When talking to BiggerPockets. “Investors need to think about long-term demand, appreciation, repair risk, taxes, insurance and how easy it will be to sell if their plans change. High demand offers more than one way to win.”<\/span><\/p>\nit<\/span> Which brings us back to several exit strategies. <\/span><\/p>\nCash flow lives or dies on property management<\/span><\/h2>\nIncome investments, whether active or passive, depend on asset management for their performance. <\/span><\/p>\nI have seen good asset management rescue deals that otherwise went awry. I have seen bad property management ruin good deals. <\/span><\/p>\nWhen our co-investment club puts together a deal, one of the first questions we ask is, \u201cWho will manage this asset, and how many assets are they already managing for you?\u201d <\/span>I don’t care about it <\/span><\/span> Management is in-house or outsourced \u2013 I care whether the operator has worked with the same property management team for a number of years<\/span>, <\/span>But<\/span> Many deals.<\/span> <\/span><\/p>\nThis is why I love investing with land flippers. They make strong profits without the need for property management: “No tenants, toilets or termites,” as they like to say. <\/span><\/p>\nOur club lent a note at 15% interest a year or two ago to a land flipper who put up his primary residence as collateral at a 55% LTV. He has never missed a payment, as he enjoys huge margins with minimal headaches. <\/span><\/p>\nimportant role of financing <\/span><\/h2>\nDeals usually fail for one of two reasons: the operator either runs out of money or time. <\/span><\/p>\nYou don’t need to remind me of all the operators who have lost money <\/span>Property<\/span> After 2022 because they financed them <\/span>temporary interest<\/span> Loan.<\/span> Their cash flow became negative and they ran out of money. <\/span><\/p>\nBut others got into trouble because they ran out of time. Even though their property cash flowed, their short-term bridge loans came due, and they found themselves unable to sell or refinance due to high interest rates and cap rates. <\/span><\/p>\nIt’s worth repeating: The deals still lost money, even if they were loss-making. <\/span>cash flow<\/span>.<\/span> <\/span><\/p>\nHave your cake and eat it, too?<\/span><\/h2>\nSome deals cash flow well when you hold them and then end up making great profits when they sell. <\/span><\/p>\nA few years ago, our co-investment club invested in an industrial seller-leaseback deal that paid a solid 6% distribution while we owned it. <\/span>after this it stopped <\/span>two and a half<\/span> Year <\/span>For<\/span> great profit, <\/span>make total payment<\/span> annual <\/span>internal rate of return<\/span> (IRR) 27.6%.<\/span> Oh, and we got a pretty nice tax benefit on it too. <\/span><\/p>\nOn behalf of multifamily, we invested in a portfolio of properties <\/span>which were geographically<\/span> Spread <\/span>Outside<\/span>and operator <\/span>scored runs<\/span> an excellent price <\/span>But<\/span> Them.<\/span> Within six months, they were paying over 9% in distributions, and when they sell in a few years we’ll be earning over 20% annual returns on them too. <\/span><\/p>\nOf course, cash flow matters. I love <\/span>high-yield investments<\/span> And seeing those passive income deposits in my bank account. I once took my daughter to the Amazon rainforest and kept the expense entirely to myself <\/span>passive investing<\/span> Income from that month. <\/span><\/p>\nBut cash flow isn’t everything. Look at each deal holistically, whether you invest actively or passively. <\/span>proceed pro forma <\/span>See<\/span> Factor in long-term property expenses, market demand, and exit options, and your investments should find a profitable path forward, even when life has its ups and downs. <\/span>on them<\/span>.<\/span> <\/span><\/p>\n<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"in this article Several years ago, I purchased a rental property that passed the “2% rule”, where the rent was more than 2% of the purchase price. I lost money on that property. Even when the properties cash flow Competently, they may still underperform other options on the table. As you step up your game<\/p>\n","protected":false},"author":1,"featured_media":140269,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[59],"tags":[2416,1219,738],"class_list":["post-140264","post","type-post","status-publish","format-standard","has-post-thumbnail","category-daily-bread","tag-buying","tag-investors","tag-smart"],"_links":{"self":[{"href":"https:\/\/christiancorner.us\/index.php\/wp-json\/wp\/v2\/posts\/140264","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/christiancorner.us\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/christiancorner.us\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/christiancorner.us\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/christiancorner.us\/index.php\/wp-json\/wp\/v2\/comments?post=140264"}],"version-history":[{"count":1,"href":"https:\/\/christiancorner.us\/index.php\/wp-json\/wp\/v2\/posts\/140264\/revisions"}],"predecessor-version":[{"id":140270,"href":"https:\/\/christiancorner.us\/index.php\/wp-json\/wp\/v2\/posts\/140264\/revisions\/140270"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/christiancorner.us\/index.php\/wp-json\/wp\/v2\/media\/140269"}],"wp:attachment":[{"href":"https:\/\/christiancorner.us\/index.php\/wp-json\/wp\/v2\/media?parent=140264"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/christiancorner.us\/index.php\/wp-json\/wp\/v2\/categories?post=140264"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/christiancorner.us\/index.php\/wp-json\/wp\/v2\/tags?post=140264"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}