Rob’s Words Of Wisdom

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30
Jun, 2023

Cash On Cash Return Explained

 

In this clip from our Addicted To Life Community Gathering, Rob Rowsell lays out the Cash On Cash Return Real Estate Formula. If you are an aspiring cash flow investor who is looking to replace your business income with recurring passive earnings, then this video is a must watch!

Satisfied Businessman Stacking his Cash On Cash ReturnRob Explains His Cash On Cash Return Real Estate Formula

Rob starts the clip out with a review of two real estate deals he is raising money for. Both of them would qualify as momentum plays. Over time, each investment will yield an average of  7% cash on cash return. Through renovations and rent increases, these properties’ values will increase.

When he sells these properties, Rob uses a formula to calculate total returns. The back end equity earned, plus the cashflow from the five to seven year ownership will equal the total.

Rob then explained the principle of the 2X multiple, which is his goal typically with real estate holdings. In order to reach his stated goal of doubling his money, Rob may need to hold the investments longer than he had originally planned.

For example, let’s say you had invested $100,000 in a property, kept it for six years, and earned back $140,000. Then you would divide $140,000 by six in order to arrive at around $23,000 profit per year. You will have roughly gotten a 23% return on your initial $100,000 investment after six years. That cash on cash return may sound too good to be true. However, in reality, it’s not!

Join Our Community

Do you own multi-family properties? If not, do you aspire to one day? Then you should consider joining our online discussion group, the Addicted To Life Community! Each month, Rob Rowsell will teach you what you must do in order to build wealth in the real estate business. It’s not as easy as it looks! Property taxes, liens, and legal fees can all be hard to navigate, so having a successful guide in your corner like Rob is a must! Enroll today!

23
Jun, 2023

Personal P & L Review

Rob explains how to calculate the financial freedom amount you need to live comfortably each month. This could mean in retirement or in an emergency financial event. Also, we discuss the process of reviewing how much you need for your security fund, and auditing your investments.

Calculate financial freedom amount with your personal P&L - Profit and Loss Report for financial independenceFinancial Freedom Amount – Finding it through your Profit and Loss Review

Rob starts out reviewing three levels of living standards: the basic level, vitality level, and your financial freedom amount. To determine how much you need to live on day to day, you must perform a personal P&L review with your own bookkeeping software. Whether it’s Quickbooks or another platform, it should have tools built in to generate profit and loss statements easily.

He then presents the concept of “grateful business expenses”. If he didn’t own a business, he couldn’t write off certain expenses, such as his cell phone bill and medical expenses. Make sure those write offs are part of your report!

Next, the discussion turns to your security fund. Your financial freedom amount must take into account money you’ll need in case of disaster. Rob recalls the day that the COVID-19 pandemic shut down all non-essential businesses. Many people were not prepared for this scenario, and we are still feeling the effects of it today. You must determine your own emergency fund number by months of income. Rob’s wife Claudia’s comfort lies with 18 months of income in the bank.

After that, you need to examine your investment funds. Are you stacking cash you don’t want to touch, but can afford to if need be? In an absolute emergency, you can borrow from your kids’ education fund, albeit with penalties.

Take all of these factors in when calculating your financial freedom amount.

Join Our Community

Do you own multi-family properties? If not, do you aspire to one day? Then you should consider joining our online discussion group, the Addicted To Life Community! Each month, Rob Rowsell will teach you what you must do in order to build wealth in the real estate business. It’s not as easy as it looks! Property taxes, liens, and legal fees can all be hard to navigate, so having a successful guide in your corner like Rob is a must! Enroll today!

16
Jun, 2023

Time and Funds

Setting up mailbox money strategies and stacking cash can keep you busy. Ultimately, though, you want to free up time for family and fun. Schedule an investment performance review with your CPA and see how close you are to meeting your goals. You may want to change your investment strategies. Perhaps you should move some money into different buckets, such as a Roth IRA, UBIT eligible businesses, or Index Funds.

It's time for a investment performance reviewInvestment Performance Review – Time and Funds

Rob starts the clip by discussing the theme of One Thing. Specifically, there is one thing that isn’t getting enough of your attention, but if you focused on it, it would make a huge difference. Between all of his investments and pursuits, many day to day tasks compete for his attention. Some things are important, but not urgent. One thing Rob came away from a recent conference needing to focus on was meeting with his CPA for an Investment Performance Review.

