Re: Question: To sell or rent… - Posted by Reif
Posted by Reif on March 25, 1999 at 01:30:04:
Continuing Dave T’s thought . . .
If you play Cashflow, even though the object is to generate passive income, after a few times you soon realize the way to generate cashflow is NOT to buy and hold rentals right away, but to flip properties for capital gains so you can get enough cash to do bigger deals to generate MORE cash flow.
Dave’s illustration is good because it shows the trap many landlords fall into.
They have break even or slightly positive (or negative)cashflow, but they have a bunch of money tied up earning below average returns.
Robert Kiyosaki would argue what he calls the ‘velocity of money,’ get in, get out with a profit, next deal, is a better way to get ahead.
Even if your rental property is gaining equity at 10% a year, and you only had 10% down, your rate of return after 3 years is only about 25% equity on equity - and you can’t get at most of that, and if you cashout - capital gains nightmare.
Again, I’m just getting started, but it seems to me that if you want to make it BIG, you need to do the deals to generate the cash first, before you start buying the ‘buy and holds.’
Anyway, that’s my $.02