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.

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