What Is Cash Flow?

Do you know what the two most important words are for survival in any type of business, much less real estate?
CASH FLOW…………………….

Cash flow is the money an investment produces after subtracting cash expenses from income. If you want to stay in real estate for the long haul, you NEED cash reserves.

Lets’ face it…...purchasing property with no money down is simple, however, handling negative cash flow, repairs and other expenses is the craft. You can come out on top if these challenges are addressed and managed properly. A lack of cash reserves can create unnecessary pressure for you.

Advantages of Cash Flow
There are many advantages to you as a property owner. When you have a comfortable cash reserve you:

• Act rationally
• Hold out for a higher sales price and qualified tenants
• Leave properties vacant rather than rent to unreliable tenants
• Know how to handle tenants when they threaten to leave.
• Take care of necessary repairs and improvements on your properties.

Here is the net-net - investment property can be purchased without money, on the other hand, you just can't make it in the business without cash reserves.

Understanding and Controlling Your Finances
In order to gain control of your finances, you have to shift from a random money management system to a controlled money management system. The first step down the path of control involves performing an inventory. A business which takes no regular inventory usually goes broke! Taking a commercial inventory is a fact-finding process and fact-facing process. You need to understand where your money is spent on a monthly basis. The easiest way to do this is to track every cent that you spend during a period of a month. Compile the list and take a look at it at the end of each week and then at the end of 30 days.
After tracking your monthly expenditures, categorize the money you spent to produce a cash flow analysis. This is generated by taking the total expense number and comparing it with your income.
Finally, create a balance sheet which will demonstrate where you stand in terms of assets (what you own) and liabilities (what you owe).
The pivotal question that you want to ask yourself is: Are you living within your means or having to borrow too much money each month?

In conclusion, think about acquiring cash reserves before investing in income properties!
Please contact me, if you would like more detailed information. For example:

• Steps you need to take when your business runs into cash flow problems
• Critical principles of operating expenses and sales
• View an example of an Expense Calendar with your own expenses and income

Please complete all information:

Cadway's Home Buying & Selling System
6125 Caminito Sacate, San Diego, CA 92120

619-265-9191

© 2003-2005 Unique Dynamics, Inc.

(Not intended to solicit homes already listed for sale)