Rental and Commercial Properties

Flipping houses can give you the cash to start. You do not have to buy rental or commercial properties until later. These types of investments require cash. They generate cash flow and wealth over the long term, but you also need cash to get them going.

Here's one rule of thumb:

Only take on as many rental properties as you can afford. If the rental property mortgage is $1,000, and your tenants move out, can you comfortably afford the $1,000 payment?

The problem is that people get stuck on the idea of finding great deals for rentals. They buy two or three good deals, and all of a sudden they have $3,000 in payments. They find several tenants, but if the tenants all move out, they have $3,000 of debt each month.

If you want to go from having a great life and saving money, to having a great life that works, you don't want to be a slave to rental properties. Rental properties are great, but have the capital reserves so that you always feel that rental properties are great.

If you have a commercial property with a $10,000 monthly mortgage, and two of your tenants move out, can you afford to be short $2,000 a month in rent? Make sure you have enough cash reserves to cover that $2,000 while those units sit vacant.

Down the road, I'll teach students how to own rental properties without stressing out. You do it by building five years' worth of reserves. Flipping properties is a way to create cash reserves first.

When you are ready to buy rental and commercial properties, you can use the same principles and techniques as when you are flipping properties.

As you are flipping houses, hone your skills so you will be ready to buy rental and commercial properties. Hone your skills for buying, negotiating, selling and managing so that you can immediately start generating cash flow.

You want to hone your skills so you can become a great landlord down the road. A lot of people who become landlords do not actually have the skills to do that. They have properties that sit vacant. They don't know how to fix problems. They let contractors take advantage of them. They end up with negative cash flow.

Never buy a rental property at full market value. When you buy undervalue, you will be able to generate positive cash flow. You want to use the same techniques you used to buy houses for flipping:

-The 70 percent rule
-No-money-down methods
-Leveraging other people's money

Build cash reserves and practice profit regeneration to keep your rental properties profitable.

Do the same with commercial properties. Always buy them undervalue so you can walk in with little or no money down. If you are going to buy a commercial building to flip, it will typically need repair. But you can fix it uop and still create positive cash flow.

All the skills you honed while buying residential properties will come into play when buying rental and commercial properties. You will use your skills for buying, repairing, negotiating and managing properties. The beauty is that you will be generating great income as you sharpen your skills, so you will be paid to learn.

As you play Monopoly in real life, you will be able to win with rental and commercial properties.