I’m about to present a couple of very different investing strategies, one of which is traditionally used by real estate investors around the globe to build wealth through real estate. In the alternative scenario, which is a thing most real estate investors foolishly wouldn’t bat an eye at, I am going to use low-risk assets. In this case study; mobile homes. In both scenario’s, we will be investing $100,000.
The First Scenario, Investing $100,000 into a house.
Lets say we contact a Private Money Lender to get $100,000 dollars to buy a property. Our payment equates to $700 dollars. If we add our taxes and insurance, it will be $800 dollars. We’ll rent property and fill it with a renter or tenant-buyer. We’ll try to get positive cash flow and build wealth by having tenants pay-off the home over a long period of time. Over 30 years If we get $1,000 in rent, and we’re paying $800 dollars monthly, that means we get $200 dollars per month positive cash flow. In the event that our tenant stops paying, we fork out $800. The house may even be worth $130,000 or even more giving us equity. However, If we can’t sell it, is it an asset or a liability? (Answer: Liability.)
So let’s recap. We just spent $100,000 dollars purchasing a house that brings us $200 dollars per month cash flow. If the tenant stops paying, we have to. We’re committing $100,000 dollars and all we’re getting back is $200 each month. Imagine that each individual dollar is an employee that makes you money. If 100,000 employees can only make you $200 bucks per month, I suggest firing them! And do it quickly!
Scenerio 2; Investing $100,000 into mobile homes & low-risk assets.
In this scenario; We commit another $100,000. Only this time, instead of purchasing one house, we’ll buy mobile homes. I want you observe what happens …
I know in my area, I buy mobile homes for $3,000 on average. I can fix each one for $2,000 and have an exceptionally nice property for $5,000 total. How many mobile homes are we able to afford with $100,000 dollars? Well, $100,000 (what we have to invest) divided by $5,000 (or the total cost of one mobile) equals 20 mobile homes. So we can acquire 20 mobile homes with $100,000 dollars.
Before we forget, the payment will still be the same as the house. Provided, our taxes are going to be higher given that we now own 20 homes.
When I fill each property with a tenant-buyer, their nonrefundable deposit allows me to regain over half of our invested money. My typical deposit or down payment is $3,000. If I have $5,000 in each mobile home and I regain $3,000 back as soon as I fill it with a tenant-buyer, how many months will it require for me to get the remaining $2,000 back? (The answer: 6-7 months.) I get all my money back from from each deal within 6-7 months!
If I buy 20 mobile homes and fill each one with a tenant-buyer that puts $3,000 dollars down, this means as soon as get them all filled, I will immediately recoup $60,000 dollars or more of my $100,000 dollar investment. “I get it right back.” WOW! Now we have 20 mobile homes! What’s our cash flow likely going to be if each one cash flows for $300? ($300 dollars per month X 20 filled mobiles = $6,000 dollars!) Now, we have a $6,000 monthly passive income! That’s $72,000 dollars annually!
Repeat the Scenario
We’ve gotten $60,000 back in down payments & we already have $6,000 in monthly positive cash flow. At $5,000 dollars each, how many more mobile homes can we purchase with that $60,000 dollars? ($60,000 divided by 5,000 = 12 mobile homes.) Besides the 20 that we already have, we’re adding 12 more. That’s now a total of 32 homes! Cash flowing $300 apiece, giving us a monthly income of $9,600 dollars!!! (Every-Single-Month) Let’s not forget that we just bought 12 more mobile that must be filled. So let’s fill them and see what happens as a result.
We’re filling 12 new mobiles with tenant-buyers and receiving $3,000 dollars down from each for a total of $36,000. (Note: We borrowed $100,000, invested it into 20 mobile homes and then got over half of our money back, which was $60,000. We then repeated the very same approach. Rolling it over once again, we now have an additional 12 properties, 32 in total, that bring a combined monthly cash flow of $9,600 per month!)
Repeat the Scenario Again
How many mobile homes can we buy after repcuperating $36,000? The answer is 7. So add 7 more mobile homes to our existing 32 and now we own 39 mobile homes! (39 mobile homes X $300 per month is $11,700.00 in monthly positive cash flow) We now have nearly $12,000 in month-to-month cash flow and let’s keep in mind the money we’ll make back when we fill our 7 new properties. We now recoup $21,000 in cash to either reinvest or put into our pockets.
Remember what we did with the house? We purchased just ONE house for the same amount of money we acquired 39 mobile homes with. We bought 39 mobile homes or low risk investments ie; cars, trucks, boats, planes, land, heavy equipment, take your pick. Anything you can create a monthly positive cash flow with.
To be successful at investing you must consider the numbers. The numbers don’t have bad hair days & they don’t wake up on the wrong side of the bed. They just are. You need to understand how to use these numbers to provide financial independence and increase the quality-of-life for you and your family.
You can use $100,000 to go into debt by purchasing a negatively cash flowing house. Or, you may use those very same funds to accomplish your financial freedom and increase your quality-of-life in record time by way of acquiring mobile homes & other cash flowing low-risk assets. Do you want to keep chasing equity checks, or achieve a 6-digit-figure without the need to go to work? It’s your choice. Which one will you do? It’s all about priorities. Would you like what a millionaire possesses? If you want what a millionaire lifestyle, then this is how you get it. If you want what a poor man has, then continue acquiring negatively cash flowing houses. It’s choice. If you choose mobile homes & low-risk investments, then come see me at www.thekeystocashflow.com & I’ll show you how.