If you read my first book, “Investing Now,” the second chapter is titled “Cash for today or Wealth For Tomorrow.”
If you had to answer that question, what would your answer be? BOTH, is what I would guess most of you would say! The question is fundamental to your investing model. Many people start off wholesaling and flipping houses retail and never make the transition from transactional income streams into long-term wealth building and residual income streams.
When I fist left corporate America I had to immediately replace my income from my JOB, so I began wholesaling and that allowed me to leave the corporate life.
This picture is a visual of the difference between transactional income and residual income and wealth building so I wanted to share this story. I was driving through Church Hill in Richmond with my daughter Melisa the other day and she said “Dad! I can’t believe those big dogs are on the porch roof of that house.” I pulled over to take a look and realized she was right, there were big dogs on the roof. I then explained to her that I use to own that house, for exactly one day. You see, I sold it wholesale to a good friend of mine. Who got what in this deal? Well, I am sure I received an assignment type wholesale fee for selling it to my friend. Let’s say it was $4,000, though I have no idea to be honest. What did my friend receive?
He got the house, which is a nice real estate asset. What else did he get?
He got some instant equity because I am sure I sold it pretty reasonably priced. What else did he get?
CASH FLOW! Right, for 4 years he has been renting this house out and receiving positive rental cash flow. So who got the best deal? I got the one time assignment fee for wholesaling it and he received long term cash flow every month, equity and ALL the tax benefits associated with owning real estate.
I think the need for good wholesalers is surging like a tsunami right now! That is good news for everyone need to create income for today.
However, DO NOT lose sight of the long term game plan to collect real estate assets, rent them out and receive positive monthly cash flow. Wholesaling is good income for today, but the strategies of buy and hold will create your WEALTH for tomorrow!
What is your game plan for this year with your plan?