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Chapter 12 Notes
Robert's Topics > Chapter 12 Notes > Capital Gains vs. Cash Flow
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wzuzak - 7/8/2009 3:57:34 PM
Exploring all possibles...though really like real estate
I have paid my dues in real estate. I really like real estate though and I'm still looking at acquiring SFRs and forming partnerships to buy apartment complexes. I would like to move more into the B quadrant, however, the only way to achieve this that I can see is to start a new company or partner with an existing modeling company and expand on it. Other areas that I will continue to review are stock dividends, etc...that provide cash flow and where I have a lower risk of losing funds. I'm a strong believer in investing for cash flow first.
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wzuzak - 7/8/2009 3:58:37 PM
Exploring all possibles...though really like real estate
I have paid my dues in real estate. I really like real estate though and I'm still looking at acquiring SFRs and forming partnerships to buy apartment complexes. I would like to move more into the B quadrant, however, the only way to achieve this that I can see is to start a new company or partner with an existing company and expand on it. Other areas that I will continue to review are stock dividends, etc...that provide cash flow and where I have a lower risk of losing funds. I'm a strong believer in investing for cash flow first.
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hedberg15 - 7/8/2009 8:41:57 PM
Please share how you plan on investing for cash flow.
I am just starting out in being financially free, so I purchased a building with an area for 2 businesses on the main floor and a 3plex on the second floor. The business area was completely gutted out and had been vacant for about 5 years now, so I am renovating both areas into 2 more apartments, one for me and one for my parents. My parents relied on RRSP"s and the small Canada Pension for retirement and my mom had to go back to work to make ends meet, They had sold their house and moved into an apt 2 years ago, and I am divorced and needed a place where I wouldn't be paying the mortgage.

My parents have helped me out so much in my life I wanted them to not have to worry about money during the final years of their lives, so now they will have no rent payments and neither will I. The renters will take care of covering my mortgage and rental vacancy in Winnipeg right now is 1%, plus when my parents can no longer stay in the apartment, I can rent it out and this will increase my cash flow to $750 and if I decide to move out, it increases again to $1650 per month, talk about a win win! The place will be refinanced after renos are complete and this will cover all my reno costs plus have extra money for investing into a local business and for purchasing silver and gold.

I want the security of something of real value and I have read and heard so much about gold and silver going up lately, and as history suggests, this is probable that it will happen again.

The business will be for cash flow only, I won't be working there, I want to look for deals and investments with my time and start to relax a bit in my life. This investment will let me quit my current job with Canada Post.

I am looking at purchasing a motor home to rent out on a daily basis and some real estate in the states for vacations for the snow birds that live in Canada or anywhere for that matter. With prices so low in the states for real estate, I think it's the perfect time to buy for renting out to vacationers. The motor home does not need any money down, and purchasing a home requires very little money down.

I am involving my kids in all aspects of these investments so they can see for themselves the benefits and start preparing for their lives and be financially secure and live a happy stress free life.

The best thing about all this, is that I started this with none of my own money, I had a $15,000 investment from a friend and it's amazing what you can do when you find a good deal, the world just opens up. The only problem I am having is securing the refinancing, and at this time it has been a struggle because of the problems in the states with the banks, but although difficult, it is doable with a little persistence.

I also made some contacts from my renovations and we are looking at a 4 plex to fix up and rent out. I would have the renos done labour free, that will be his investment and my investment is from borrowed money from my first investment, it just makes sense but explaining it to anyone they just give you this blank stare like, you can't do that! When I get frustrated I simply refer them to Rich Dad Poor Dad, or to our Canadian affiliate Fast Track Capital. All sending the same message about financial education. Thanks very much Mr. Kiyosaki.
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hedberg15 - 7/8/2009 8:47:17 PM
Please share how you plan on investing for cash flow.
Oh yeah, also invested in a home based business with ACN, endorsed by Donald Trump. This will reduce my taxes even more!
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joe.cochran444 - 7/8/2009 9:30:42 PM
401K with Match
Robert, I have a question about my works 401K. I know you hate 401K's and I understand why completely. I agree with your points about why a 401K is a bad investment for anyone with financial intelligence. However my work does a 100% match of up to 6% of your income. Although this sounds great as not many investments are going to double you money right out of the gate, is it a good investment. Is this a scenario that makes sense for someone to go with. I realize that if the US currency goes to 0 then no mutual fund or stock is a good investment. But aside from that happening, and I'm not convinced it will or will not, does this make a good investment or is it still a joke? Thank you and keep up the great work.
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WHITE_4NINE - 7/9/2009 5:12:57 AM
investing for cashflow
the short-term goal is a cashflow of $5,000 a month. of course there are costs to meet. I define this as $5,000 a month minus the costs and aim for $5,000 a month positive cashflow, i.e. all costs covered.

