Chapter 12 Notes
Robert's Topics > Chapter 12 Notes > Capital Gains vs. Cash Flow
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Robert - 7/7/2009 4:07:05 AM
Capital Gains vs. Cash Flow
One of the most important concepts in Conspiracy of the Rich is the difference between capital gains and cash flow. Please share how you plan on investing for cash flow.
phamkhacha - 7/7/2009 8:00:13 AM
cash flow vs capital gain
My questions to Robert regarding cash flow from retal properties and CF vs CG:

1/ You said that real esates are only valuable if there are jobs..., in this time of economic crisis, unemployment rate is climbing every month, how can you sustain rental incomes for your investment?

2/ I invest for both capital gain and cash flow with priority to CG, when the properties appreciate strongly, I will sell them and find a new investment (monthly cash flow is very small compared to captial gain if you have a good timing), and during the bad economic times, I keep the properties and rent out for cash flows (assuming I chose the right location). Is that a more flexible way of investing rather than just buying and holding and receiving monthly cashflows?

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chayot - 2/8/2012 4:12:14 PM
RE:cash flow vs capital gain
 Hi there,

I think this is a great question.  And if you don'd mind I would like to kindly suggest my rationale.

So, hereis my 2 cents. I hope you this will be helpful to you.

I think you should be focusing on cash flow.  Because, I believe that we will soon be facing a high inflationary economic conditions because of the amount of money supply being injected into the world economy by ALL major central banks and not just the Federal Reserve Bank.

When that happens, capital appreciation will take care of itself.  The amount of debt (your mortage) will still be the same.  The mortgage interest payment will be the same (you need to fix for as long as you can, 30 years if you are an American citizen). Your rent will go up (meaning more cash flow).  But most importantly, the home value will also be sky rocketing (real estate is a natrual hedge to inflation risk. Same as commodity like gold and silver.  But those commidities cost you money to hold, while real estate gives you money to hold.  Exception would be to invest in an oil well, or gold/silver mining business).

During this turbulent time, cash flow is the most important aspect of your business and investment.  So, focus on the cash flow. Remember Donald Trump's quote "Protect the downside.  The good time will take care of itself".

Hope this helps,

Chayot Ing-aram
Internatioanl Real Estate Professional

Genghiskhan_09 - 7/7/2009 8:27:34 PM
My Plan
My plan is a very simple plan. It's actually Robert's plan. Build a business and then invest in real estate. I already have one property cashflowing $300 a month but I quickly realized that mistakes can be expensive without the income to support the property. So now i'm building a network marketing business so I can use that as my cash machine to buy real estate!
provance - 7/7/2009 8:30:21 PM
Increasing & Investing for Cash Flow
My plan has three componets or legs -
I. Join and grow with a MLM organization, my eye is on PPL.
- Planned for the next 45 - 60 days.
II. Look for and invest in small residentual and/or commercial properties. Looking for owner financing.
- Planned for the next 60 - 120 days.
III. Investing in Tax Leins.
- Planned for the next 90 - 150 days.

To all - the Best,
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Merrie.Hargreaves - 7/8/2009 2:14:40 AM
difference between cash flow and capital gains
Mr. Kiyosaki: I have to admit i do not know what the difference is because I do not know what the difference is I can not comment on the subject. But cash flow is the amonut to cash you have available.
Merrie Hargreaves
nicktkd09 - 7/8/2009 2:36:00 AM
an idear
Where I am people are losing job, but overseas students studying at our TAFEs and Unis. I thinking of taking up afew rent to own homes close to TAFEs then renting out singel room for uni stundents.
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buttababee - 7/8/2009 6:48:41 AM
Work for Free.........................
I will continue to develop myself as an inside investor, not an outsider.....Good day!

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foxhound67 - 7/8/2009 9:14:08 AM
cash flow vs capital gains
Kia ora Robert,

well just about to change my plan slightly.

Have just finished Mike Maloneys book on gold & silver. although people had breath taken away a bit when I said I had 32 Kg of silver after his session. after that book I am going further.

I have one property left after all my mistakes trying to fix them & get that cash flow. return is good but not enough to live on.

so plan is now to sell, re invest in my new business based on lessons from mistakes I have made, invest in internet passive income I learnt about second day of your seminar in Auckland & most of all invest another good amount about 20% in gold & rest in silver.

when those two revalue, & I think it will be very shortly after reading that book until 0300 (3am) I woke to hear that Obama looking to print more money to hold up your economy, wil invet in good investments to allow me to set up my dreams of businesses that not only return good cash flow but make a difference in the community. Have being looking for the way forward to achieve this & now I can see it. being frustrating & even now cash flow to live on is hard to ocme by. this has really energized me to move forward with the sureness that my goals can be reached. so yes some is capital gains but with aim to provide the cash flow to as they say move forward.


Ken 'Dusty' Duncan
newydd105 - 7/8/2009 1:37:20 PM
CF vs CG
I have been an avid follower of your books, partner books and games for 10 years. The ideas have allowed me to expand my knowledge, experience and wealth as a consequence I invest for both Cashflow and Capital Gain.

Property - I started building a property portfolio in 2001. Used £300 cash to pay legal fees. Borrowed £7000 on credit card to pay cash on an auction property. Four months later mortgaged property, paid off credit card, pocketed the £300 I had put in and had sufficient left over to pay deposit on next property and cover legal fees. Rental income covers the cost of the mortgage and provides me with a little income each month. As your books say 'infinite ROI' as the only time I used my own money was to pay £300 legal fees on the first property which I repaid myself four months later. None of my own money is now invested in property it is all OPM. I now have a large portfolio from just reinvesting remortgaged funds and substantial cashflow. No concerns about property prices as rental income continues. The credit crunch has had some but little impact on cashflow as we mainly operate in a 'niche market' rental income has stayed fairly consistent.

Shares - I have had an interest in shares since 1980's dabbling and making some good CG. Came out of the sharemarket in 1999. Re-entered market in 2001 with more focus on CF rather than CG. CG still did well. In 2006 sold shares as I was concerned FTSE100 was too high. Probably came out too soon as market continued to go up but I had good CG which allowed me to buy more houses; some commodities and government bonds. In March this year FTSE100 dropped to biggest low in since 2000. Started to tentatively buy some more shares with view to increasing both CF and CG. As the sharemarket is in its longest downward spell (4 weeks) since 2000 glad it was only a small amount invested but I still think there are good opportunities and will continue to invest more money when the market settles down and as I see good opportunities arise.

Commodities - Since 2006 have been investing in commodities - mainly silver. Don't know much about oil investments still doing my research on that one.(if you don't already have a book on that I could probably do with one!!) Also researching Coal which looks promising with oil prices going up and the new mining techniques allowing cleaner emissions it seems coal is now more viable to bring to the surface and a more favourable source of energy. New coal mines opening in Wales UK and old ones being reopened I see good opportunities available here.

Another area I am looking at is the food industry. There is an ever increasing worldwide population that needs to be fed. Demand for and continued building of properties is reducing the amount of land available for growing crops and farming. Weather has an impact on supply and over coming years I think we will see greater shortages of food and the western world being hit harder than they realise. We are going through a tough time economically yet the supermarkets continue to do very well. Everyone has to eat. There are undoubtedly good opportunities in the food industry. I am particularly interested in hydroponics and other non land ideas.

Your books and games altered very much the way I think about things. I found myself quite good a seeing trends and predicting outcomes but I never knew how to take advantage of it. Financial IQ gained from the books and games provided the window to act on them and the belief to follow up.

Thanks for the great books I avidly await the next ones.
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