Cash flow optimization: Earning more

In the last couple of blog posts we've talked about the importance of cash flow over accumulated wealth and how the first step to optimizing your cash flow is to reduce your bad expenses.

I truly hope you did the expense-reducing exercise in my last blog post. Some people will have skipped past it because it sounds too tedious but it can literally save you THOUSANDS of dollars a year. That's huge. (If someone wrote you a check for thousands of dollars, you would RUN to the bank right now to cash it, right? Sure you would. Well that last blog post is my version of writing you a check).

Now that you have reduced your expenses, it's time to...

Increase your daily income

Notice how I didn't say "increase your annual income" because when we talk about annual income, we tend to think of accumulated wealth. When we talk about daily income, we tend to think about cash flow and how the money coming in each day might stay with us or be spent through our expenses.

So you need to find ways to increase your daily income. Some of the most obvious ways are to ask for a raise at work, invest in dividend-paying stocks (well, maybe not in THIS economy), start your own business... but it won't come as a surprise to you that the best way to earn daily income is from real estate investing.

Real estate investing as a daily income-producing opportunity

Real estate investing is a big term and some people think of rehabbing or flipping but that's not what I'm talking about. (I hate rehabbing. It costs a lot, it's a lot of work, I can't do it while I'm traveling, and it doesn’t provide daily income, it only provides a spike in income IF the property sells).

The kind of real estate investing I do focuses on 3 ways to earn money (which I call Trifecta Profits) but the cash flowing portion of Trifecta Profits comes from the monthly income I receive from a renter.

Now, you might agree that rental increases cash flow but maybe you feel that it doesn't seem to increase your cash flow by very much: Let's say you've got a property and you receive $1000/month in rental. Some of that money (let's say $100/month) (10%) goes toward property management. Some of that money (let's say $500) goes toward the mortgage. And some of that money (let's say $200) is split with another investor who did the deal with you. You're left with $200/month. Hardly seems like a huge pay raise, right?

Well, that might be the case with one property. But consider this: You don't actually have a lot of expenses on this property (the tenant pays utilities, the rent covers the mortgage, plus you're paying a property management company to take care of the property). So you're left with $200/month and you're not actually doing anything.

Okay, that's not bad. But it can get even better. I'll explain how in a moment, but first you need to read this:

Disclaimer: The numbers I've given here are just example numbers. You might earn more or less on each deal you do, and your expenses might differ, too. Obviously do your own due diligence when doing your deals and don't make any significant financial comparisons between the deals you do and the examples I've given in this blog post.

Serious money in a year… all from optimized income cash flow!

Let's say that you do 1 identical deal each month for the rest of the year. (It's possible and I lay out a plan to do that in this blog post: How to retire in 12 months or less.

In month 1 you'll make $200 from one property.
In month 2 you'll make $400 from two properties.
In month 3 you'll make $600 from three properties.
In month 6 you'll make $1200 from six properties.
In month 9 you'll make $1800 from nine properties.
In month 12 you'll make $2400 from twelve properties.

Think about this: How much work are you putting in? Only some work to get the deal going and then nearly no work at all to keep the deal going. And by the end of the year, using these example numbers, you're making $28,800 a year… that's not a huge amount but you're earning it while you're watching television or hanging out with your kids.

There's one aspect of daily income that I haven't told you about yet that you absolutely must understand! I'll reveal what that is in the next blog post.

Your daily-income-earning friend and mentor,
Mark Evans DM,DN


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