Robert Woodruff

Hi, this is Robert Woodruff, President of the Charleston REIA and author of, “The Keys to Cash Flow.” Whether it’s the members of my club, or the students from my course, the biggest thing I see most investors do not have is a clear understanding of cash flow risk. As a matter of fact, I often meet investors who build large & small real estate portfolios and subsequently lose “everything” because they had no clue on how to assess the risk of each investment. Please pay close attention. In this blog, I will show you how to determine the cash flow risk of several investments.

But first, we all know that there are plenty of gurus with courses on how to buy property using a plethora of no money down strategies. Each of these courses should carry a disclaimer that reads, “Warning, if used too often, this strategy will bankrupt you!” Although these courses have disclaimers to protect the guru, they do not come with disclaimers like this to protect you.

Let’s discuss the cash-flow risk associated with no-money-down deals on houses. Most of the time, these properties were bought by sub-prime borrowers. Which means their credit wasn’t the best. This also equates to them having a slightly higher payment than someone with good credit. Which means one thing, upon renting the property to a tenant-buyer; we will have a hard time making a decent cash flow off of this investment. We are taught by Gurus through no money down strategies that we are to collect as many of these houses as possible in order to build wealth and become rich. (Which is False.) Make no mistake, this is a fools’ errand. I’ll show you why.

Imagine acquiring just 10 properties no money down. Each has $30,000 in equity giving us a combined net-worth of $300,000 in real estate. Sounds nice right? Well, each property has an average mortgage payment of $800 per month including taxes and insurance. We can rent each property for $1,000 per month. This now means we have a combined total cash flow of $2,000 per month IF all of our properties are filled and our tenants are paying.

But, “WHAT IF” they stop paying?? What if half of your tenants stop paying at the same time? If half of your tenants stop paying, than you still get $1000 in cash flow from your 5 properties that are filled. Only now, you have to pay $4,000 per month for the ones that opened-up. Not to mention the cost of fixing each property, AND the cost of marketing each until they are filled. My question is, “Where do you plan on acquiring that money?” Surely it will not be from your 5 houses that are filled. The 5 you have filled only bring you $1,000 dollars per month. So where are you going to come up with the additional $4,000 PLUS what you’ll need to fix and refill your properties? I call this, “The Storm.” Warren Buffet calls it, “When the tide goes out.” Either way, it happens to ALL of us. As sure as day turns to night, you will get hit by the storm. It’s just a matter of time before it happens. No Investor is immune to this type of scenario. Although, there are things we can do to protect ourselves from losing everything we fight so hard to accumulate. Let’s evaluate another popular strategy, multi-family investments.

Multi-family investments are not very different from buying houses no money down. If you buy a multi-family property at 70% of value, you will still have the same cash flow scenario. When you add taxes and insurance to the payment for your 4-plex multifamily investment, you will have to make sure 3 of the 4 units are filled just to make your monthly payment. There is one helpful thing about this however. The big difference between multifamily housing & single-family residential housing is that it takes more than one family to move-out before you have to start making the payment. On the other hand, if your tenants stop paying, you stand to lose 3 times more than you make on a good month. As you can imagine, paying the full payment on a multi-family investment will most likely put you in a state of emergency.

My last example is something that is rarely looked upon by new investors as being good deals. Often, they are too worried about “other people’s perceptions’” of their socio-economic status.

In this example, I will show you how to assess the cash flow risk of mobile homes or low-risk investments. (AKA: RV’s, Trucks, Heavy Equip, Land, etc.) When someone purchases a mobile home investment, they usually do it with cash. There is absolutely no mortgage payment to speak of. However, if the home is in a park, instead of having a mortgage payment, you have lot rent. Lot rent is usually half of what you can rent the mobile for. So on a good month, you make twice as much as what you would lose on a bad month.

