Think and Grow Rich
Think and Grow Rich
The Science of Getting Rich
The Science of Getting Rich

Matt Napier's Real Estate Warning to InvestorsSince the beginning of the Great Recession, there has been a debate on cash flow between real estate investors, many of whom learned some tough lessons when the Recession began (including myself). Specifically, the debate is: What kind of deals should you focus on and how is your money best used!? Should you focus on creating equity or focus on creating solid income and cash flow?

You may be saying that they don’t have to be mutually exclusive. While that is correct, many investors tend to focus on either building equity OR cash flow. To me, the decision of what kind of deals to focus on is made easy if you boil it down to one thing- how much money do you need right now to live the lifestyle that you are already living (provided it’s already a decent standard of living) and do you already have enough cash flow to live off of on a monthly basis? If you do not have enough to live off of, do NOT focus your efforts too heavily on equity build up. Instead, focus on cash flow (quick flips, wholesaling, and only rentals that will generate strong cash flow); investments that will put cash in your pockets within 1-9 months.

One of my mentors when I got into real estate investing nearly a decade ago, Del Hinds, who headed the SCREIA, made a point of continually telling me not to focus too much on gaining long-term equity, until I had enough to live on today. His famous words still haunt me- YOU CAN’T EAT EQUITY! I also had another mentor that swore to me, you better have a sure fire exit plan and back up strategy if it doesn’t work. I will explain that more in a minute, but for now, let’s talk about Del’s words. At the time, I thought that he just had a different approach to investing, but he was 100% correct. Although I’d built up a significant pile of equity in properties, that was slowly being squeezed out each month when the Recession hit and since I didn’t focus on strong cash flow from the beginning, the $100 to $150 I was making per property on gross rents (before expenses) barely covered basic maintenance and vacancies, meaning my true profit per month on rentals was close to zero.

This serves as a warning. If the economy goes into another recession (which is certainly possible given the lack of fundamental improvement in the economy and massive spending by our government) and you do not have more than enough cash flow to live on already and are focusing too heavily on equity, change your focus… FAST. Focus on wholesaling, rehabbing, and flipping properties, or if you do buy rental properties, ensure that you have at least 30 to 35% cash flow after PITI payments plus a 10% allowance for vacancies and a 10% allowance for repairs (I actually look for 50% net cash flow now). Just because there are enough properties with potential equity that we can buy all day long right now, don’t buy too many properties too quickly if the strong cash flow isn’t there, and if you’re choosing not to re-sell them right away. Your equity may get squeezed out and you may be stuck with a property that you can’t sell for what you thought, and then you’re holding onto properties that aren’t cash flowing well enough to make it worth your time. You’re one of the smart ones though; you know to focus on cash flow, and thus, you will be a successful investor.

Matt Napier

With nearly a decade of experience in specialized niches of real estate, Matt is considered a highly knowledgeable real estate investor in the Charleston, South Carolina area. Matt has dedicated himself to learning highly specialized skills which allow him to find high-return real estate investments for his clients and his investment company, The Napier Organization. His company offers high-return investment opportunities to select individuals and funds, secured by real estate. In his free time, he enjoys coaching new real estate investors on the technical details of real estate investing.

What is a Lifeonaire?

Shaun McCloskeyA Lifeonaire is someone who is full of life.  Many people equate living life to the fullest with their financial means to do so; they think that having more money will automatically enhance their lives. At the root of a desire for money is actually the desire for what people think money will give them: a greater quality of life. That focus typically results in the opposite of the goal, causing people to funnel their energy into earning more money rather than living an incredible life.

When someone is very “successful” in their career and spending a lot of time making a lot of money, often times they never really get around to experiencing the fullness of life for which they are working so hard. This is evidenced by the broken families, damaged friendships, forgotten hobbies and interests, crumbling marriages and troubled children that result from neglect – all because their primary focus is on being more financially successful.  

