Epic Real Estate Investing - How to Get More Cash Flow When Your Cash Won't Flow | 331

Episode Date: January 8, 2018

Epic Real Estate Investing shows you how to get more cash flow when your cash won’t flow. Make 2018 the year that you find financial freedom for yourself through passive income real estate investments. It’s not a money problem, it’s an idea problem! ______   The free course is new and improved!  To access to the two fastest and easiest strategies to a paycheck in real estate, go to FreeRealEstateInvestingCourse.com or text “FreeCourse” to 55678. What interests you most? • E.ducation • P.roperties • I.ncome • C.oaching Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Terio Media. Yo. I'm not sure for what you came for. Throw you smoke up your ass, seminars. It's next door. Line your tips up, man, just like a next door. All you're winning and wanting, yo, that's what we check for. By building piles of cash, create cash flow.

Epic real estate investment I make your cash grow. When I can tell, you ain't worked as hard at all. Tell people you work hard, you ain't working hard at all. Go deep with your investment. You're going wide. Too cold for your. Yo, you need to go inside. It's not a money problem.

It's an idea problem. Epic, full estate, investment, then we can solve them. Scared money, you don't make money. Passing income cash flow, yo, how you create money. Safer's the losers. Open your eyes and see them. Matt Derryall creating your financial freedom. Yeah, yeah, we got the cash flow.

Yeah, yeah, we got the cash flow. Yeah, yeah, we got the cash flow. You didn't know home boy, we got the cash flow. Yeah. Hello and welcome to the epic real estate investing show. Glad you found us. Because, you know, if you're feeling like you've got big goals for 2018 and you're not sure where to start, you're in the right place.

And if you already feel like you're off to a slow start for 2018, you're also in the right place because when you have a place to get support, motivation, inspiration, and instruction and mentorship on a regular basis, the journey, it's that much easier and frequently that much faster. So here at the Epic Real Estate Investing Show, we provide all of that and then some. So that's why I'm glad you found us. I think it's a good match. It's a good fit. So the cash flow conclave is coming up. That's our live event, the Epic Intensive. It's coming up at the end of this month. Wow. Time is flying. January 25th through the 27th. So if you haven't reserved your ticket, you may do so at Epicintensive.com. Epicintensive.com. And to give you a little,

bit of an insight on what's going to happen at the cash flow conclave. I thought I'd share with you how to get more cash flow when your cash won't flow, right? Because I've heard from a few people that have decided not to go because, you know, the cash flow thing is not really their cup of tea at the moment. It's really tough to cash flow in their market specifically is with their big point. And it's becoming increasingly more difficult in many other markets as well as property prices are increasing at a speed that's outpacing the rents. That gap is getting more and more narrow. And they're frustrated because, you know, they've just got to put too much money down now to generate a cash flow, to generate positive cash flow. And when they do put enough money down,

then what that does is it just kind of kills the whole return rate, right? It takes that ROI and pushes it down. And the idea of investing in a different market, because there's a market it won't cash flow. So they're looking at other cash flow markets. That's either, seems like too much work. It's daunting or quite frankly, for a lot of people, it's scary. And the big fear is that they're never going to be able to cash flow unless they pick up and move their primary residence somewhere else.

But when you get this cash flow game thing, when you get this thing right, opportunities, they seem to appear where there seemingly weren't any before. And you can put minimal money. down to generate a solid cash flow. I mean, the less money, the more cash flow, what that does is that it equates to a higher return on investment, a higher ROI. Your money is working harder for you. You have to put less down to generate the same returns or the same cash flow.

And also, you know, when you get it right, you may sleep a little better at night, knowing that your investments are within driving distance. And the big aspiration is that you'll be able to exit the rat race, just like the way it's discussed and been proven here so many times on this show for the last seven years. That's what we're all aspiring to do, right? We want to generate that freedom. And the only thing that really generates that type of freedom in the society of which we live is a consistent flow of cash. Cash flow.

So today I've got five hot principles to share with you on how to get more cash flow when your cash won't flow. So five hot principles, point one, cutting costs. Right. Two is changing the use. Three, is seller finance. Four is add conveniences. And five is fractionalizing. So to increase cash flow, what this is, what cash flow is, it's when the income from a property exceeds the expenses that it costs to keep the property. Because you've got taxes, you've got insurance, you've got maintenance, you got vacancy, you've got property management.

And you've got, I don't know, God, for a big major repair here and there. So you've got all of those types of things to be concerned about. And you just want to make sure that the money that's coming in from your tenant exceeds the money that's going out to your property. Okay. So that's the first. And that's what's really going to generate the income for you or the freedom for you is that consistent cash flow.