See what I mean? The examples I gave you for cash flowing off houses & multi-family are clearly upside-down. That means you stand to pay 3 to 4 times as much on a bad month compared to a good one. Mobile homes on the other hand, are the complete opposite. You make nearly double or more off a mobile home investment on a good month versus a bad one. (For example: you make $3-400 on a good month, and only have to pay lot rent when your tenant stops paying. Lot rent may only be $150-200 dollars.)

If being a successful investor is important to you, you must first consider and assess the cash flow risk of your investments. “You must pay close attention to the numbers.” Not doing so means the difference between brilliant success and utter failure.

*Robert Woodruff is a multiple business owner, philanthropist, real estate investor, president of the Charleston REIA, and author of; “The Keys to Cash Flow.” Robert lives on a small island outside of Charleston SC with his lovely wife of 15 years and two boys. For more information on topics like these or to know more about Robert, Visit him at his site www.theKeystoCashFlow.com or join him on Facebook. www.facebook.com/#!/rwoodruff

Mobile Homes VS. Houses. "Let’s Take a Look at the Numbers"

I’m about to present two very different investing scenarios. One of which is predominately used by real estate investors all over the country to build wealth with real estate. In the other scenario, which is something most real estate investors foolishly wouldn’t bat an eye at, I will use low-risk assets. Aka; mobile homes. In both scenario's, we will be investing $100,000.

The First Scenerio, Investing $100,000 into a house.

We contact a Private Money Lender to get $100,000 dollars to buy a house. Our payment equals $700 dollars. If we add our taxes and insurance, it will be $800 dollars. We’ll rent this property and fill it with a renter or tenant-buyer. We’ll try to get cash flow and build wealth by having tenants pay-off the property over a long period of time. (30 years) If we get $1,000 in rent, and we’re paying $800 dollars per month, that means we get $200 dollars per month cash flow. (If our tenant stops paying, we pay $800). The house may even be worth $130,000 or more giving us equity. However, If we can’t sell it, is it an asset or a liability? (Answer: Liability.)

So let’s recap. We just spent a $100,000 dollars buying a house that brings us $200 dollars per month cash flow. If the tenant stops paying, we have to. We’re investing $100,000 dollars and all we’re getting back is $200 per month. Imagine that each one of those dollars is a worker that makes you money. If 100,000 workers can only make you $200 dollars per month, I suggest firing them. And do it quickly.

Scenerio 2; Investing $100,000 into mobile homes & low-risk assets.

In this scenario; We invest another $100,000. Only this time, instead of buying one house, we’ll buy mobile homes. I want you to watch and see what happens. I know in my area, I buy mobile homes for $3,000 on average. I can fix each one for $2,000 and have a really nice property for $5,000 total. How many mobile homes can we afford to buy with a $100,000 dollars? ($100,000 divided by 5,000 equals 20.) So we buy 20 mobile homes with $100,000 dollars. Before we forget, the payment will still be the same as the house. Given, our taxes will be higher given we now own 20 mobile homes.

When I fill each property with a tenant-buyer, their nonrefundable deposit helps me to recoup over half of my invested money. My normal deposit or down payment is $3,000. If I have $5,000 invested in each mobile home and I regain $3,000 back as soon as I fill it with a tenant-buyer, how many months will it take for me to get my $2,000 back? (The answer: 6-7 months.) I get all my money back from each deal within 6-7 months!

If I buy twenty mobile homes and fill each one with a tenant-buyer that puts $3,000 dollars down, that means as soon as get them all filled, I will immediately recoup $60,000 dollars or more of my $100,000 dollar investment. “I get it right back.” Okay, WOW! Now we have 20 mobile homes! What is our cash flow going to be if each one cash flows for three hundred dollars? ($300 dollars X 20 = $6,000 Dollars!) Now, we have a $6,000 monthly income! That’s $72,000 dollars per year!

