Years ago, I experimented with a single-family home rental property I had owned. I offered this home on a “Rent to Own” Program. When interested applicants asked how much money they needed to put down on the home, I replied by asking, “How much are you able to put down?”
This question yielded many different responses, all of which offered more money than the typical security deposit. I ended up collecting several thousand dollars up frontfrom the family that ended up moving into this home. The larger up front payment collected was for the option to buy the home during the two-year lease. If they purchased the home, the large up front payment would be deducted from the preset purchase price. If they didn’t buy the home, the large upfront payment stayed with me as option consideration.
This large up front payment that I unexpectedly collected from a rental property completely transformed the future of my investing. This option income significantly increased the cashflow available from the investment.
This increase in cashflow was nice, but the most important impact that occurred is that I learned what I now believe is the MOST important investment skill, which is…
How to Invest Small Amounts of
Money to Create Monthly Cashflow!
The large up front payment that I collected on this home was used to purchase my first mobile home investment. I bought an older two-bedroom mobile home for cash. I turned around and sold this home with financing at a higher price. The buyer financed the mobile home purchase over four years and paid around $200 a month generating an additional $9,600 of income.
This additional monthly income was on top of the cashflow I generated from the single-family home.
In essence, I created this $9,600 out of thin air using the tenant’s upfront payment. It was ALL profit.
ONE tenant in ONE investment property ended up generating two monthly income streams. It’s hard to explain how important this strategy has been for me. It unlocked the doors to many profitable investments, as I’ve tried to copy what I did with the first upfront payment.
This skill allows you to double your income streams without investing any additional money out of your pocket.
Every time you collect money from someone moving into one of your properties, start forcing yourself to reinvest this money for additional monthly cashflow. Work hard to turn one income stream into two income streams.
Your mission, should you choose to accept it, is to create two income streams from EVERY income producing asset you own.
One more thing…
The typical real estate investor dreads vacancies because they have to advertise the home, show the home, screen applicants and they have to draft all of the lease documents. It’s a BIG pain in the arse.
Trust me, I know.
However, when you learn how to turn small amounts of money into new cashflow, everything changes. This is because every new vacancy opens the doors for you to create a new income stream.
You start profiting from something that the average real estate investor hates by turning adversity into opportunity. Before long, you’ll become excited for vacancies because they create opportunity for you to create more cashflow.
P.S. The tenant who paid the large upfront payment on this home actually ended up buying that home at the end of the lease. After the home sold to that tenant, I was still collecting monthly income from the mobile home investment!
Oh, I almost forgot… when the home sold to the tenant, I used the proceeds from the sale to buy two new single-family investment properties.
Guess what I did with up front payment collected from the tenants who moved into those two new investment properties? 🙂