The great thing about the cash flow is it should only get better. It is the money you can take out of the company and spend on yourself.įor me, $100 a month was enough cash flow to buy a property with no money down and get it into my portfolio.

It is the money you don’t have earmarked for something already. Cash flow is all the income minus all the expenses, including the mortgage and any savings for future expenses such as saving 1/12 of the property tax bill each month. Let’s pause a moment to define cash flow. Only you can decide how much above zero you want the cash flow to be before you are willing to make the deal. The lower the cash flow is below zero, the faster you become broke. The higher the cash flow is above zero, the better off you will be, the more cushion you will have in an economic down turn, and the closer you are to financial independence. (This is why your personal home is not an investment, but an expense) Do not buy “investments” that take money away from you each month. You can only own a few of these before you go broke.

You will need to put money into the investment every month to keep it afloat. If the number is less than zero, you have a negative cash flow. You could own as many greater than zero cash flow properties as you want. That magic number is zero! If the cash flow is greater than zero, you have a positive cash flow. After all, there must be a cash flow number that will dictate whether the deal is good, if it is above this number or bad, if it is below. Investors want to hear a magic number for minimum cash flow. It is no secret, especially if you read my book The Doctors Guide to Real Estate Investing for Busy Professionals, that my number one criteria for purchasing a real estate investment is it must produce a positive cash flow.

“Great talk, thank you! Wondering what kind of cash flow After my talk was released, the first comment about my talk was as follows:

Positive cashflow real estate