Archive for cash flow

Which Is The Better Opportunity?

By Rob Minton · Comments (10) · Thursday, November 11th, 2010

A few weeks ago, I wrote about a breakthrough in thinking regarding an opportunity in one of my Master Marketer Club weekly membership reports. I’m curious as to what you think might be a better opportunity, so I’ve decided to share what I wrote with everyone. I would love to hear your thoughts on this! Please feel free to add them in the comments section!

Here goes…

My breakthrough occurred when I compared starting property management services to buying an investment property. Most agents are hesitant to offer property management services, but would happily buy a rental property hoping for passive monthly income.

Why is this so?

You would have to do the same things on a month-to-month basis to own a rental property as you would to manage someone else’s property. However,  you have significantly less risk when you manage someone else’s property vs. owning your own rental property.

As an example…

If you own an investment property, you have to keep them rented to remain profitable. If you lose a tenant, you have to cover the mortgage payment out of your pocket. Moreover, you’ll probably have to invest additional funds to paint, carpet and spruce up the property to get it ready for a new tenant.

I’ve learned with my properties that ONE vacancy can suck up every penny of cash flow collected throughout the year. If the property is damaged, you have to cover the cost to make any repairs. And if you live an area requiring city rental inspections, you’ll have to cover the cost of fixing any violations required to obtain an occupancy permit.

Even worse, if the real estate market drops further, you could lose a lot of money when the value of your property gets pulled down.

Now let’s compare owning a rental property to simply managing someone else’s rental property. When you manage a property on behalf of another investor….

1.   You never have to cover a mortgage payment out of your pocket.

2.   You never have to invest money to renovate the property during vacancies.

3.   You can collect a management fee every single month of the year, regardless of whether the home is rented.

4.   You have no risk of loss if the property is damaged.

5.   You never have to pay to correct any violations required by the city for an occupancy permit.

6.   You have no risk of loss if the property values decrease.

7.   You don’t have to put 20% to 25% down to buy the property.

8.   You don’t have to borrow a penny.

9.   Your credit score is not on the line, because you’re not buying the property.

Let’s stop for a second. Which is the better opportunity? Are you starting to have the same shift in your thinking, about property management, as I did?

Now, here are a few additional considerations:

  • It’s pretty challenging to get financing for investment properties these days. How many rental properties are you able to acquire right now? If you’re lucky, you might be able to buy one or two investment properties with today’s lending requirements. More than likely, you’ll have to invest 20 to 25% out of pocket to buy these properties for the down payment. So you’ll have to invest a significant amount of money to generate passive income from one property and you’ll have to carry 100% of the risk of loss.
  • How many rental properties could you start managing right now, assuming you had a few key systems in place? Answer: as many as you wanted. There are no lending requirements, down payments or other restrictions that would limit the number of homes you manage. This simply means you could generate more monthly income by managing properties than you could by buying properties! All without any risk of loss.
  • Some might argue that you lose out on any future profit when the home appreciates. This is definitely true, assuming the home does appreciate. It’s probably going to be a long-time before home values go up by any meaningful amount. Believe it or not, you can receive a BIG check down the road from the properties you manage. Simply turn each property management agreement into a listing agreement and you’ll set your business up for many future commission checks.

Sure property management comes with a few headaches, but what good business opportunity doesn’t?

I had a huge shift in my thinking with this little comparison, because I was reluctant for many years to get involved with property management. However, during this same time period, I would happily run out and buy investment property after investment property.

This seems crazy in hindsight.

I was willing to invest large down payments to buy properties, handle the same management responsibilities, and carry the risk of loss to receive monthly cash-flow. With property management, you don’t have to invest a penny, have no risk of loss and can generate monthly revenue all for assuming the same management duties.

I might venture to make this statement…

It’s more profitable and less risky to manage a rental property than it is to own a rental property. You profit when the home is rented. You profit when the home is vacant. And you have the opportunity to earn a commission down the road, when the home is sold.

Once again, I didn’t think this way previously. I do now. What do you think? Please feel free to share your thoughts in the comments below.

If you’d like to download my new course “How to Start and Run a Profitable Property Management Business” for FREE, simply join my Master Marketer Club membership today at this special link:

Join the Master Marketer Club Now!

Comments (10)
Categories : Investing, Money Management
Tags : , , , , , , , ,

How to Eliminate Negative Cashflow in Your Business

By Rob Minton · Comments (0) · Thursday, June 17th, 2010

This article is excerpted from my report titled “How Real Estate Agents Can Eliminate Negative Cash Flow in Their Businesses.”

