Cash Flow is King When Investing in Real Estate
July 31st, 2009 categories: Investing in Real Estate
You have heard Cash is King but how about Cash Flow is King.
If you are thinking about investing in real estate make sure you have cash.
After cash make sure your investment will give you cash back.
How much Cash should you invest is up to you but make sure what ever amount you invest you will earn a percentage of your money back each month in positive cash flow.
This is typically called Cash-On Cash Return. If you invest $100,000 and can earn back $10 K back each year your Cash-On-Cash return is 10%. This example would be a pretty good investment and should be compared to other returns like CD’s, Money Market Accounts, Stock Market, Savings Accounts, Bonds, where you can earn a return on your invested cash.
Since Real Estate is not as liquid as other investments your return should be higher. If after your analysis you will make less than other investments you should reject buying real estate.