we started out with a 4-plex which has been a great learning experience. it has never lost money yet the task is clear: make a profit! we currently own 6 units, manage them ourselves, learn how to reduce costs, learn how to trust the process that this is real income. without exception our tenants love what we offer. we do a lot for them. the result is no vacancies and happy tenants.

we were fortunate enough to make an inheritance and ivest it into a 4BR modular home with 22 acres, and a self-storage business consisting of 22 units. Both will add $900 positive (!) cashflow a month. We kind of move gingerly, not taking on too much debt, increasing cash flow, having enough equity to venture into more RE projects when we find them. moving slowly has gained us valuable experience which now enables us to move a lot quicker.

we are able to provide a home for local residents who otherwise would never be able to get a loan i.e. own a home. this is very satisfying. and still making a profit.

it builds up kind of slow and we look for opportunities for more quick turn investments. even flipping. because we know how to do it. it also dawned on me, reading Robert's books, if you know hot to sell and who to sell to. This 4 BR is magic: we knew intuitively it was good (just as valid as doing tons of calculations) and have people line up to rent/lease option it. Hasn't always been so. By going slow we are getting better, also not losing contracts by putting in low-balling offers but by seeking a deal that benefits many. I quite enjoy that.
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dvdwalt - 7/9/2009 8:53:35 AM
Vending Machines
Hi Robert

I took the rental property idea and modified it. I bought a vending machine instead. The idea was that I would only have to restock it once a week. Mistakes are made, lessons are being learnt.

I'm also considering to join a network marketing business. As you say, learning to sell is essential, but its also something I;ve been avoiding for too long.

The penny might just be starting to drop soon. Hold thumbs.

Regards
Danny
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sawate1 - 7/9/2009 6:41:39 PM
Plans for Cashflow
Robert, Following is my plan already being successfully executed-
1) Network Marketing Business - Built Globally and expanding successfully.
2) Land Development Company established for commercial & residential construction. Through these I am not just selling for capital gains but constructing some for renting. I also have plans to build entertainment related properties (eg. Mini Golf, Golf Range etc) that with proper management will keep the cash flow coming.
3) High Dividend Paying Stocks - By forming a team of knowledgeable investors I am investing in High Dividend Paying stocks Globally in fundamentally strong companies in Energy & Utility, Soft commodities, Water, Alternative Energy, Asia infrastructure, Property REITS, Mining and Shipping.
4) Precious Metals - acquired and still acquiring
Thank you.
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BlackDogsRule - 7/9/2009 8:54:13 PM
Investing for Cash Flow
I have an education as an accountant and have no problem reading finanial statements. Thus, I was really taken by surprise when Robert talked about your home not really being an asset, but a liability. I understood this from an accounting paper standpoint, but didn't really apply it to my life as we have been taught that our home will be most people's greatest assets they will own. That really enlightened me to look at investments differently and the importance of striving for cash flow. I can now see how my rental homes are much more important investments than the home I live in (but will eventually turn into a rental). This knowledge will keep me in line when moving up the ladder in homes or making large purchases that depreciate in value.
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ravafelix - 7/9/2009 9:31:11 PM
Investing in Cash Flow
I want to buy a department. A little one, maybe just one or two bedrooms but near to high-rental demand zones at Mexico city (near offices).

I've checked the prices and a department like this is around 45 thousand dollars.

Nevertheless, mortgage is more expensive at Mexico than at USA. The mortgage interest is around 12 to 15% per year so the monthly payment is more or less 412 dollars and the rent can only be set around 261 to 300 dollars maximum!

This way I can't get cash flow from this department.

I have to buy such department from a desperate owner who is looking for fast money, and maybe I'll get a lower price. Or maybe I can purchase from bank promotions - properties lost by owners due to lack of payment. But the problem with these properties is that owners are trying to get their property back.

I do not know.

The thing is I have been searching and I can not find a mortgage payment lower than the rent amount.

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