Two of the three primary reasons to be a real estate investor are quick cash and long-term wealth. The third, monthly income is a byproduct of good investments and is a topic unto itself so I’ll be discussing it more in a separate series of articles. In this article, I’ve linked quick cash and long-term wealth pursuits in real estate because they are more closely linked than you might think.
Quick cash is your immediate payout from a short-term real estate transaction. Depending upon how aggressively you are working your business and what kinds of deals you are pursuing, quick cash can be substantial and the question often becomes what you’re going to do with all of that extra revenue.
I think there is a hierarchy or tiered structure to how quick cash gets used by real estate investors. Everyone is different so this is not intended to be a “one size fits all” description but I think you’ll see where I am going with this as we move through the discussion.
Tier One use of quick cash would be to put food on the table, pay bills, or at least cover business operating expenses. For most real estate investors, I suggest a solid focus on Tier One quick cash as you are getting started because this can help liberate you from your current job and give you the ability to work the real estate business on a full-time basis.
Tier Two use of quick cash is to use it to buy “stuff”. By this, I mean the bigger house, the Mercedes, etc. How you use your cash is entirely your prerogative but this is a use of quick cash that I suggest you be cautious with. The bottom line is that, however nice it is to show off your newfound success to the neighbors, it won’t do anything to help build your empire or foster your continued success.
Tier Three use of quick cash is to invest it in assets. This is a practice of the wealthy and one that you should give strong consideration to once the opportunity is there. Investing proceeds from your business in other assets (including real estate) is a proven way to fast track yourself to long-term wealth and success.
Folks, the reality will set in at some point that you can make a lot of quick cash in real estate but it also will not make you wealthy. Wealth comes from investing in appreciating assets and letting your investments work for you. Real estate offers this opportunity but only if you hold some of the properties in which you invest. This usually requires capital so where is it going to come from? Stay tuned for a later article where I will discuss a gold mine way to fund your own deals.