But before I go on and I tell you how you can do this and how you can maximize that or increase cash flow or create cash flow where there isn't any right or isn't any right now is understand and remember. You just can never lose sight. of this. When we say real estate has created more millionaires and billionaires than anything else, it's absolutely true. And when we say that real estate is the final frontier where the average person has a legitimate shot of creating epic wealth, absolutely true. And, you know, it's set more people free than anything else. Absolutely true. So with that said, understand that cash flow

is just one profit center of real estate. And cash flow is not typically the profit center that's going to create your wealth. Your wealth is going to come from your amortization. It's going to come from depreciation. And it's going to come from appreciation. That's where the real wealth comes from. Right.

So just keep that in mind that if you're breaking even or you're just slightly lower than, or you're a little negative or a little positive, you've got those other three. If you can make that happen and if you can hold on to those properties responsibly and you have the reserves

or income from other sources to do it, understand that you're still moving forward, you're still building your wealth. You're not going backwards. Okay? I would never recommend holding a property that negatively cash flows. I would never recommend that.

But if you did, if you opted for it, I wouldn't say that you are wrong because you've got those other three profit centers and if you have the means to maintain the difference between what you're short on that cash flow each month to cover those expenses, then I don't think that's a bad investment. I just don't.

Historically speaking, you would have been right every time if you could have pulled through those instances. Okay. So keep that in mind. Now, let's talk about the cash flow specifically. That's what we're really talking about because the cash flow is what's going to set is free. That's what's going to replace our jobs income.

It's what's going to allow us to enjoy life right now while we're still young enough to enjoy it. All right. So point one, cutting costs, right? So there's two ways that you can do this. to create cash flow, you increase the income or you decrease the expenses. So cutting costs. So look at your maintenance costs.

Where can you cut there? Look at property management. Where can you cut there? Look at the utilities. All those types of different costs. Can you refinance and get a lower mortgage rate on the property? Can you go and refinance the private money or the seller's money that you're borrowing? Can you pay it off and refinance with some other source?

How can you cut those costs? cost. So always look at where you can cut costs. Right. So that's number one. And the rest of it has to do with increasing income. Right. So number two, point two, changing the use of the property so it generates more income. Right. So most of us when we think of income property, we think of a tenant, someone that's going to come in and rent that space from you to use as their home. So that's what that's what we all generally think of. But there's a lot more ways that properties can increase income. And some of these are going to be a good fit. Some of them are not. But just listen. Keep your ears open and maybe it'll inspire some new ideas that I don't even mention. Right. So in some states, in many states now,

seems like each election, there's a few more states that this is possible. If you change the use from just regular residence, maybe a grow house. Yeah. Marijuana, it's, I'm not a fan. I'm not a user. I really don't have an opinion about it one way or the other. I'm very much indifferent about it. but I do see it as potential income and changing the use of your property. And for you that are not living in a legalized state, that might sound totally crazy and absurd. For those of you that are living in states where it is legal, you just maybe had a light bulb go off in your head and you're like, aha.

So I just met with a friend over Christmas vacation, actually a client. And we had lunch together. And he was asking me kind of a similar question. like this. And this is kind of what inspired this episode. So Justin, if you're listening, this whole episode is for you. And, uh, you know, we're in Oregon and it's legal there. And to go ahead and purchase a property and get it all coded for, uh, the proper electricity that's required to create a grow house and just make that totally turnkey. That's something that would, uh, someone who's a grower would find very appealing if they just had to move in and

everything was already there. They didn't have to Mickey Mouse anything or to go Meggie Mouse. shift with anything trying to get it right. But if you just had it decked out and you made the investment and got all the permits and everything for the electricist and everything, that could be a really viable alternative. And other changing use, vacation rentals, short-term vacation rentals have become really popular. And inside of the investing space, it's becoming more and more popular. I think by the day, I think, I don't know, the last half of last year, it seemed like there are six or seven different gurus out there all promoting their little course on how to do

vacation rentals and they all had their own little twist to it. So that's another way. So short-term rentals, you're renting it out by the day, not by the month. And if you live in an area where, whether it's close to an airport, it's close to a downtown area, it's close to tourist attractions, if it's a place that people would want to go and rest or vacation or anything like that, that's another very viable alternative. And from what I've kind of seen around looking on the internet, and because I've been looking at it, looked at it, I don't know, here and there for the last few years. And each time I was like,

eh, that seems like a lot of work. I don't know if I want to be in the hospitality business. But I still see the income. I see the numbers. And they're very attractive. And what I've seen is typically it's about, per the day, it's about 10% of what it would cost for the month.

So if a house rented for $2,000 a month, you could probably get right around $200 a day. as an Airbnb rental. So you basically have to, you know, rent it out for 10 days a month to be where you were if that was a long-term rental. And then pretty much every day over 10 seems like it would be profit, okay? It would be more than what you would have made if it was just a traditional rental. And that's rule of thumb.