Taking some of that Quadrant 2 Time (concept courtesy Stephen Covey’s 7 Habits of Highly Effective People) to regularly review your financial strategies. How much cash do you actually have on hand? What buckets are performing the best? Where should you invest your money when a tax free plan like a Roth IRA is at the center of your strategy? Reinvesting profits in passive income streams? Some may not pan out the way you envision.

Meeting with your CPA for a monthly Investment Performance Review is key to maximizing the bag of money you will have when you retire.

Join Our Community

Do you own multi-family properties? If not, do you aspire to one day? Then you should consider joining our online discussion group, the Addicted To Life Community! Each month, Rob Rowsell teaches you what you must do in order to build wealth with real estate. It’s not as easy as it looks! Property taxes, liens, and legal fees can all be hard to navigate, so having a successful guide in your corner like Rob is a must! Enroll today!

14
Jun, 2023

Offering Memorandum Review (OM)

 

Rob Rowsell stresses the importance of working closely with your CPA before you make an offering memorandum. Review the details and summary of your P & L every month, so if the day comes that someone wants to buy your business or real estate property, you’re ready to sell.

Offering Memorandum Checklist for Selling Business or PropertyAdvantages of an In-House Bookkeeper

Rob recalls an astounding previous experience of working with an outside CPA. When they returned his records, they had drawn up a P & L, despite not having anything organized. They didn’t ask any questions in order to gain a deeper understanding of his business. He then understood the advantages of hiring an in house bookkeeper.

Let’s say you have a potential buyer interested in your business. They will need to examine your books before making an informed purchase decision. When you don’t pay close attention to your numbers, they will come back with many questions that you as the owner can’t answer. If there are too many question marks surrounding your records, they may walk away. Who needs that headache?

If you have the capacity to employ your own bookkeeper, you should. Whether you’re gearing up for a sale, or providing numbers for your business coach, you always have the answers on hand. Your bookkeeper should know all of the categories and formulas needed to run the financial side of the business, so you, the owner, can focus on other duties.

Offering Memorandum Checklist – Review Your Finances Monthly

Next, Rob suggests a monthly numbers review with your financial officer. A single one hour meeting each month should do it. Don’t let any other tasks interrupt this important meeting. You need to concentrate on both the detailed and summary versions of your P & L statement.  Require that they generate those numbers by the 12th of each month. This way, you can make any course corrections necessary. Make sure you have a paper copy, so you can highlight important lines and make notes in the margin. Hold onto your copy for future reference.

This process is so crucial if you have a potential buyer. If you don’t have up to date numbers to include in the offering memorandum, you might miss out on a huge payday. Quarterback those numbers, because nobody will care as much as you do!

Join Our Community

Do you own multi-family properties? If not, do you aspire to one day? Then you should consider joining our online discussion group, the Addicted To Life Community! Each month, Rob Rowsell will teach you what you must do in order to build wealth in the real estate business. It’s not as easy as it looks! Property taxes, liens, and legal fees can all be hard to navigate, so having a successful guide in your corner like Rob is a must! Enroll today!

9
Jun, 2023

Cashflow and Back End Equity Play

Rob explains the difference between cashflow investing and equity property investment plays. If you are willing to invest in new construction, for example, be prepared to wait for three years to see some of your investment returns. Cashflow investors may not be patient enough for that kind of ROI, but the regular mailbox money down the line could be worth it.

Backend Equity Property Investment vs Private Business CashflowBackend Equity Property Investment

Rob starts the discussion by bringing up the example of new construction in the real estate realm. Investing in new construction is not a cashflow play, but rather an equity property investment play. The moment you start put your money in, interest starts to accrue, but you will not see those returns until the property is completed and people start signing leases.

Whether you want to hang onto the property, or sell it once its complete, it will not generate an immediate cashflow return. Rather, you could be waiting a few years for ROI.

Backend equity property investment almost always means greater returns. However, it requires more patience and faith on the investor’s part. If developers project your high rise apartment complex build will take three years, you are putting faith in them that it will actually take three years, instead of five.

Do your research and get to know the founders you could be partnering with. How many deals have they completed? Can they prove they can take a rental property investment full circle? How much money are they putting in themselves? Make sure you have all the answers to these questions, so you can avoid bad actors.

Join Our Community

Do you own multi-family properties? If not, do you aspire to one day? Then you should consider joining our online discussion group, the Addicted To Life Community! Each month, Rob Rowsell will teach you what you must do in order to build wealth in real estate. It’s not as easy as it looks! Property taxes, liens, and legal fees can all be hard to navigate, so having a successful guide in your corner like Rob is a must! Enroll today!

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