I’m often asked by new investors which they should do, buy and hold (cash flow) or buy and sell (flipping). The answer is know your requirements and be prepared to go after opportunities depending on your needs.
Every individual is different. When I was first starting out I had a full time job in another industry so my goal was to create enough annuities (cash flow) that I would be able to leave my full time job.
To determine what I needed to do I sat down and put together a plan. If you’re not planning you don’t know what you need to do to reach your goal of independence.
I determined that I needed approximately fifteen properties yielding a cash flow between $250 and $300 each a month to leave my full time job.
Now I knew what I had to do, I had to set my mind to finding properties in areas that I could easily rent for profit. Next I sat down to determine which areas had more rentals (this is important) than sales so I was in an area where people sought out investors to buy and had a rich tenant market.
I went out and looked at the areas that I researched and set my plan in motion to buy in those areas.
Eventually I did it; by the time I left my full time job I had sixteen active cash flow properties and my family was not impacted when I left my job.
If I never sat down and made a plan I would not have known what I needed to do to achieve my goal of financial freedom!
Always be prepared to adapt!! During my pursuit of cash flow properties I found several other properties that would be good flips. I knew I could not address them myself since I had a full time job so I partnered with someone who handled the rehab and sale of the property.
Once I left my full time job I was able to manage these myself and the “pops of cash” allowed me to set up college funds for my kids and take my family on vacation’s without taking money out of our day to day cash flow.
What is your goal??? So often I meet new investors that don’t have one; therefore they don’t know how to determine whether or not they are moving in the right direction. How can they adjust their tasks if they don’t know what they are doing with their time and energy?
Be a planner, sit down, and determine what you are trying to achieve; incremental cash to subsidize what you’re earning today? Annuities so you can retire tomorrow? College, vacation; It’s different for all of us but the bottom line is you can’t get where you need to go if you don’t know where your going.