The most profitable real estate business for the future will not look anything like the real estate business of the past. In fact, the real estate business of the future will focus entirely on cash flow. Here’s a snapshot of how this business will look:

1. Zero negative cash flow

2. No long-term contracts

3. Complete flexibility

4. Limited or no overhead

5. No debt

6. No salaried employees

7. Will reverse the cash flow on monthly expenses

8. Will focus on generating higher-quality free leads

9. Will use automatic lead-conversion systems

10. Will be engineered around your ideal lifestyle, not sales growth.

11. Simplicity will rule over complexity.

12. Will maintain significant amounts of cash in financial reserve.

I realize this may sound impossible. It definitely IS possible. Picture this for your business…

Every day, new high-quality leads are generated and automatically imported into your database management system. These new leads are put through an automatic marketing funnel whereby certain percentages are converted into clients. These new clients are pre-trained to operate according to your rules of engagement.

Each lead is followed up with on a weekly basis, using a content-oriented email newsletter delivered for free.

Your business doesn’t require physical office space other than your home office. Everything above happens online or remotely. Everything you need is at your fingertips, within your home office. This means you don’t have to drive to an office.

Your lead generation and conversion systems are designed in such a way that you have the luxury to reject a new client if they won’t work on your terms. This is because your business expenses are minimized, you won’t need to work with every client or prospect that touches your business. You’ll have the luxury to “cherry-pick” the best clients from your marketing system and work with these clients on your terms.

You have one or two good agents who you can give new clients to and feel comfortable that they’ll turn the clients into sales. These agents work remotely from their home offices and are paid commissions on the homes sold to your clients. They do not receive any salary or fixed payment from your business. They pay their own business expenses and must sell to earn income. The income your business receives from these home sales is used to build your financial reserves of your business.

Because this business is structured to minimize overhead and completely offset other business-related expenses, every commission check received from your personal home sales will be positive cash flow. Depending on your market and commission rate, you should be able to reach your cash flow goal with 2 or 3 home sales a month with zero negative cash flow. When you factor in the commissions received on homes sold by your buyer’s agents, you’ll enjoy your ideal lifestyle with virtually no risk and complete freedom.

NOTE: If you’d like to read more about how to eliminate negative cash flow in your business, visit http://www.zeronegativecashflow.com

Comments (0)
Categories : Business Re-invention
Tags : , ,

Financial Advice from a Con Man?

By Rob Minton · Comments (2) · Saturday, January 2nd, 2010

In the midst of writing my new report titled “How Real Estate Agents Can Eliminate Negative Cash Flow in Their Businesses”, which will be released on Wednesday (January 6), I received a Men’s Journal magazine in the mail. The feature article titled “What I learned from My Father, the Grifter – A lifetime of lessons on money from a con man”, by Pat Jordan, summarized various money lessons learned from his father, who was a professional con man.

Here’s an interesting quote from the article:

“I know he would not approve of my mortgage, my car payments, my credit card, my monthly “nut,” which I can sometimes cover, but which often overwhelms me. That’s a gambler’s term – the minimal expense he needs to support his family. My father has always kept his “nut” to a minimum – rented apartments, cheap secondhand cars, no frills. No matter what, he always told me, a man has to meet his “nut.”

Both of these examples reveal the same lesson – keep your fixed monthly expenses to the bare minimum. The lower your “nut,” the more freedom you have in your business. The higher your “nut,” the less freedom you have in your business.

What it really seems to boil down to is:

If your “nut” is lower, you own your business.
If your “nut” is higher, your business owns you.

Or I can put this another way…

If your “nut” is lower, you can work less and enjoy life more.
If your “nut” is higher, you must work more and enjoy life less.

Bottom line – Your “nut” ultimately dictates how much happiness and freedom you’ll have in life.

Another way to think about your “nut” is that for every dollar your business spends, you must generate $5.00 of revenue after factoring taxes and other related expenses. Eliminate the dollar spent and you’ll have to generate $5.00 less in commission income. Aka – less work & fewer homes to sell!