The first step to becoming a Lifeonaire is to determine what you want your life to look like. (Creating a Lifeonaire vision) Believe it or not, 98% (or more) of people don’t know specifically what they want their lives to look like. Most everyone says they do, but very few people have any amount of specificity to their answer, nor have they taken the time to put it in writing. Instead, what they know is that they don’t like the way it currently is, and they mistakenly believe that more money will be the solution. This first step is critical, since your Lifeonaire vision will become the foundation that subsequent actions will build upon.

Most people think of success this way: Start a business, focus the majority of your time on making it grow financially, and then try to figure out how to live life in the time leftover (if there is any).  For a Lifeonaire, we do the exact opposite; we spend our primary time on what’s really important and then fit our business into the remaining time.  This means we must learn to design our businesses to serve the life we want to live, rather than serving our businesses, hoping that one day it will provide the freedom we so desire.

Many won’t admit that life didn’t quite turn out the they had hoped it would.  Instead, they present a facade of enjoying success, when deep inside they’re frustrated, tired and feel like failures.  Why are they frustrated?  Because they’ve been playing by all the rules our society dictates to achieve success.  The problem is, they’re playing the wrong game.  

Entrepreneurs tend to be the worst culprits since most of them play the game of accumulating the most wealth, yet don’t have a life.  (Many of which are business owners, authors, national speakers, gurus, internet marketers, people you likely already know or have heard about…) I have to get them to change the rules. We teach them to set themselves up to win by rewriting the rules they choose to live by.  

I’ll let you in on a little secret… In the end, most discover that what they want is to experience life and relationships.  Currently their mindset is that it takes money to accomplish this, but as they explore it further they come to realize that it takes time, which is the one thing that most trade away in pursuit of money.

Here’s proof: When we ask people to tell us the names of all the people they know personally (Notice I said personally, not someone you read a book about or heard about…) who are living the life according to the way they want to live, most people can’t name a single person.  Many don’t know anyone who lives the lifestyle they so strongly desire.  Some may be able to name a few friends or acquaintances that have a lot of money, but very few can name people they know personally who are truly free in every sense of the word. And yet, all of them are following the same recipe for success that everyone else around them is following. 

The sad truth about the American Dream is that it is a sham. It enslaves people.  They pursue it thinking that it is synonymous with life, but it results in trading away life to attain and maintain the dream.  We’ve sold ourselves (our time and our freedom) for this dream that has no power to give us the life we truly desire.  To truly live life to the fullest, we must replace the prison of debt with the lifestyle of prosperity through simplicity.

So in essence, a Lifeonaire event is about winning the game of life. But in order to win the game, you must know not only consciously choose the game you wish to play, you must also write the rules. Most people are playing someone else’s game entirely, following rules they never wrote or consciously agreed to in the first place.

Take back the game. And this time, win the right game. We’ll see you at Atlanta REIA on March 2nd and at the Workshop on March 14th

Download The Profit Newsletter for March 2015 (PDF)

The Profit Newsletter - March 2015The March 2015 Edition of The Profit Newsletter is available for download just in time for our Atlanta REIA Main Meeting on March 2nd. There are 40 pages of valuable information this month for your real estate investing success. Download it and check it out! The Profit is Atlanta REIA’s digital, interactive newsletter for serious real estate investors delivered as an Adobe PDF file to read on your PC, Mac, Smart Phone, iPad or other mobile ready devices. Many of the articles and ads in The Profit contain many hyperlinks you can click to get more information online! The high res version of The Profit is “print ready” for those who want to print the newsletter on their home or business printer. Be sure to Subscribe to The Profit by Email or Subscribe to The Profit by Text so you don’t miss a single issue.

This month you can enjoy a variety of real estate investing articles from Shaun McCloskey, Bill Cook, Jim Hitt, Michael Vazquez, Bill Ham, Mark Jackson, Russ Hiner, Kathy Kennebrook, Ron LeGrand, Bob Massey, Don DeRosa, Larry Harbolt, Karen Bershad, Kimberlee Frank and Tony Pearl.

Atlanta REIA Business Members can Advertise in The Profit for as low as $599/year for a single full page ad or two half page ads. Just call us at 678-701-7160 to discuss a special plan to promote your business to our members, friends and followers throughout the year.

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