The beginner real estate investor often looks for neighborhoods they would live in, good school, close to a park, has appreciation. Surprisingly, when doing the numbers, the nice neighborhood investments are not necessarily with the most cash flow.
The mindset change of a real estate investor is focusing on positive cash flow. Positive cash flow is what separates assets from liabilities and makes your exit from the rat race possible. If you know how to create positive cash flow, you are on your way to becoming rich.
If you don’t or dismiss its importance, your investments will go south before you even know what has happened. Remember when Rich Dad Poor Dad first came out in 1997, and Kiyosaki pointed out“your house is NOT an asset.” He made this bold statement because he understood the importance of positive cash flow and the role it plays in creating true wealth.
Assets put money into your pocket. Liabilities take money out of your pocket. It is as simple as that. The former represents your money working for you and the latter is you working for money.
Regardless of what people may call it, your house is a liability. Even if it is completely paid for, when a house takes money out of your pocket for upkeep, taxes, and repairs, it is moving you further away from exiting the Rat Race.
The Rat Race is the all too familiar pattern of getting up, going to work, paying bills; getting up, going to work, paying bills. When you buy and own liabilities, instead of assets, you have to work day after day, week after week, month after month to pay them off. Even then, they can still take money out of your pocket.
Positive cash flow and assets, on the other hand, are what allow you to exit the Rat Race. When you buy assets that produce positive cash flow, you begin to create true wealth for yourself. That is because true wealth is not measured in terms of dollars, but in terms of time. When your assets produce enough positive cash flow to cover all of your expenses, you never have to work again. You exit the Rat Race.
Your assets— whether they be real estate, businesses, or paper assets—work around the clock putting money into your pocket. If you want to enjoy true wealth , then you must understand and follow the secrets to positive cash flow.
In the Simple Financial Freedom coaching program, I reveal secrets that will help you successfully approach investments in three of the most popular asset classes. The Secrets to Positive Real Estate Cash Flow Real estate investors are not cast from the same mold.
While many people are content—or in some cases, resigned—to putting in their 40-hours week after week after week, real estate investors are a unique breed. They are willing to venture out on their own and take complete responsibility for their success and failure.
In taking on that responsibility, the ones that really succeed are the ones that have learned to think like the rich. They understand that breaking from the shackles of the E (Employee) and S (Self-Employed) quadrants necessitates a new way of thinking. The great thing, however, is that anyone can train himself or herself to think like a successful real estate investor.
Real Estate Secret #1 – Be Clear on What You Want to Accomplish More people know what they “don’t want” rather than what they “do want.”