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.


Download The Profit Newsletter for July 2015 (PDF)

The Profit Newsletter - July 2015The July 2015 Edition of The Profit Newsletter is available for download just in time for our Atlanta REIA Main Meeting on July 6th. There are 48 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 Don DeRosa,
Kathy Kennebrook, Frank Iglesias, Karen Bershad, Bill Ham, Kimberlee Frank, Ron LeGrand, Mark Jackson, Russ Hiner, Larry Harbolt, Tony Pearl, Bill Cook, Jim Hitt, Bob Massey and Michael Vazquez.

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.

“I always say shopping is cheaper than a psychiatrist.” ~Tammy Faye Bakker

The other day I was in the grocery store picking up some milk. In the checkout line, the checker asked the guy ahead of me if he had one of those loyalty cards. Well, this guy took out a shoebox full of those cards – a shoebox! –and started searching through them. It took forever!

Okay, maybe I made that up. Actually, if anyone needs a shoebox for those cards, it’s probably me. And if I were to pull out that shoebox in the checkout line, I’ll bet no jury would convict the checkout lady if she shot me right then and there.

Now, just in case there’s anyone who still doesn’t know about loyalty cards, it’s time you did. They’re promotional wallet cards that big retailers and businesses give out, usually for free. When the checker scans the barcode on the back (or when you give the checker the phone number they have on file for you), you can get all kinds of deals that are only available for people who sign up.  

And it’s not just stores and businesses that use barcodes. These days, libraries, museums, and organizations have them. Barcodes are on the back of gift cards, too. Corporate barcodes can save you time, money, or both.

Well, you know how much I love a bargain! So when stores started giving away these loyalty cards, I got on board fast. Now, I have a whole collection of them. I especially like those little barcode tags you can put on your keychain. But when it takes fifteen minutes to find the card you need, it’s time to do something about it.

That’s where Key Ring comes in. Key Ring is a great little app that’s available for both iPhones and Androids. Essentially, it collects and organizes all those cards so you don’t have to stuff them in your wallet or clutter up your keychain. It’s easy to learn and operate, and it’s free.

Here’s how it works: When you get a new loyalty card, you open the Key Ring app and create a virtual card on your phone. Key Ring has an extensive list of companies that issue these cards. You select the business, and Key Ring has you photograph the barcode, as well as the card itself.

Once that’s done, your life gets a lot simpler. For one thing, you can bring up the barcode on your phone – which you always have with you anyway – and the checker can just scan your phone. I love quick and easy!

Key Ring does something else I love: it’ll show you deals and coupons offered by the retailer, and in a lot of cases these can be geared to your location. And if all that wasn’t enough, you can even create shopping lists with the deals you select.

One of the things I really like about Key Ring is its versatility. For instance, you can enter in gift cards as well as loyalty cards. If you’ve lost the actual card, you can enter your membership ID instead (tip: to find your membership ID, go online, get into your account and go to your profile), and it’ll still bring up all those special deals.

And if the business isn’t on Key Ring’s list of businesses? No problem. You can create a custom entry. It won’t bring up special deals, of course, but it will still save you time and help you stay organized, because all your barcodes and memberships will be in one place. All in all, a really nifty little app that will make your life run more smoothly.

That, of course, leaves one question: What should you do with that shoebox full of cards you’ve been accumulating? Here’s one option: Save them if you’ve got the space. Don’t even take the cards apart when you get them. Keep them in pristine, original condition. Somebody’s already collecting them somewhere, and you never know, one or two of those cards could be worth a little money someday.  

Whatever you do, though, please don’t take your shoebox to the grocery store.

Don DeRosaDon DeRosa is recognized as one of the nation’s top 21 real estate investors in the New York Times bestseller “The Millionaire Real Estate Investor”. Don, who is a full-time investor, trainer, and mentor, is the first to offer his complete investing system on a mobile platform. Don teaches investors how to Make More and Work Less by being more efficient, productive and competitive, leveraging mobile technology and apps on the iPad, iPhone, Android and other mobile devices.

Contact Don DeRosa

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