It might be different in every area. I haven't looked at every area, but the few areas that I've looked at, that seems to be really close to the right number. Okay, so 10 to 12 days will get you breaking even for a long, in comparison to a long-term rental and then everything above that. Like if you had another week, I mean, that's just like, you know, you just increased your rent by 50%. That'll cash flow in most places.

That'll be the difference maker right there. So there's one, or there's two. Another changing use is potential daycare, right? Find, there's a, I know here in Southern California, you see them all over. People go and will get their daycare license and they'll just turn their house into a daycare. And if you took a house and turned it in a nice neighborhood and you turned it into a daycare and you hooked it up with all the amenities and everything that's going to make it child safe and all that stuff, that might be something of business would rent out. And then speaking of business, maybe you turn it into an office space and you can turn the property into office space or maybe a halfway house, something like that. So those are all different ways that you could turn residential properties into changing their use into a, I guess, an income stream that would be much bigger than just a,

traditional tenant. All right. So first was cutting cost. Second is changing the use. Three, to increase your cash flow, you could sell the property. We talked about this last Monday. You could sell the property with seller financing. And if you didn't want the cash flow to end, then, you know, go ahead and amortize it over 40 years, over 50 years. That way the cash flow never ends. The person would never pay it off if they didn't have to. And then you, but if you did, you could sell it at a premium because you're offering seller financing, you could lock in your appreciation or your, yeah, your profit. So if you pay 100 grand for the property, and even if it was worth 100 grand, you could sell it for, you know, 110, 120.

If you're offering seller financing, people will pay that for the convenience if they didn't have to come in with a giant chunk of money and they'd have to jump through all the hoops of the bank. They might give you a 10, 20 grand down and they'd be happy to amortize that thing over the next 30, 40, 50 years. Okay. And I guess in this scenario, if your properties aren't cash flowing, at 100 grand, they probably would cash flow. So this would be more in the $200, $300,000, $400,000 price range. Okay, so you could do that. Let's see. So that's seller financing. So you're holding the note for your cash flow instead of the properties, what that comes down to. Point number four, you could add conveniences in charge a premium forum. You could rent your house out furnished.

You could pay for the utilities and charge a markup, or you could pay the charge for the utilities and add premium. So, you know, you add high-speed internet. You add the dish service or the cable network, and you could have someone come and do the cleaning, and you can create an arbitrage there. Other convenience is one of my favorites. This is a biggie, is allow people with pets to come and stay in your house.

And don't take a pet deposit. You know why you don't want to take a pet deposit? because you might have to give that sucker back. You don't want to give the deposits back. So what you do is you charge pet rent. Right? So you charge pet rent. You say, yes, go ahead and bring your two Dalmatians and move them right on.

And it's 50 bucks per dog. So there's an extra $100 in your pet rent. And that goes on and on and on as long as they live there. And a lot of people with pets, they like to stay because it's sometimes it's difficult for them to find a rental that will accept pets. And I'm telling you, that small little shift and that little extra $50 an extra $100 per month, that can kick your ROI up two, three, four percentage points in some cases.

Just that little bit can really make a big impact to your ROI. Okay, so think about pet rent. And so, I mean, if you charge two dogs and you charge 50 bucks a dog, there's 100 bucks, and you might charge, you know, 300 bucks deposit, 500 bucks deposit per dog if you're going to take a deposit. So there you have, there's a thousand. bucks and if they were good pet owners and they took care of their pets and they kept a clean place, you know, when they move out, you got to give that $1,000 back.

But if you collected $100 a month and they stayed for two years, that's $2,400 extra that you put in your pocket and you don't have to give it back. Got it? So that's another one part of the convenience. So you can add conveniences and charge a premium and just kind of create that arbitrage for yourself. So that's number four. Number five, fractionalizing.

fractionalizing. I don't know if that's the correct word, but cutting your property up into fractions and then renting out the pieces, meaning storage. You could sell extra storage space. If you have a big lot, you could put storage units on there and sell it to somebody else, rent it out to somebody else, or rent it out and sell a premium to the tenant for storage. Let's see, the parking spaces. If you have additional parking on your property, you could sell the parking spaces, especially if you live next to an extra event. center, stuff like that, it might be good. Or if you live next to an apartment, apartment buildings that don't have a lot of parking,

there's a lot of those here in Los Angeles where I know that it would be very easy if you had extra parking space to rent that parking because so many of the apartment dwellers got to park on the street and they have to move their car once a week because then they get parking tickets. And over a year, they've pulled up five, six, seven extra parking tickets at, you know, 35, 55 bucks a pop. That adds up. That's next three, 400 bucks a year that they pay in penalties.

