. Therefore, it would take 30 months before making my money back from that one person that moved out.
After you have cash on hand, you may decide that you want to experience with lease optioning houses for cash flow if you have the need to take care of yourself in the future. I seen more real estate investing businesses go under making this HUGE mistake.
Thank goodness there & # 39; s a better formula to escape the rat race. And here it is, in detail:
First, generate cash through flipping homes to replace your current salary or income from your job.
Then, continue to flip homes to generate enough cash to invest with.
Finally, big deals that will bring cash flow whether it 's business, apartments, or office buildings with the cash that you have on reserve.
Take these steps to build wealth and you & # 39; ll avoid the many problems and headaches that many new investors experience from owning real estate that keep them from attaining financial freedom.
