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Quality Versus Quantity in Real Estate Investing

Jul 1, 2008
In this article I want to teach you that it is not the amount of properties you have but it is the amount of cash flow. As you will find out as you start investing there are many unexpected expenses that you can and will incur when buying property.

I know a lot of people need to flip properties, whether it is wholesale or retail, to generate some 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. 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.

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 in managing the property? Which is going to have the most repairs?

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.

This is also a way that you can raise money to invest into other properties. If you cash out $5000-$10,000 in each property, depending on where you live or invest you could buy a property free and clear after you do enough of the deals to generate the tax free cash. This is a great way to create more cash flow and own some properties free and clear.
About the Author
For more articles and a 10 part e-course on how to create your own Ultimate Buying and Selling Machine! plus over 50 training audios, simply go to www.LarryGoinsFreeOffer.com where you will gain instant access
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