• Kevin

Who’s King and Who’s Queen? Cashflow vs. Cash

Cashflow brings gives stability, security and protects you from the unknown


Amazon is Here
Acquiring assets and investments that produce consistent and predictable income can lead to time freedom. If all your monthly expenses are covered by the positive cash flow of your assets you have in theory eliminated the need for a job and created financial freedom!

We've all heard the expression "Cash is King" and without a doubt there's a lot of truth in this statement. Having cash at the right time, deployed in the right investment, can make you some major mullah and offer tremendous returns.

But today I would like to challenge the classic and say that "Cashflow is King and Cash is Queen" 🙂

Why exactly? Acquiring assets and investments that produce consistent and predictable income can lead to time freedom. If all your monthly expenses are covered by the cashflow of your assets, you have in theory eliminated the need for a job and created financial freedom!

In this article we’re going to cover:

· Why cashflow is king

· When is the right time to buy

· What types of investments can provide cashflow

· Where to get access of cash to acquire cashflow

Before we even discuss investments make sure you have a rainy-day fund - usually 6 months reserves for living expenses. You know, just in case the world shuts down. The rainy-day fund will give you a sense of stability, security, and protect you from the unknown.

Why - Cashflow is king?

Building a foundation

As you amass assets that generate monthly income it gives you a foundation of positive cashflow so that once you reach a certain level you become financially free. What I mean by this is if you generate enough income to replace your W-2 salary, your working income, or your monthly expenses you’ve essential freed your time to do what you want to do when you want to do it.

Multiple streams of income

The typical millionaire has 7 streams of income!! Buying property that produces positive cashflow is an extremely advantageous strategy at all stages of an economic cycle because you get income, tax deductions and possible appreciation. The reason why it makes sense to acquire income producing property regardless of market cycle is because the additional income streams give you stability and security in case other revenue sources dry up.

Income regardless of market

Velocity of money is a key principle for return, if you have money sitting in a checking account for 1 year you essentially have a 0% return. When the market conditions are unknown, acquiring income producing property is a solid investment strategy because you're generating a return based on purchase price and net income produced. After you’ve purchased the investment and it is producing income, the value doesn’t matter until you sell it.

When – is the right time to buy?

· You can’t time the market tops or bottoms, but you can tell the economic cycle direction so you want to ride the cycles if possible.

· Cashflow works regardless of what stage of the economy we’re in. Assuming you’re holding on to the Investment for 5-7 years and its producing income. You don’t have to worry about the value while it’s producing that income.

· When we’re in a transitioning market top, liquidity and short-term investments are optimal.

· When we’re at a market “Bottom" invest into value add projects to ride the upswing and get the highest return.


What - Type of investments give cashflow now?


For the near future, I recommend trying to keep your money as liquid as possible, but still invest in conservative options that generate income.


Residential rental properties

One of my personal favorites - generally speaking there’s a shortage of affordable housing in the United States. Most people are forced to rent in some form or another and there are many submarkets where you can purchase cashflow positive rental properties. In the environment we’re in right now it’s probably easier to invest in passive rentals instead of being an active manager yourself. During tough economic times dealing with tenants can be more difficult and experience is key.

Short term hard money loans (debt lending)

With the right deal sponsor you can loan out your cash and securitize it based on an asset as collateral. From there you can earn 8-12% on your money for a 6-18 month period. This can be achieved through a variety of different asset classes or alternative investment that are real estate or non-real estate.

Residential fix & flips partnerships

My general standpoint is right now you have to be extra careful with this type of investment strategy. The benefit is that it’s a quick investment 6-9 months and can easily yield a 15% annualized return. It’s not cashflow but it’s a short term investment with a quick payout. The residential market has been extremely hot because of the low inventory, ample cash on the sidelines, and historically low interest rates. All of these have led to stable and increased sales prices in some markets for this summer of 2020. You want to get in and out of the property quickly and make sure there’s a back-up plan, for example turning it into a rental.