Repeat the Scenario,

We’ve got $60,000 left & we already have $6,000 in monthly positive cash flow. At five thousand dollars apiece, how many more mobile homes can we buy with that $60,000 dollars? ($60,000 divided by 5,000 = 12 mobile homes.) Besides the twenty that we already have, we’re adding twelve to it. That’s now a total of 32 mobile homes! Cash flowing $300 apiece, giving us a monthly cash flow of $9,600 dollars!!! (Every-Single-Month) Let’s not forget that we just bought 12 more mobile that need to be filled. So let’s fill them and see what happens.

We’re filling 12 new mobiles with tenant-buyers and getting $3,000 dollars down from each for a total of $36,000. (Note: We borrowed $100,000 and we invested it into 20 mobile homes and then we got over half our money back, which was $60,000. Then we repeated the very same technique. We rolled it over once again and now we have an additional twelve that brings us up to 32 mobile homes with a combined monthly cash flow of $9,600 per month.)

Repeat the Scenario Again,

How many mobile homes can we buy after recouping $36,000? The answer is 7. So add 7 more mobile homes to our existing 32 and now we own 39 mobile homes! (39 mobile homes X $300 per month is $11,700.00 in monthly cash flow) We now have nearly $12,000 in monthly cash flow and let’s not forget about the money we’ll recoup when we fill our 7 new mobiles. We now recoup $21,000 in cash to reinvest again or put in our pockets.

Remember what we did with the house? We bought just ONE house for the same amount of money we bought 39 mobile homes with. We bought 39 mobile homes or low risk investments ie; cars, trucks, boats, planes, land, heavy equipment, you name it. Anything you can create a monthly positive cash flow with.

In Conclusion,

To be successful at investing you must take a look at the numbers. The numbers don’t have bad hair days & they don’t wake up on the wrong side of the bed. They just are. You need to know how to use these numbers to provide financial freedom and increase the quality-of-life for you and your family.

You can use $100,000 to go into debt by purchasing a negative cash flowing house. Or, you can use that very same money to accomplish your financial freedom and increase your quality-of-life in record time by acquiring mobile homes & low-risk assets. Do you want to keep chasing equity checks, or achieve a 6-digit-figure without the need to go to work? It’s your choice. Which one will you do? It’s all about priorities. Do you want what a millionaire has? If you want what a millionaire has then this is how you get it. If you want what a poor man has, then keep acquiring negatively cash flowing houses. It’s your choice. If you choose mobile homes & low-risk investments, then come see me at www.thekeystocashflow.com & I’ll show you how.

How to Assess Cash Flow Risk

Hi, this is Robert Woodruff, President of the Charleston REIA and author of, “The Keys to Cash Flow.” Whether it’s the members of my club, or the students from my course, the biggest thing I see most investors do not have is a clear understanding of cash flow risk. As a matter of fact, I often meet investors who build large & small real estate portfolios and subsequently lose “everything” because they had no clue on how to assess the risk of each investment. Please pay close attention. In this blog, I will show you how to determine the cash flow risk of several investments.

But first, we all know that there are plenty of gurus with courses on how to buy property using a plethora of no money down strategies. Each of these courses should carry a disclaimer that reads, “Warning, if used too often, this strategy will bankrupt you!” Although these courses have disclaimers to protect the guru, they do not come with disclaimers like this to protect you.

Let’s discuss the cash-flow risk associated with no-money-down deals on houses. Most of the time, these properties were bought by sub-prime borrowers. Which means their credit wasn’t the best. This also equates to them having a slightly higher payment than someone with good credit. Which means one thing, upon renting the property to a tenant-buyer; we will have a hard time making a decent cash flow off of this investment. We are taught by Gurus through no money down strategies that we are to collect as many of these houses as possible in order to build wealth and become rich. (Which is False.) Make no mistake, this is a fools’ errand. I’ll show you why.

Imagine acquiring just 10 properties no money down. Each has $30,000 in equity giving us a combined net-worth of $300,000 in real estate. Sounds nice right? Well, each property has an average mortgage payment of $800 per month including taxes and insurance. We can rent each property for $1,000 per month. This now means we have a combined total cash flow of $2,000 per month IF all of our properties are filled and our tenants are paying.