And plus they got the inconvenience. of always looking for parking space every time they come home. That would be a very viable solution in your higher-priced areas and your more densely populated areas. Another one is selling out the rooms. You know, if you're near a college, you can turn it into student housing and rent the property out per room. So a house that, say, has four bedrooms that rents for $2,000, go ahead and rent each room for $700. And now you went from $2,000 to $2,800. And, you know, you might have a little bit more maintenance on there, but you've,

certainly kept up your, you've increased your cash flow significantly. You can take bigger deposits. You could do better job screening and kind of minimize the downside of that type of rental. But you could go ahead and split up the rooms and run it out by room. All right. So those are five ideas and maybe they'll work for you. Maybe they won't. Maybe one will, maybe one or two will or maybe none of them will.

Or maybe some of those ideas just kind of inspired something, stirred something up because there might be something specific to your market. market, you know, around storage. Like, that's a big deal in a lot of parts of the country. But it's not a big deal at all in other parts of the country. So maybe there's something specific, like the grow house thing. You know, maybe they don't grow weed there, but maybe you could rent out the backyard for the neighbor to grow tomatoes.

I don't know. But just kind of take those and take what fits and give it a shot on your rentals or the next time you're looking at a rental, consider one of those options. Could we do this? Could we do that? Right. other thing uh what you call it uh what's the other one that that's a biggie you know if you have the ability to put a a billboard on your property or on your on the on the house itself or if you have

the ability to rent out for um cell towers there's another thing so there's all different types of ways that that you can increase the income of a property all right so um and then you could always do the other thing you can go ahead and invest somewhere else without moving You could leverage someone else's system, someone else's resources that already has all that stuff in place that can that could mitigate all of that risk for you and help you, you know, kind of push those fears down a little bit of doing it remotely. But either way, you've got to go for the cash flow. You've got to make it happen. Don't throw your hands up in the air because it's difficult in your area, right? It's never a money problem.

It's just an idea problem. So I shared a bunch of different ideas with you today. Hopefully it inspired something. but if you don't get the cash flow, boy, you're just going to be working for the rest of your life, saving, saving, saving, and the intent that your pile of money that you save gets high enough to where it produces the cash flow that's going to give you the financial freedom. And that's just a long, uncertain path. And this is one thing I'm going to be illustrating and are demonstrating at the cash flow

conclave is how much faster it is if once you figure out the cash flow, once you, you figure out the streams of income, once you pursue and build those streams of income first and then let your piles build second, how much faster that moves, moves you towards your financial freedom. It's shocking. And so I've got a model that I've put together just to illustrate that. And it's going to make a believer out of everyone there. And no one in their right mind is going to want to walk out and ever flip another property again. It's that compelling. So if you haven't signed up, please go. This is just the icing on the cake. No, the tip of the iceberg. That's the metaphor I'm looking

for. This was just the tip of the iceberg on some of the new stuff that we're going to be talking about that we've never talked about before at an epic intensive. And I've got a bunch of different people coming with me to share their expertise on how they create cash flow. And I just want you to be there. It's going to be cool. It's going to be great. And, you know, I know it's bone-chilling cold right now across the entire country. I think New York was covered in snow today. Do you know what the temperature is here today? Here in Los Angeles.

It is 73 degrees. I almost wore shorts. I wore pants just because it didn't feel right. And I was thinking about you in the Midwest and in the East Coast. So come out and see us at the end of January, January 25th through the 27th. Go to epicintensive.com. And if you need any help with any of this, or like you need the type of help or like, I don't.

want to do it, like you don't want to do it. You just flat out want someone to do it for you. Consider booking a call with Mercedes. Mercedes at Cashflow Savvy, and you can do that directly. You can jump right to the front of the line, get on our calendar at callmercedes.net. Don't put dot com. You're going to get some different Mercedes. I don't know where she works. Go to call mercedes.net. And if that's too fast, though, if you don't want to move that fast, you don't want to talk to Mercedes right away, just go to cashflow savvy.com to download her investors package that will illustrate in detail on how you can make cashful happen for yourself without having to pick up your family and move to a new town. All righty? So last and final notice

for today, go to epicintensive.com, grab a ticket because I want to meet you. I want to meet you in person and I want to help you through this process and I want to help you get everything that you want out of real estate, everything that you originally signed up for. Let's make it real. Let's make it your life. Let's make it 2018. All righty. So that's it for today. God bless and to your success. I'm Matt Terrio, living the dream. Yo.

Yeah, yeah, we got the cash flow. Huh. Yeah, yeah, we got the cash flow. Yeah, yeah, we got the cash flow. You didn't know, home, boy, we got the gas flow. This podcast is a part of the C-suite Radio Network. For more top business podcasts, visit c-sweetradio.com.