Chapter 12 Notes
Robert's Topics > Chapter 12 Notes > Capital Gains vs. Cash Flow
cashhound - 7/23/2009 11:48:49 AM
After attending one of your earlier three day workshops I returned to my little investing world and added more rooms to my investment houses for increased rent. Now, thinking again on what you have said about deriviatives and what Andy Tanner has said about selling time I have added some storage areas to the rental properties where tennants can store extra stuff that the dont need in the house for extra rent . By doing this I have acheived another cashflow stream from garage and shed areas previously underutilised
olga8777 - 7/24/2009 4:07:01 AM
Investing for cashflow
We are building a duplex in a nice part of the town where we live. We borrowed money from a private investor to purchase a lot and to build a duplex. We didn't invest a dime, our time only. One side of duplex is finished, we already moved in. The second part needs a few finishing touches and will be ready for lease.
We are in the process of financing the finished part of the duplex. Once it's done we will be able to pay off our debt to the lender. Once the second part is financed, we will receive a nice sum of money in capital gains.
I am planning to go ahead with buying houses and leasing them. Eventually I will be looking for apartment buildings. Not sure if building houses and leasing them will work for us as it takes up a lot of time and we have business to run.
pefrat@msn.com - 7/28/2009 5:54:41 AM
Cash Flow vs capital gains
My primary source of income has been from my full time job, for which I am grateful as it is a good career which has taught me a lot and helped me grow as a person. As good as my career is and as lucky as I feel having a career with my company, after reading some of Robert's books a few years back I changed my whole outlook. After all, we all know that our jobs are not safe and I don’t wish to be left without income based on my employer’s needs.

I began to purchase rental real-estate in Florida in 2007. It was just after the peak. I was too eager to start and significantly overpaid. As other's here said, mistakes were made, lessons learned.

In addition, I have long been interested in investing/trading in the stock market and in recent years have been working hard to educate and train myself on becoming a trader. The idea is that with trading I can get a good source of cash-flow which is scalable (once I become consistently profitable, returns can continue to grow with the size of my account), and use part of the earnings to invest in assets for both Cash Flow and wealth preservation. Trading is a tough business and requires tremendous discipline. Again, mistakes were made, lessons learned. And the learning never ceases.

I am currently working hard to get my debt down to a more manageable level, such that I can begin to take on some good debt and invest in multi-unit residential properties. Valuations are beginning to look good and I need to make it a priority to get out there and find some good deals.

Thanks to Robert for his insight and enlightenment on the subject of money as well as certain historical and political aspects. As others here wrote, Robert's ability to explain these tough subjects in simple and easy ways, as well as his ability to grab the readers' interest, to market and cross-sell are truly amazing and inspiring.

Good luck to all.

P.S. One last point. At times reading through this book I found that Robert made some things sound too easy and too simplistic. I find that often times his examples regarding how to increase cash flow are overly optimistic and even exaggerated. In fact, one particular example, regarding generating income from options was outright impossible (on page 170 he refers to buying a stock for $2 and selling the $3 call options on it for one month out for $1. That is completely unrealistic). Although this was only a hypothetical example, it was so far from reality that it gave me some pause and made me wonder if Robert is exaggerating about other items. This type of thing can really hurt Robert’s credibility in my eyes and I truly hope that the editing process remediates this problem before the final book is published in print.
kayesell - 7/31/2009 11:28:15 PM
Investing for Cash Flow
After reading your books, My thinking has changed drastically. During this recent change in RE market I'm learning the difference first hand of Capital Gains vs. Cash Flow. We have seen the importance of investing for cash flow. Working a very lucrative manufactured home market has been in the capital gains mindset and now I'm planning to look for deals for cash flow.
tundeliasu - 8/7/2009 9:48:10 PM
cash flow Vs. Capital Gain
The investment must make sense before i start; and that means it must be a good bird-dog in both good and bad economy.It must produce a positve cash flow even during economic down-turn. Nothing guarantees that my investment will always appreciate in value. Real Estate investment is it. People needs accomodation; and if economy is sluggish it means i can buy a real estate at a bargain and rent out with a positive cash flow. If the there is boom i enjoy both positive cash flow and appreciation. To me, capital gain is the exra and for all i know nobody goes to the market to buy 'extra'.
sailorguy1 - 9/10/2009 6:40:26 PM
Cash Flow is king!!!!!
It started in 1984 with 1 small house and about $90 in positive cash flow. My brother in law always said cash flow was king. I did not understand but all through the 90's was a hard time to keep cash flow going. In 2003 all my properties of the past 19 years were paid off and nothing due to the banks. It does not take many buildings to get a $40,000 per month cash flow machine running when you have the mortgages paid off. If you have positive cash flow you will pay off the mortgage and when it is paid life becomes easy. Now hitting 50 is a bit easier and I look around and realize Cash flow is king. The rules still apply and maybe I will purchase more properties but only when I see cash flow. If not I will have to sit on my cash flow holdings and be content never owning an airplane.
When it's time to sell it is easy to accept almost any value for a property I wish to get rid of because the real money is in the first $300,000 not the $500,000 others have to get just to put cash in their pockets. Stick with solid returns on real estate and fixed rate mortgages. Don't refiance and you will be happy 20 years down the road!
zharare - 9/17/2009 2:34:42 PM
business is the only way
the greatest gift of this book is if u are already financially literate it opens more your insight into how we can be kings of our own money and poverty will forever be our slave,,,big up robert
northstar2493 - 10/19/2009 6:36:42 AM
I plan to build an
I plan to build an information marketing business. I will create several products including books, courses, films, music, and more. Subjects such as personal finance, goals, determination, motivation, and personal development are some of the many topics I would love to enlighten the world with.

When it is time to sell silver, I will have the capital needed to take my dreams to the next level by purchasing real estate and other assets.
Valued member
Valued member
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carlo3_2003 - 1/22/2010 12:50:25 PM
hi robert, the most important
hi robert, the most important thing i learn from reading your book " Conspiracy of the rich" the differentiate between capital gains and cash flow.... i see and understand what my mind can see and not my eyes... i'm very thankful for that. now i'm applying that and some of my friends they don't understand what i mean of cashflow even a friend of mine who is a CPA. so i'm investing now in real-estate. what i did i always as my self with this question " how can i purchase a one piece of land with out using my own money, owning that partial piece of land and making a profit when i buy it?" and my context grow...and from time to time i always as myself with this question "how can i do what i do for more people with less work and for a better price?" the one i learn while reading your book "retire young retire rich" i am more excited everyday applying what i had been learn from you.. thank you and more power and God bless you and your whole company and staff...

best regards,
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