Cash Flow vs Profits

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The Difference Between Cash Flow and Profits

Did you know there’s a difference between cash flow and profits? Actually, there’s a significant difference.

Cash flow is the money flowing in and out of your bank account every month to fuel a project from start to finish. The trick is to match incoming money to outgoing money. If cash flow is negative, you’ll spend more time juggling who gets paid and how instead of focusing on finishing and selling the project.

Profits are what you make after everything is paid. Basically, they’re the BIG payday at the end of a project. Profits replenish the pool of money you get to play with, apply toward your next project, and use to lower costs on your next deal. They can also help your cash flow by showing lenders you’re worthy of better products and rates. In their eyes, you’re successful and able to repay them.

Ready to boost your cash flow AND profits? Then contact us!

 

Take Advantage of the Fix and Flip Escalator

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Now that you’ve seen the benefits of the Fix and Flip Escalator, let’s talk about what you can do to take advantage of it!

  1. Start with what you have and see how you can enhance it. For example, what are your assets and experience level, and how can you use them to accelerate yourself up the escalator?
  2. Show off your work! Create a portfolio. The more you analyze your project history the more likely bankers and lenders will fight for your business.
  3. Fix your credit. Your credit should range between 670-800+. If it’s below that, you should focus on fixing it.
  4. Keep up to speed on the finance world. Be aware of what products are available to support your current and future plans.
  5. Find people who can help you with the finance stuff. Because, again, math. Ugh!
  6. Create a roadmap to financial success!

By moving away from an expensive partner and heading toward profit boosting cash, you’re sure to make A LOT more money A LOT faster.

Which means you can start fulfilling all of your lifelong dreams sooner.

Quick Deal Analyzer

Product Intro: Quick Deal Analyzer

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Introducing the new Quick Deal Analyzer from Hard Money Mike!

With the Quick Deal Analyzer, you’ll be able to find out:

  1. If the estimated profits are in line with your goals.
  2. If the ARV will work for you and your lender.
  3. If the project is worth the effort at the end of the day.

If you’re interested in making more money on your next deal, download the Quick Deal Analyzer here.

What’s Your 2-Year Plan

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Close your eyes. Clear your mind. Take a deep breath.

Now, let’s pretend we’re talking to each other two years from now. What happened during that time period that made you proud and put a smile on your face? How does your cash flow look? What kind of work schedule do you have? How does life look for you and your family?

When it comes to investing, we have discovered that thinking ahead two years leads to the most success. Why two years? Well, it’s short enough to imagine without being overwhelming, and it’s long enough to create tangible, positive change in your life.

Coming up with a plan is as easy as one, two, three:

Step 1: Imagine where you want to be in two years.

Step 2: Evaluate where you’re starting at today.

Step 3: Create a plan that connects your current reality to your future dreams.

How do you formulate an actual plan? Well, that’s what our team is here to help you do. It’s just a matter of picking up the phone and giving us a call to chat.

One conversation can change your future…and your life!

Loan Optimizer

Loan Optimizer Explainer

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Looking for a powerful tool to analyze the financing of your next project? Then check out our new explainer about the Loan Optimizer!

If you’re ready to download this beneficial tool, click here.

 

 

Fix and Flip Escalator: Bigger and Better

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When you use the Fix and Flip Escalator, you’ll quickly realize it’s not magic. It’s SIMPLE math.

This week, let’s use the escalator to see what your money does when you complete four deals per year.

 

Hard Money > Soft Money

Profits increase by­ $12,000

$12,000 x 4 deals = $48,000

 

Hop up another step to bank financing, and this happens:

 

Hard Money  > Banking

Profits increase by $17,000

$17,000 x 4 deals = $68,000

 

Then look at how your profits skyrocket over the course of two years:

Hard Money > Soft Money

$48,000 x 2 years = $96,000

 

Hard Money > Banking

$68,000 x 2 years = $136,000

 

You know what these numbers mean, right? Yes, instead of losing $136,000, you’re making $136,000. That’s money you can reinvest or spend on…anything! Hey, it’s your money. You can do whatever you want with it.

Are you ready to hop on the escalator yet? If so, contact us!

Quick Deal Analyzer

Product Intro: Quick Deal Analyzer

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Introducing the new Quick Deal Analyzer from Hard Money Mike!

With the Quick Deal Analyzer, you’ll be able to find out:

  1. If the estimated profits are in line with your goals.
  2. If the ARV will work for you and your lender.
  3. If the project is worth the effort at the end of the day.

If you’re interested in making more money on your next deal, download the Quick Deal Analyzer here.

Tricks to Get Approved for a Loan

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So, you keep getting turned down for a loan.

As mentioned in a previous post, there’s likely a valid reason. The most logical explanation is a lender doesn’t have the kind of loan you’re looking for. They might only offer loans that include:

  • Lower LTV’s
  • Shorter terms
  • Smaller loan sizes
  • Borrower entity requirements
  • Loans for higher credit scores
  • Loans for those with more experience

Even so, it gets old. So, what are some tricks can you try to avoid hearing, “No,” instead of “Yes”? Here are just a couple:

  • Look for smaller banks in your area. They will charge a little more but don’t mind the churning because they have smaller buckets of money.

With that said, we recommend you always work with one or two small banks because they’ll tighten the money outflow as they fill their buckets up.

  • Look for lenders who like real estate investors. How? Just ask them upfront if they work with fix and flippers before you go through the four-week process of being turned down.

Are you ready to set yourself up for success, rather than failure? Give us a call at 303.539.3000 to get the ball rolling!

Fix and Flip Escalator – A Closer Look

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Let’s continue with the example we used last week and examine the Fix and Flip Escalator a little closer.

As reminder, we used the following scenario to evaluate figures:

You need a loan for $250,000. That covers purchase price and repairs. After 6 months of hard work, you fix the property and sell it for $335,000 (nice job!). Once you take into account all of your holding, closing, and realtor costs, you should walk away with $50,000.

So, now let’s see what happens when you jump from a higher step (i.e. hard money), to a lower step:

When you move from hard money to soft money, you:

  • Make $12,000 more in profits.
  • Drop your monthly payment by $1,100—that’s more money in your pocket!

When you move from hard money to banking, you:

  • Make $17,000 more in profits.
  • Drop your monthly payment by $1,500—again, more money in your pocket.

Are you following along? We hope so, because it’s pretty cool to see how much you can make when you consider the actual math.

Yeah, yeah. We know.

Math.

But it’s worth running some small numbers to see BIG results, right? If you’re ready to tackle the numbers for your project, give us a call.

11 Expert Tips for Flipping Success

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Whether you’re just starting to flip houses or you’ve become an old pro, it never hurts to read about other people’s experiences and learn about tricks of the trade.

11 Expert Tips for Flipping Success

We’ve all seen those “reality” shows on TV, where they showcase a house flipper who makes a ton of mistakes, yet somehow still manages to turn a profit. It makes for nice TV, but it certainly isn’t part of any reality I’ve ever experienced.

Check out this post from Mindy Jensen on Bigger Pockets. She offers 11 expert tips on flipping homes, from beginning to end.