Why Cash Flow Beats Cash: Any Day, Sure

Don’t you sometimes feel envious when you hear someone boast about buying a property 20% or more below market value? Good price! But have you ever stopped and asked what ongoing terms it was purchased on? That is the part of the cost that can be set aside.

As with anything, that’s what we call a one-time cost instead of an ongoing cost. Just think in terms of buying a high-end washing machine that runs year after year with little to no maintenance compared to the cheaper model that often breaks down at the wrong time and needs to be replaced much sooner.

You should think of instant cash and ongoing residual cash income the same way. One is a short, sharp injection, while the second is a continuous, steady stream of financial fuel to keep you going!

But what’s wrong with an adrenaline rush with instant money? Nothing! I’m sure we’d all love one once in a while. The main drawback is that income like that can often be sporadic and volatile as to when it will arrive. Steady incoming cash flow, on the other hand, leads to greater certainty in adapting to the ongoing ebbs and flows of business. It also makes the bank manager’s job easier by seeing regular and reliable income on the right side of the ledger.

Just look at all those instant lottery millionaires who won it overnight, only to give it all away over the next five years. The cash didn’t help them as all they did was apply their previous bad habits to get back to where they were before the windfall.

One of the things I like about cash flow investing with my buy-to-let properties is that I get a steady stream of income, plus a lump sum cash injection every time one of my properties finally sells and I get my final profit. For properties around the national average, as long as you buy well and sell at a realistic market price, I only need about 6 income-producing properties at any given time to replace your work. Just 6 properties can give you back the 48 weeks you sacrificed for someone else and start doing what you want to do, which often means you can spend that time buying even more cash-flowing properties, or even ones you keep flowing for the long term. . .