Got Cash? Why Equity is the Secret to Cash Flow | VestMap: Better Data For Real Estate Investors Got Cash? Why Equity is the Secret to Cash Flow | VestMap: Better Data For Real Estate Investors

Got Cash? Why Equity is the Secret to Cash Flow

By Clay Ripma - 09/17/2020

Got Cash? Why Equity is the Secret to Cash Flow

By Clay Ripma - 09/17/2020

People always ask me “How do I actually create $10k a month in cash flow?

I’m going to ask you one simple question that is key to you reaching this goal. Yes or No: Do you have a million dollars in the bank?

If the answer is YES, then you are in luck because it is not that difficult to achieve 10% cash-on-cash return. There’s your $100k/year cash flow done.

So for the millionaires out there, stop reading this right now and go out and buy the cash flow you need to be free. Simple and easy.

If you’re not a millionaire, which is true for 95% of the U.S., then read on. I’m about to share my secret formula!

Ready?

You need a million dollars in EQUITY.

Now there are inevitably many small steps on the way to having a million dollars in equity. Trust me on that one.

But I’m not here to overwhelm you, I am here to tell you that it’s more than possible. In fact, it’s plausible! IF, you know what to do.

Some people can do it in 6 months while for others it will take 3-5 years. This will often depend on your risk level, your market and your strategy.

Here is the path I took to reach $1M+ in EQUITY in 2 years.

First, I had to learn how to make equity in real estate and this comes back to the 7 wealth generators of Real Estate.

For this wealth generator, we are going to focus on FORCED APPRECIATION.

How do you force appreciation?

Well, you must increase the value of a property through renovation or increasing the income. The concept is simple but it takes a bit to master.

The key is that you get to $1M in equity in your properties and once it begins to snow, it will snowball.

Here is an example.

You have $100k to start (seed money) and you want $10k a month in cash flow.

Now, if you buy a cash-flowing quad with your $100k you will maybe get $1k/mo when you rent it out but now your money is tied up.

So instead, buy a fixer duplex that costs $150k. Use your 100k on the downpayment and the renovations. Then sell at a gain of $50k. Now you have $150k seed money to do it again and again.

Using cash to force appreciation, or in other words, trading up-and-up, you will reach $1M in equity. That’s is the secret to getting your 10k/mo in cash flow!

Now if we have good market appreciation, the renovation work doesn’t need to be done as the market will do the work for you.

However, it can be hard to time your entry and exit in an appreciation market so you may want to focus on what you can control.

Do you have to create equity in real estate? NO.

You could start a business and get equity in that. You could join someone’s company and get stock. Not all equity is real estate equity.

Real estate equity is just the thing that I’m focused on in my own life and now why I am here to serve you reach your goals and dreams!

But you also may be thinking to yourself, “Is there an easier way?” Sure, get more capital! Maybe you’ll start wholesaling, flipping, or open an unrelated business that is your source of capital.

Bottom line, if you want massive amounts of cash flow – Get equity FIRST!

And yes, this is exactly what I did!

*Note this is my subjective opinion and bias only and it is not financial advice. I am not a registered financial advisor. The opinions expressed in this article are mine and mine alone and should not be construed as legal or financial advice. All investing carries risk. Please don’t do anything reckless with my story to $1M+ in equity.

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