Cash Flow Guys | Real Estate Investing & Cashflow Ideas - Inspired by Robert Kiyosaki / Rich Dad Poor Dad

In this episode, I’m going to tell you a true story about a situation that happened to me recently regarding one of my properties. We have owned this one since 2014 and currently operate all the apartments as short-term rentals.  In 2016 when we made the switch from long-term to short-term tenancy I met with my insurance agent at the time to be sure I had adequate coverage for the change of use. I figured that the property would be subjected to a bit more use and abuse due to the short-term nature of our tenant’s stays. My agent suggested that I simply purchase an additional liability policy that would cover any claims of damage or liability that stemmed from the short-term occupancy.  The cost of the plan was only $1200 a year which was well within my budget since the property consistently cashflows 10x that or more each month. In 2020, my insurance agent sold his practice to another agent and retired.  I did not find this out until 6 months after the sale which irked me a bit I must admit. After chasing down the new agent for well over two months, I finally received a call back where he explained he has been “busy” with the takeover of the agency. I ask that my policy be reviewed to be sure it still provided adequate coverage for my short-term rental which he acknowledged that it did.   This fall, while speaking with one of the agents in the office on an unrelated issue the conversation came up about policy renewal.  I asked if it was still necessary to have three separate policies due to the Airbnb situation which she replied that my wind policy would not offer any coverage in the event of wind damage from a hurricane or likewise if I was using the units as short term rentals. You can imagine my feeling when I discovered that all along I have been underinsured! If I had suffered a loss at any time over the last 7 years due to a storm or wind damage I would have zero coverage available to me.  Let’s not even get into the wasted money of paying for the wrong policy, EVEN after being proactive about full and unsolicited disclosure about exactly how I operate that property. The agent determined that I had to switch to a commercial insurance policy because of the AIRBNB element.  This increased my annual insurance costs by over $6,000 per year.   As you might imagine I wasn’t real pleased about receiving this news but at the same time, I am thankful the issue was discovered and hopefully corrected. I must say, after this debacle, I am very insecure about whether or not I have the proper coverage.  I certainly don’t want to pay for coverage I don’t need, nor do I want to risk being under-insured. Clearly, I need to have another licensed insurance agent take a look at this situation which has proven to be a challenge all by itself.  It seems no insurance agent in Florida needs more customers.  They don’t answer the phone, respond to email or website inquiries.  Even those who referred to me simply will not respond. After about trying over two dozen companies I finally got one to call me back only to learn that they would not consider quoting the policy without me proving my roof was under ten years old.  I was dumbfounded to hear this because the effective age of a pitched shingle roof in Florida is 20-25 years, yet now the insurance companies have decided that they no longer like that timeframe. Fortunately, the roof was on schedule to be replaced this year anyway so needless to say we expedited that process and are now awaiting the materials to arrive for the roofer to begin the project.  Once that’s done the roofer will provide me a 4 point inspection form and proof the job was completed that I can turn over to my current and future insurance companies. In the end, it’s the cost of doing business.  I could choose to get all upset about it, sell off my portfolio and trade crypto in my Mom’s basement, yet that would be foolish. When I consider the $100,000’s of thousands of dollars of legally tax-free income I have earned from this investment property over the years, the costs I mention in this episode become small and insignificant.   In summary, how you choose to interpret things that happen will make you or break you.  Those that crack under pressure are generally the same people whose property I wind up buying at a bargain price because they simply chose to fail.  Instead, choose to succeed, find a solution because I assure you there is a solution for each and every problem you face.

In this episode, I uncover a recent discovery I made (by accident) and how you can profit from it.  The iBuyer craze is taking America by storm until this week, Zillow jumped off the bandwagon, cut loose 25% of its staff, and is dumping inventory like mad.  I'll uncover how you can leverage this service to your advantage no matter if you are a seller, Realtor, Wholesaler or Rehabber.  Don't miss this one!

