The saying “you can’t eat equity” is pretty cliché, but oh so true when it comes to real estate investing!
What exactly does it mean? Essentially this; that equity doesn’t put food on the table. It gives you long-term wealth, which is what most real estate investors are after, but does not pay those monthly bills. For that, you need cash flow.
Well, I might sound like a broken record here, but real estate investing is all about cash flow. Sure, if you’re buying, selling, and flipping properties then price appreciation becomes more important, but if your game is long term buy and hold, then cash flow is king!
Sometimes it ‘s hard to see and understand this when prices are appreciating rapidly like they did from 2015-2017 in the Vancouver real estate market, but when the music stops and prices start flattening or even dipping, you’ll be happy that you focused on cash flow to keep things afloat.
I’m not saying that building real estate equity isn’t great…it most certainly is! Equity builds you long term wealth, and gives you options to sell or refinance your revenue property portfolio to generate cash if required, but just don’t let it be your day to day focus, or you monthly expenses may quickly exceed your income if you’re not careful, especially as you scale.
If you’re looking at options for purchasing a real estate investment property, or need help with managing your rental property, please be sure to contact our real estate and property management company here!
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