Real Estate Cash Flow Sources
You Own The Property
The year was 1982. I was 29 years old and I decided to become a Landlord. That year I purchased two 4-unit apartment buildings in a middle class community south of Chicago know as Chicago Heights.
That was my first experience at "landlording". Like so many other people, I became a landlord because I wanted to create a source of income that didn't involve going to work everyday.
I knew that as a Landlord, I could receive rent payments every month from my tenants. The idea of receiving "mailbox money" really appealed to me, so I went on a buying spree. Before long I had 27 rent checks coming in every month and life was good.
As the owner of these properties I had to deal with certain "head aches and challenges" but those 27 checks made it worth the trouble. So I carried on being a landlord and spreading the good news about landlording to anyone that would listen.
I was enjoying the powerful benefits of receiving what I thought was "passive income". To my way of thinking...this was the only way to create passive income with real estate. I didn't really know of any other options that were available to me.
Of course, as the owner I was entitled to collect any rental income generated by the property but I also had to accept full responsibility for every aspect of the property.
PLUS...my cash flow was impacted by vacancies, tenant issues, maintenance, repairs, renovations, market conditions, city inspectors, water usage, property tax increases, insurance premium increases and a half-dozen other factors.
On top of all that...my "net worth" was directly impacted by increases or declines in the market value of my properties.
Don't get me wrong...I am not saying that this is a bad cash flow model, I followed this model for 31 years from 1982 until 2013. It served me well.
However, as you'll learn on this website, there is another way to reach your goals with Real Estate. The strategy i am referring to is "Private Lending".
You Own The Mortgage
When you own a mortgage, you are considered a "Private Lender". Like most people, I assumed that lenders made their money on interest and left the pursuit of capital gains to investors. I was wrong.
The pursuit of Capital Gain is the driving force behind the stock market, commodities markets, real estate ownership and professional gambling...to name a few.
It's the Big Score. Buying Low & Selling High. You know the dream...everyone wants to invest in the next Facebook or Microsoft. Get in on the "ground floor". Well, good luck with that!
Why Do Stock Brokers "Sell" The Capital Gains Dream? Because when it comes to producing reliable, high yield, SAFE cash flow...They Got Nothin'. So they sell the dream..."Someday this stock is going to be big. Buy it now."
Finally after seeing my retirement savings slowly dwindling while my stock brokers collected fees trade after trade, I pulled the plug on stocks, bonds, commodities, CD's and mutual funds. I moved my money into something that I understood...real estate. Almost immediately my investment dollars began to out perform the financial markets. I thought to myself...this is great. It doesn't get any better than this.
I owned 27 rentals and the properties were going up in value, my net worth was growing and life was good. Like everyone else, I heard all of the chatter about a "real estate bubble". But frankly, I felt that even if there was a 20% pull back in prices, I'd still be OK.
What I didn't see coming was a recession so severe that it would wipe out all of my gain & then some. I was hit hard, just like so many other landlords. However, I noticed that my friends with money invested in mortgage Notes thrived during this time. They made more money than ever.
This intrigued me, so I decided to take a closer look at the "paper" side of real estate investing. I soon discovered that Mortgage Notes provide a built in Capital Gain, a high ROI and passive Cash Flow. It almost seemed to good to be true...but it IS true.
There's an old saying..."You Don't Know, What You don't Know." In July 2013, I became a ravenous student of Mortgage Note Investing. It didn't take long to realize why Banks & very wealthy people invest heavily on the Paper side of the real estate. Once I "saw the light" I began buying mortgage Notes and selling my rental properties.
I now have cash flow, capital gains and safety without any of the ownership hassles. You can do the same. Let's talk.