When I see a dangerous trend that impacts lots of people who listen to this podcast, I feel it’s my duty to create an episode to explain what I am seeing in hopes that you will take pause and dig a little deeper before you jump off that cliff.  I’ve done my best to keep you up to speed on trends I discover that end up trapping good people into difficult situations. When I first got started, I followed the herd-like most of us do.  I flipped houses first, then later wholesaled for a while.  While I made some serious cash doing these things, I also wound up paying far too much of my earnings to the IRS in the form of tax.  I also overpaid mailing houses, sign companies, call centers, software salesmen, and asset protection lawyers that said I needed a bunch of LLS’s, trust, and other nonsense. Recently I’ve been learning about investing in / trading cryptocurrency.  I’ve read books, watched YouTube videos, read forums and chat groups, and dabbled in it myself.   I still have lots to learn (tech analysis), discovery and rationalization of trends, and so forth. I have discovered that public opinion or group thinking is often the driver of cryptocurrency performance and not so much the technology. There are groups of people who spend their days and nights offering unsolicited advice on crypto without any sort of credentials being presented or discussed.  For all I know I could be talking to some teenager in his mom’s basement. When Elon Musk, Mark Cuban, Robert Kiyosaki, Logan Paul (YouTuber), Gene Simmons, and Snoop Dog speak, what they say influences the financial markets of cryptocurrency. I gotta say, such a phenomenon does not make me comfortable with cryptocurrency in any way shape, or form.  In fact, it keeps me from investing any large amount of money in this space. I’m not saying crypto is bad, evil, shady or anything like that I’m just saying before you leap in, might want to swim around in the shallow end and get a feel for your risk tolerance before proceeding past your comfort zone of loss. When you invest in anything be sure to never invest more than you are willing to lose.  I decided my magic number was $5,000 for crypto.  Although the investment has grown quite a bit, I also realize that if Snoop Dogg can’t find weed because of the supply chain issues then it’s likely he may tweet out some nonsense to wipe out my profits. As I dig into learning more about the chart analysis of crypto, the more I see and come to understand how market cap and trading volume impacts the price of crypto, unlike stocks, those are generally the two metrics available to track.  Please note both of those are directly impacted by emotion and the public consensus on the very second a crypto buyer executes a trade. The bottom line is that we all need to do our best to avoid playing monkey see monkey do when it comes to investing.  Take a time out to learn about what you plan to invest in, how profits are derived, know the risks and only invest that which you are willing to lose until you get to a place where you feel comfortable taking bigger steps.

In this episode, I discuss how the current events happening in our daily lives eventually wind up holding us back from making forward progress.  I dive into the most important thing that you can do to protect yourself from the uncomfortable changes in your life from an economic standpoint. 

In this episode, I bring back my Real Estate Attorney Shawn Yesner to discuss HOA foreclosure issues that are rapidly becoming more commonplace.  This episode is packed with the info you need to avoid this common "gotcha" that catches many real estate investors off guard and can cost you hundreds of thousands of dollars. To connect with Shawn go to YesnerLaw.com

There's been a lot of chatter lately about the US Debt Limit "crisis" that was created by our elected officials.  I'm not suggesting its not a crisis, it certainly is, yet 100% of the blame is shared by our elected officials on both sides. The easiest way to understand it is to think of it as a credit card that has a credit limit.  Imagine if you paid all your bills using that card and suddenly decided you wanted (or needed) to buy more stuff. If the credit line is maxed out, simply call the bank and ask for a higher line of credit...what could go wrong?  LOTS, lots can go wrong. There is an unimaginable amount of bad information spewing from Washington DC on this topic which is why I made this episode.  It's time for you to take action to protect yourself from our elected criminals.  This episode will help explain what's really going on, how we arrived here, and then offer suggestions on how to prepare yourself to weather the storm. SHould you be nervous about the debt limit? No, but you should be taking steps to prepare and to protect your financial future.

For every landlord, the day comes where we find the need to raise the rents.  For many, this is a routine that happens annually or semi-annually.   The event can bring with it a bunch of emotions from landlords and their tenants, some good, some bad, some indifferent.   Nonetheless, there is a "right way" to raise the rent such that the most desired outcome for you is probable and that's what I am discussing in this week's episode.

“Deal Shopping” tends to lend itself to the rose-colored glasses effect, everything is great, no worries here, this place is just under-rented, all ya gotta do is buy it and POOF double the rents and get rich right?  WRONG Before we go any further, let’s discuss the two types of vacancies. Physical vacancy applies to actually empty units (nobody living in them) Economic vacancy identifies the difference between the potential (proforma) rent and the actual rent. As a passive investor investing in someone else’s deal, it’s a good idea to perform your own independent market research.  Your findings should align with the finding of your deal sponsor.   If you are buying a property yourself as an active investor, the same is true.  You can’t count on the Wholesaler, Broker, or Seller to be accurate with the information they provide. It’s not that they are lying necessarily, instead, it’s more likely that they simply were not willing to do their homework if they are the Broker, Wholesaler, or Deal Sponsor.  If the seller is off, I often find they are conveying what the “feel” it will rent.  Let’s keep in mind that they never actually get that much, after all, they don’t want the tenants to leave right? In this episode, I’m going to break down how you can assemble the most accurate information available.  Its making decisions based on facts that will keep you safe during your investing journey. If you want to learn more about what I am up to in Key West as far as my upcoming deals, go to keywestcashflow.com/call and schedule a time to get on my calendar to discuss our plans down here and how we might be able to work together in the future.

In this episode, I discuss recent headlines as they pertain to our current and future financial crisis.  Recently, Tax Attorney Mark Kohler put out a great video about proposed changes to tax law that could have a massive impact on those who use IRA's to invest.  You can watch this on youtube by following this link: HTTP://CashFlowGuys.com/IRAdrama This impacts house flippers, real estate syndicators, and the like across the board.  Should you sit on the sidelines and let this unfold before you invest again?  Does it make sense to buy now?  These are the topics I discuss in this episode.