How to Lower Your “Nut”

Let’s analyze some common business expenses your business incurs on a regular basis and see how we can minimize, eliminate or offset them:

1. Real estate licensing/CED/e-boxes/signs
2. Rent/Desk Fees/Commission Splits
3. Advertising
4. Payroll
5. Business Utilities
6. Website
7. Auto-Related Expenses
8. Dues & Subscriptions
9. Business-Related Equipment

In my new report, I detail exactly how to handle these 9 expenses using the 5 strategies listed below:

  1. Eliminate: This is easy to understand. Simply stop using the service or product and eliminate the expense all together. An example from my business was a voice broadcasting service I used to use in my marketing. I would send automatic voice broadcasts to prospects marketing various items for my business. The “Do Not Call” laws virtually eliminated voice broadcasting. This expense became easy to eliminate.
  2. Minimize: Try and reduce your expense. You might be surprised to find that you could get a reduction in many of your expenses simply by asking. Or if you can’t minimize, see if you can use the product or service less and negotiate a lower rate. For example, I have a bookkeeper help out with paying bills, reconciling accounts and preparing financial statements. She works one day a week. I could change her schedule to one day every other week. This would cut this expense in half.
  3. Reversing the Negative Cash Flow: This is a profound concept and can literally change your business dramatically. The idea of reversing cash flow is to generate income specifically to offset the expenses you must incur in your business. I’ll give you a few examples of how to do this later in this report!
  4. Targeted Investing: Investing into an asset that provides you with income to cover a specific expense for your business. For example, let’s assume you pay $100 a month for utilities. Can you invest into something which pays the equivalent of $100 a month or $1,200 a year to offset this expense? There are many stocks available that pay dividends. A few examples would be Nike (pays a quarterly dividend of 27 cents a share) or Campbell’s Soup (pays a quarterly dividend of 27.5 cents a share) and Sysco (pays a quarterly dividend of 25 cents a share).
  5. Restructure Expenses to Pay When Income is Received: The last way to eliminate negative cash flow in your business is to try and restructure or renegotiate expenses so they’re only paid when income is received. Almost as if they are to be deducted from your commissions. This way you don’t have to pay for the expense before getting paid.

NOTE: I’m only going to sell 100 copies of the new Zero Negative Cash Flow report and 57 have already sold to agents who signed up for the pre-release notification list. Watch for an email from me on Wednesday January 6 with the subject line “Eliminate Negative CF NOW!”

Comments (2)
Categories : Business Re-invention, Money Management, Uncategorized
Tags : , , , , , , , , , ,

Cash-flow or Equity?

By Rob Minton · Comments (0) · Friday, September 19th, 2008

What is better, cash-flow or equity?

Several years ago, after reading the "The Millionaire Real Estate Agent" by Gary Keller, I began the process to secure the franchise rights for a Keller Williams office in Lake County, Ohio. I spent a great deal of time meeting with some of the top guys here in the Cleveland, Ohio area. They were simply fantastic.They would have been great partners.

As I moved through the process, I sat down and pondered what I really wanted from my business. I asked myself one very important question. The question I asked was:

Do I want cash-flow or do I want equity?

My answer was: CASH-FLOW

This answer was extremely important because it pointed my business in a different direction. Securing a Keller Williams franchise would have been the best move if I had answered "equity." By building a large Keller Williams office, I would have created a substantial equity position in the business.

Instead, I made a decision to keep building my own little brokerage. I also decided to re-invent my entire business to be a cash-flow machine. I focused my business around real estate investors. I stopped taking listings and I added several new income streams within the business. I was ruthless in applying the 80/20 rule.

My decision led me to create a fantastic small "cash-flow" business generating $1.4 million dollars a year.

Guess what happened?

I sold my little "cash-flow" business for a very attractive price. This meant that I had created substantial equity in the process of building a "cash-flow" business. I learned very valuable lesson from this experience. The lesson I learned was:

Always go for cash-flow first. If you’re successful in creating cash-flow, equity will come along for the ride.

Had I chosen to build a business for equity, I would have sacrificed a great deal of cash-flow in the process. Building a business for equity requires different decisions than building a business for cash-flow.

What is more important to you: equity or cash-flow?

Apply your answer in everything you do. If you invest in real estate, focus on cash-flow properties instead of deals with equity. If you are investing in the stock market (scary thought), focus your investments on companies paying dividends. If you’re building your real estate business, focus on income instead of the number of transactions.

Can you see the differences?

Comments (0)
Categories : Business Re-invention
Tags : , , , ,

Blog Updates


 

runs on Builder by iThemes
Copyright © 2013 All Rights Reserved