by on October 13, 2011 Leave a Comment

Cash Flow? Capital Growth? Yes — But When Is The Real Question

Long time readers know what I think about worshipping at the altar of cash flow — it can wound, even maim what coulda been a magnificently abundant retirement. I’ve written often on the subject. It’s my thinkin’ that the one I wrote a couple years ago was possibly my best effort.

It talks about a couple guys who came into my office quite some time ago. Real folks, in the flesh, with real agendas and money to back ‘em. A father and his son — from different schools. I learned much about human nature from those two.

Anywho, here’s what I really think of cash flow vs capital growth — read and enjoy. I hope ya like it. Better yet, I hope it helps in some small way.

I’d love to talk with you about your retirement goals. Call me at 619 889-7100 — let’s put our heads together. Or, if you’d rather write me first, click on Contact BawldGuy up top, and we’ll start that way. Either way, do it quickly, cuz I need a fix. Have a good one.

Filed Under: 1031 Exchanges, Capital Growth, Cash Flow
by on August 17, 2011 1 Comment

The Age Old Tug of War Between Schools of Thought – Long Term Real Estate Investing

BawldGuy Here: I first published this piece about six months ago. I was thinkin’ it was time to put it up top again. Hope it sheds some light for ya.

There are multiple schools of thought related to investing in real estate for retirement. Two dominate.

One says you buy property, holding it forever. When you’ve saved sufficient capital to buy additional property, you do — then hold IT for evermore too. The idea is you allow rental income to pay off debt as quickly as possible, arriving at the point of a debt free cash flow machine. Do this a buncha times and you’ve built the foundation for a nice retirement income stream.

Or so the doctrine goes.

The other school’s doctrine teaches cash flow comes from the yield on capital or equity in an asset. The bigger the capital amount or equity in the asset, the greater the income, measured in dollars. The ‘yield’ itself is expressed in terms of a percentage. For example, 7.5%. This commandment says that since the yield is equal, more or less, for a more substantial or less generous figure, why not arrive at retirement with the largest amount of capital and/or equity possible? [Read more...]

Filed Under: 1031 Exchanges, Capital Growth, Cash Flow, Depreciation, Retirement Income, San Diego Property Owners
by on July 7, 2011 Leave a Comment

When Is Free and Clear Damaging – Even Sabotaging Your Retirement?

Several times a month a reader, or maybe a client referral will gimme a call and a great fix by asking if I could, “just tweak our plan a bit to make it perfect.” So many times they’re under the mistaken belief that owing to (Stellar pun, Jeff.) the fact they own a $300,000 income property debt free, their retirement plan is only subject to minor adjustments. Sometimes that’s the case, though in my experience rarely. The answer to my follow-up question dictates my advice.

How long till you retire?

The answer often falls in the 10-15 year range. Let’s construct a scenario that mirrors many of the callers’ circumstances. The facts will be as follows: [Read more...]

Filed Under: 1031 Exchanges, Cash Flow, Retirement Income, San Diego Property Owners Tagged With:
by on May 10, 2011 Leave a Comment

Attention Real Estate Investors – Is Your Plan Really The Best Case Scenario?

As mentioned in yesterday’s post, while in Starbucks I met a local high school teacher, Rick, who was hunched over a buncha papers he was grading. We got to talkin’ and as one thing will led to another, real estate investing came up. (Yeah, I’m shocked too.) Turns out he owns a small local La Mesa, CA apartment building. I know exactly where it is — solid location. It’s well kept. He was raised in the biz by his dad, doing cleanup, repair and maintenance — against his will. :) Amen brother, we lived the same lives.

Breaking News: My old San Diego TC — Transaction Coordinator — just walked into Starbucks. Hadn’t seen Debbie in years. I’ve had TC’s since her, but none better, not even close. She was the real deal. So fun to run into her today.

OK, back to schlepping for Dad against our wills. :)

His units are now cash flowing about $5,000 monthly with $800,000 in debt. He says it’ll cash flow roughly twice that when the loan is paid off. He’s retiring in about 10 years. Oh, and for the record, the location of his units is such that I’d gladly have Mom live there alone. Just so ya know.

Ever heard the saying, “. . . like shootin’ fish in a barrel?”

Here’s what I’d advise him to do — while tellin’ him he should get the ball rollin’ sometime around 4:30 yesterday afternoon. [Read more...]

Filed Under: 1031 Exchanges, Cash Flow, EIUL, Purposeful Planning, Retirement Income, San Diego Property Owners Tagged With:
by on April 18, 2011 Leave a Comment

Real Estate Investors – Create Synergy Between Short and Long Term Investing – A Projected Case Study

Recently a post spoke of how those who buy, fix, and sell properties — flippers — can use that skill as a natural turbo charger for their long term investing Plan. You can read it here, it’s not too long.

A couple weeks ago I met a potential client, in San Diego for a work related conference. He’s a 30-something professional, married to the same. They have their first child, not even two months old yet. (Remember those days?) They’re both smart as whips, hard workers, way above average wage earners, and already building an incredible future. Also, just nice folk, both of ‘em.

‘Edmond’ is already doin’ the buy and fix-up thing. He’s now the proud owner of a few such properties. They’re old. They don’t have much of a future. But they will all show a profit, short term. He’s done well, and not only has he gone on a nearly vertical learning curve, he’s been able to apply lessons on the run, in real life/real time. [Read more...]

Filed Under: 1031 Exchanges, 401(k)'s & IRA's, EIUL
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