But if price appreciation becomes harder to come by, investors need to consider the
role of positive cash flow, whether through dividends, or yields.
But if price appreciation becomes harder to come by, investors need to consider the
role of positive cash flow, whether through dividends, or yields.
Late stage companies have generally reached a
point of positive cash flow generation and begin to experiment with expanding into tangential markets.
They include a case study of a client named Paul who parlayed equity in his downtown condo into 20 similar properties in the same area, resulting in $ 10,000 a
month of positive cash flow.
Calculate the future
value of positive cash flows incurred in any year during the holding period of the investment, by growing them at the interest rate expected to be earned on cash generated by the investment (Reinvestment Rate).
The US Tax Code benefits real estate owners in a number of ways, including unlimited mortgage interest deductions and depreciation accelerations that can shield a portion
of the positive cash flow generated and paid out to investors.
For example, you may find that the cost of paying income tax and paying someone to file an extra return for the small
amount of positive cash flow that you generate from a few properties - would be less than paying 2 - 3 % on the total assessed value EACH YEAR in higher property taxes in an income tax free state.
I'll manage the two units myself since I'll be living in the building, but if I hire a property manager I know that will eat pretty much
all of the positive cash flow and then some.
But instead of putting
some of the positive cash flow into a reserve account for future needs he puts it all into his back pocket.