Nobody enjoys making low ball offers - Let’s be honest….its painful! Brokers / Wholesalers / Sellers always “guess” at the asking price, that’s right, I said guess.  Why do I say this?  Because it’s true, let’s think about it for a minute.  The Realtor does a market analysis and /or the seller is super savvy and gets an appraisal to help them determine the fair market value of their home.  In almost every case, the seller will boost that valuation up a little to leave room for negotiation hence a “guess” when it comes to the asking price. I’d like to think that Key West Realtors are crazy in the pricing down here but they’re not.  Homes actually sell for more than the asking price in many cases which tells me that the buyers feel the homes are worth more than the sellers and brokers do!  That’s a great thing when you’re on the selling side of the transaction for sure! I’ve never met a seller, wholesaler or real estate agent who was happy to hear that you feel the property they are selling is “overpriced”, so, why bother discussing that topic at all? I suggest a “softer” approach...take copious notes, get detailed in note-taking and ask lots of questions.  If the property is a rental property be sure to document ALL of the expenses that the seller is willing to provide and add the ones they tend to forget about (such as property management) Get all the data available, refuse to make an offer without knowing each and every expense on the property (crazy sounding I know). Then...Do The Math WITH the seller or agent., yes, I mean spin-the-pad, ask the seller or broker how to make this work...subordinate yourself, and prepare to have a fruitful negotiation.

In this, the 300TH episode of the Cash Flow Guys Podcast I sit down with J Massey of Cash Flow Diary to discuss the amazing possibilities that can be had by investing in Short Term Rentals.   As a student of J's Jill and I have built an incredible STR business that allows us the freedom to run it from anywhere in the world.   Recently, we relocated to Key West, Fl to begin buying up long and short-term rentals in this market. With the help of Mike Marino of LayoverMoney.com we plan to revolutionize the traditional methods of syndication investing by building a streamlined, highly optimized investing opportunity for our investors. If you want to learn how to grow your very own short term rental business, you can get started today by texting "blueprint" to 949-506-5255 As a student of CashFlowDiary myself I can tell you that learning this skills will prove to be absolutely life changing if you choose to do the work.

In this episode, I talk with my investment partner Mike Marino and our CPA John Hartung for the Cashflow Capital Investment Fund we have opened recently about the pros and cons as it pertains to investing in syndications of all kinds. We discuss the several ways a syndication or investment fund is taxed and also how the individual investors are taxed. Did you know it's possible to achieve a zero tax rate without being Jeff Bezos?  I didn't but it certainly is and John discusses how that is possible amongst many other juicy tax strategies in this episode that you're not going to want to miss!

Lately, I’m seeing signs of supply chain issues that could potentially impact the income I make from my rental properties and other real estate deals. In this episode, I break down what I am seeing as it pertains to labor and materials shortages and how that can impact all real estate investors worldwide. Don’t underestimate how the current and upcoming shortages can and will impact your business.  I am hearing more and more reports daily from friends and colleagues who are having trouble finding even the most basic supplies to maintain their rentals or finish flips.   Experts are saying the shortages will likely worsen before they get better so why not take a minute to access your position and take appropriate measures to protect yourself and your business.

The term equity multiple is used by syndicators/deal sponsors as a fancy way to discuss return on investment. Google Definition: Equity multiple is a metric that calculates the expected or achieved total return on an initial investment. It’s calculated through an equity multiple formula that divides the total dollars received by the total dollars invested. Equity Multiple = Total Distributions / Total Invested Capital Example 1:  An investor purchases a property for $100,000;  The property is sold for $200,000.    The deal produces a 2x equity multiple.  If the investor only receives $150,000 back, the deal delivers a 1.5x equity multiple. Example 2:  An investor purchases a property for $100,000;  The property pays $7,000 a year in net operating income;  The investor sells the property for $165,000 after six years In this case, the equity multiple calculations would be $207,000 divided by the initial purchase price of $100,000, or a 2.07x equity multiple. Example 3:  Leverage Example:  An investor purchases a property for $100,000 The investor used a loan for $50,000 and put $50k down The  property pays $7,000 a year in net operating income The annual interest payments on the loan of $2,500 The investor sells the property for $165,000 after six years In this case, the equity multiple would be 2.84x. While leverage can amplify returns because the cost of debt is cheaper than the cost of equity, it’s important to remember it can also destabilize a project and amplify losses. Equity multiple is an easy comparison tool because it provides a quick glimpse into the total profit investors can expect to earn on a particular investment, provided its successful.  Keep in mind that it’s dangerous to put too much weight on this metric when deciding a go/no go decision because this metric does not factor time.  Internal rate of return DOES consider time in the calculation yet like other metrics also has its shortfalls.  True IRR cannot be considered unless the asset has already completed a given cycle of performance and has been exited. 

Earnest money is defined by Google as “money paid to confirm a contract” and in my opinion, is one of the most important elements of putting a deal together. In Florida (and I believe in all US States) for a contract to be considered enforceable, there must be “consideration” which is most often meant to be some sort of cash deposit or earnest money Wholesalers are notorious for not using earnest money when they attempt to go under contract with a seller on their home, this is a great way to lose deals! Many folks will tell you that it’s not necessary to use earnest money which will come back to bite you the minute a seller decides not to sell to you or honor your contract. In this episode, I cover how to use earnest money to win a seller’s approval on your offer over others which is critical in this very competitive market