Your Turn to Get Paid
It’s all fine and dandy to talk about cash flow, depreciation tax breaks, building equity and all of the other great benefits of buying an apartment complex.
However, if you’re anything like me, there’s one big question on your mind – when do I get paid?
After all, if you’re sinking $100K into a project and expect to get a nice $1,000 check every month, you would like to know when it starts, right?
Of course, there are many different kinds of projects with different profit opportunities like:
- Buying a property and fixing it for a substantial return when it’s sold.
- Buying a marginally profitable property, making some improvements and increasing both value and rental income.
- Buying a well-performing property and hauling in the cash with a rake.
Each of these different situations will generate different types of cash flow.
Cash might trickle in at first and increase, we may have to wait until the rehabbing is done, or we may just collect as we go steadily and steadily increasing.
However, here’s a typical scenario using our old friend the 200-unit, $5.5M apartment complex to close the deal and get everything squared away.
It’s always a good idea whenever you invest in a property or even a business to have a cash reserve fund set up.
Something put away for emergencies or for those little extras that boost performance.
So what we like to do is instead of requiring even more cash up front, we let the property build its own cash reserves. How is this done?
Simple: the first couple of months of rental income goes straight into the bank – we let our tenants build our reserves for us!
How’s that for proper utilization of resources!
We open the cash tap.
After we’ve got a comfortable cash reserve built up, we begin distributing funds.
This is the best part.
Depending on the deal, we may send you your cash flow either monthly or quarterly or on another schedule that works.
This approach gives you 3 distinct advantages:
- You don’t need to put extra money up for reserves in order to get the deal closed.
- You get to start claiming the tax breaks right away.
- You can be even more secure in knowing that your cash will continue to flow because we’ve taken extra care to see that all is well.
Imagine going to the mailbox each month and finding a nice fat cash flow check from Adams Investor Group.
Now imagine that this check continues to grow in size over time as we increase the income of the property in which you’re a partial owner.
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