Timing cash flow with investments is often very misunderstood. This time it’s not about the relative order of the timing of cash flow vs capital growth.

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Transcript:   Today, let’s talk about the specific timing of cash flow in the real estate investment problems. I’m not talking about what I usually mean when I say timing which is buy for capital growth at first and then switch to cash flow at retirement. What I’m saying is this zero down school of though 5 or 10% down. You have to understand that the timing even if you’re successful I won’t be part of that for people. The next zero down that one of my clients buy will be without my help. I’ve never been a part of that. The next one will be my first and it will never happen. What happens with these low downs is fine but even when low down are 25 or 30% down. The timing of cash flow means this, if you’ve got 28 years before you’re scheduling your retirement don’t worry. The loan is 30 years, you might pay it off in 28, you might pay it off in 18 depending on your income and everything else you may be doing for investment in your purposeful plan. You might pay it off in 8. I’ve got clients that pay off real estate loans on small multi unit properties in two to three years but they are very high earners. The key is this, the timing should be that you enter retirement debt free. Now, I’m going to reverse myself by saying even if you enter retirement debt free what you’ve given yourself is a new page of options. Remember the principle, the investors with the most options wins. What if you have a million dollars of property and you retire next week, you just made your last payment on all of them and you own them free and clear, it’s a million bucks. If you want, even thought you’ve got cash flow from debt free property you might do the comparison and say, “You know what? I’m making 5 or $6,000 a month from these properties, maybe more.” It depends on how bad of a neighborhood you were in so how low a price you pay, right. My people buy in the best neighborhoods only. What if you decided to refinance that property at 4 to 6 or 7% at say 70% loan value. You get $700,000 loan. You just destroy the cash flow from those four properties but you’re still having cash flow. It’s paying for itself for the buffer but now you’ve got $700,000 that’s tax free, it’s not even a taxable event. You can go out and you can buy 80 to $100,000 and note income through discounted notes. Again, that’s a timing thing. You want that option. You don’t need that option till you retire but if you’ve got a wait a year, two years, three years for that to happen and you know what? Sometimes that’s a fact life. Things happen, we talk about Murphy a lot here. He knows where we all live and it’s our turn in the barrel sooner or later. Nobody escapes Murphy. For the record, O’Tooles comment about Murphy’s losses. Murphy was an optimist. The key is if you can time it right the ultimate timing factor is your debt free at retirement. You can keep those properties debt free, you can decide to borrow and get another vehicle. I use discounted notes that you might have something else to do. Maybe you’re starting a business in retirement. Nothing like having half a million tax free dollars to get a good running start. Again, timing. The fact that you could buy more real estate only means that if you’re wrong on your timing you’ve entered yourself times three or four or five if you have not the cash flow you need to retire. I’ve seen people that had to delay retirement because they missed time when they were going to be able to pay it off. You can’t be all rosy,