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.


In the inaugural Ask Me Anything blog post I reached out to you, offering to answer your questions on how I could provide further mentoring toward your personal development and growth.

Today, I will address three of the questions.

The first question comes from Jeanine Morton, who asked:

Q: What piece of advice can you give to business owners seeking balance? 

 CLICK HERE FOR ANSWER

Post image for 5 Hour House Flipping Workweek Webinar Replay Available

The webinar we had last night (Tuesday, August 26th) filled
up so fast that many of you were not able to register.

The webinar was awesome!

Don’t worry though…it was recorded
and the replay is now available for
you to watch. :)

>>> Click here to watch the replay <<<

The 5 Hour House Flipping Work
Week webinar was awesome! We
had some technical difficulties but
the content was top notch.

If you want to know how someone
can flip over a 100 houses in a year
and basically do it all within about 5
hours a week, you must watch the
replay.

>>> Click here to watch the webinar replay <<<

Be sure to go and watch it soon
because Justin presents an awesome
opportunity to join his mastermind at
a steep discount.

All the information about it is on the
page with the replay.

There is a deadline though.

The discount to join the mastermind
ends Friday at Midnight. [UPDATE: The deadline was extended until Sunday, August 31 at Midnight! Don't miss out.]

If you’ve been following my blog for
any length of time, you know I don’t
usually recommend too many people.

When I do, you know it is because
I absolutely feel that they offer real
value AND they are out there DOING
WHAT THEY TEACH.

Justin, has an amazing program that
I am very happy to recommend and
believe you should give some serious
consideration if you are serious about
creating a real flipping business and
having the freedom that a properly set
up house flipping business can provide.

>>> Click here to watch the replay and find out more about the mastermind <<<

Your flipping friend,
Danny Johnson
FlippingJunkie.com

P.S. When Melissa and I started flipping
houses over 10 years ago, we had read
the E-Myth which talks about building
systems so that you work ON your business
more than IN your business.

We started to do just that but then got
caught up the business work and details…

Fast forward 10 years and I met Justin. He
didn’t get caught up in the details and
actually built the systems that allowed him
to work on his business for about 5 hours a
week and made 7 figures doing it.

There is a lot to learn from Justin. Don’t
just take my word for it, watch the webinar
replay and join his mastermind group.

>>> Click here to watch it now <<<

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