Commercial syndications

Investing in a syndication can provide solid quarterly payouts and a great overall annualized return on the exit. These types of projects are a pool of investor capital into a limited partnership and the hold period is typically going to be 5 to 7 years.


Cash – is not an investment

Cash is the ultimate liquidity and allows you to jump on opportunities in the near future, it’s not an investment. The best way to hold cash in the bank is a high yield savings account currently at ~1.1%. Staying on the sidelines isn’t a bad strategy because market timing is difficult, no one can truly time a market. The skills, experience and ability to make a sophisticated, high-quality, well-timed investment can be difficult especially right now when there's so much uncertainty in the world.


CDs – I don’t like

I have no idea why anyone would ever buy a CD, there's literally nothing beneficial about it, you lock up your money for a long-term. You're paid less than the inflation rate, so you're basically just locking up your money in a government vehicle that doesn't pay anything - that's just my two cents



Where - Can you access cash to invest in cashflow?


· Savings & checking accounts

· Equity in your real estate - main residence or other investments

· Retirement accounts (Self Directed IRA or Solo 401ks)

· Loan on your retirement account

· Equity in your business

· Loans from family or friends (at a lower interest rate)


If you want to find out more about passive cashflow opportunities email us at PassiveInvestor@AltusIG.com or schedule an appointment today by clicking ---> Here <---


CONTACT US

(702) 608-9789

info@altusig.com

  • LinkedIn
  • Instagram
  • Facebook
  • Twitter
  • YouTube

© 2020 Altus Investment Group, LLC. Inc. All Rights Reserved.​

Altus Investment Group, LLC. (“Altus Investment ”) is not a registered broker-dealer, investment advisor or crowdfunding portal. Altus Investment Group, LLC does not endorse any of the opportunities that appear on this website, nor does it make any recommendations regarding the appropriateness of particular opportunities for any investor. Altus Investment Group, LLC  (“Altus Investment Group”) is a wholly-owned subsidiary of Altus Investment Group, LLC and a federally registered investment advisor (CRD# 299176). Altus Investment Group, LLC Advisors provides investment advisory services exclusively to privately managed accounts and the Altus Investment Group, LLC Opportunity Zone Portfolio, LLC, and does not otherwise provide investment advisory services to the Altus Investment Group, LLC  Marketplace. For more information, read our Disclosures & Disclaimers and Terms of Use.

This website uses the term “Internal Rate of Return” with respect to both (i) individual realized deals and (ii) all realized deals as of a particular date. With regard to an individual realized deal, the term “Internal Rate of Return” means, with respect to the investors in the realized deal, the discount rate, using cumulative annual compounding, at which the net present value of the total of the investors’ (a) aggregate capital contributions to the issuer of the realized deal and (b) aggregate distributions from the issuer of the realized deal, equals zero, and calculated for each such capital contribution from the date the offering was removed from the Altus Investment Group, LLC Marketplace (the “Marketplace”) and from the date such distribution, as applicable, was made. The calculation of an individual Internal Rate of Return is determined by using the XIRR function of Microsoft Excel. To determine the Internal Rate of Return for all realized deals as of a particular date (with respect to the investors in such realized deals), we calculate the weighted average of each individual realized deal’s Internal Rate of Return based on the aggregate capital contributions provided by investors through the Marketplace. It is important to note that most of the investments on the Marketplace are still in their holding periods. The fully realized deals represent a small portion of total deals on the Marketplace, and it may be more likely for deals that realized early to have experienced a high value exit and for deals that are not performing well to be delayed in their realization. Accordingly, the performance information to date may not be an accurate indicator of overall Marketplace performance. Furthermore, Altus Investment Group, LLC is not responsible for the performance of deals on the Marketplace, and past performance is not indicative of future results. You should not invest unless you can sustain the risk of full loss of capital.