Why Your Cash Flow Will Increase Even When Cost of Living Rises

 

Our clients are familiar with our Remote Control Retirement Riches formula. This is among the best and more reliable ways to create wealth for yourself and your family, and to secure your financial future. Real estate is, in a sense, an investment that pays for itself. When you take out a loan and buy a house, you then rent it out. The rental income generated then helps you repay the mortgage. Over time it generates a profit. So what is the right way to use these cash inflows?

Two ways to use your cash inflows.

If your investment is not generating a profit for you right now, it will do so in the future. This is because as the cost of living goes up, rental incomes do the same. However, your mortgage payment amounts will remain the same over the years because you're going to have the benefit of the 30-year fixed-rate loan. So you will have surplus cash. What do I do with this cash flow, my clients and people on social media sometimes ask me.
Well, one option is to create an emergency fund for expenses that may crop up for you as a landlord: maintenance, breakage, repairs, replacements etc. So you can put aside some money for this. On the other hand, you can accumulate your cash inflows and invest in more houses. You can buy more homes and further secure your financial future.

How I used my cash inflows.

There was a time when I was also putting money away for emergencies and contingencies. I would do this because I felt that as a landlord, I should have a way to defray expenses such as house maintenance, repairs and so on.  I soon realized, however, that this was not helping me meet my goal – which was to buy as many homes as possible. I was not making the best use of my liquid assets by parking them in a contingency fund.
The better option was to use the money and accumulate my cash flows to buy more homes, and then generate higher incomes. And what about the times when those expenses cropped up? I found that it made sense to open up a line of credit with the bank – to be used as and when needed. This is also what I would advise investors to do with the cash flow that their investments generate.
It makes sense to create wealth, for a more secure, prosperous future. For this to happen, you cannot afford to let your cash flows stagnate. You have to put them to the best use possible. If you would like to know more about our investment strategies, visit us at icgre.com. To get more real estate investing tips, check out my podcasts and videos.

Should You As A Landlord Worry About Meeting Unforeseen Expenses?

How much emergency cash should I have for each rental property for unforeseen maintenance and repair expenses? Is there a percentage? These are some of the questions that our current investors or would-be investors ask me at times. After all, as a landlord one has to be prepared for things to break, need replacement or regular maintenance, right? However, I have some tips for people who don’t want to park thousands of dollars of their hard-earned money in some emergency/ reserve fund.

Who needs an emergency fund?

If you follow what we call the “Remote Control Retirement Riches” formula that we have perfected over the years, you don’t need to worry about all of this. The first thing to do is to remember – only brand new homes! I will always advise my investors to invest in brand new, single-family homes. Single-family homes fetch the best rent, and buying brand new has several other benefits. For one, you are far less likely to have breakdowns or breakages in a brand new home. A brand new roof is less likely to spring a leak and a brand new air conditioning system is far less likely to malfunction, for instance.
Plus, there is the builder's warranty that protects you in the unlikely event of such expenses as well. So if you decide to opt for a brand new home – wisely – then you are much less likely to need a reserve or emergency fund for your rental home. By the time a few years go by, your cash flows start to improve – while your mortgage payments remain the same, your rental income increases. So you are able to maintain better liquidity.

Why a bank credit line makes more sense.

Back in the day, I would park thousands of dollars in an emergency or a repair fund, meant to be used when a rental property of mine needed repairs or maintenance and so on. Soon I realized the futility of jamming my hard-earned money for so long. My aim was to invest in as many houses as possible and having to maintain some emergency fund or account spoiled my chances of doing this. So I decided to take another route.
Instead of keeping money aside in some emergency fund, what I did was start a line of credit with my bank. I didn’t even need to use it, but it was there in the event I needed it. If there were repairs to be made or things to be replaced, that line of credit would take care of the expenses. I find that this makes more sense than maintaining an emergency fund. Watch this video for details. 
It is all a part of the Remote Control Retirement Riches formula that we at icgre.com have developed and refined over the years. You too can benefit from it at no added cost to you. 
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