But, “WHAT IF” they stop paying?? What if half of your tenants stop paying at the same time? If half of your tenants stop paying, than you still get $1000 in cash flow from your 5 properties that are filled. Only now, you have to pay $4,000 per month for the ones that opened-up. Not to mention the cost of fixing each property, AND the cost of marketing each until they are filled. My question is, “Where do you plan on acquiring that money?” Surely it will not be from your 5 houses that are filled. The 5 you have filled only bring you $1,000 dollars per month. So where are you going to come up with the additional $4,000 PLUS what you’ll need to fix and refill your properties? I call this, “The Storm.” Warren Buffet calls it, “When the tide goes out.” Either way, it happens to ALL of us. As sure as day turns to night, you will get hit by the storm. It’s just a matter of time before it happens. No Investor is immune to this type of scenario. Although, there are things we can do to protect ourselves from losing everything we fight so hard to accumulate. Let’s evaluate another popular strategy, multi-family investments.

Multi-family investments are not very different from buying houses no money down. If you buy a multi-family property at 70% of value, you will still have the same cash flow scenario. When you add taxes and insurance to the payment for your 4-plex multifamily investment, you will have to make sure 3 of the 4 units are filled just to make your monthly payment. There is one helpful thing about this however. The big difference between multifamily housing & single-family residential housing is that it takes more than one family to move-out before you have to start making the payment. On the other hand, if your tenants stop paying, you stand to lose 3 times more than you make on a good month. As you can imagine, paying the full payment on a multi-family investment will most likely put you in a state of emergency.

My last example is something that is rarely looked upon by new investors as being good deals. Often, they are too worried about “other people’s perceptions’” of their socio-economic status.

In this example, I will show you how to assess the cash flow risk of mobile homes or low-risk investments. (AKA: RV’s, Trucks, Heavy Equip, Land, etc.) When someone purchases a mobile home investment, they usually do it with cash. There is absolutely no mortgage payment to speak of. However, if the home is in a park, instead of having a mortgage payment, you have lot rent. Lot rent is usually half of what you can rent the mobile for. So on a good month, you make twice as much as what you would lose on a bad month.

See what I mean? The examples I gave you for cash flowing off houses & multi-family are clearly upside-down. That means you stand to pay 3 to 4 times as much on a bad month compared to a good one. Mobile homes on the other hand, are the complete opposite. You make nearly double or more off a mobile home investment on a good month versus a bad one. (For example: you make $3-400 on a good month, and only have to pay lot rent when your tenant stops paying. Lot rent may only be $150-200 dollars.)

If being a successful investor is important to you, you must first consider and assess the cash flow risk of your investments. “You must pay close attention to the numbers.” Not doing so means the difference between brilliant success and utter failure.

*Robert Woodruff is a multiple business owner, philanthropist, real estate investor, president of the Charleston REIA, and author of; “The Keys to Cash Flow.” Robert lives on a small island outside of Charleston SC with his lovely wife of 15 years and two boys. For more information on topics like these or to know more about Robert, Visit him at his site or join him on Facebook. http://www.facebook.com/#!/rwoodruff

Hi, this is Robert Woodruff with “The Keys to Cash Flow” & President of the Charleston REIA. Today I’d like to discuss something that helped me bail myself out of a mess that I had created as a new investor. This information saved me from losing a dozen houses that I acquired using No-Money-Down techniques taught by Guru’s all across the country. As I will explain later, I also used multiple streams of income to increase my monthly cash flows and achieve my financial freedom.

What most investors do not realize, the more properties you acquire, the more money you need to pay for them. Rental properties are meant to open-up. Meaning, your tenants will eventually move out or stop paying you. It doesn’t matter how much equity you have in each property. If you don’t have enough money in the bank to pay for at least half of them opening-up at the same time, you risk losing everything you worked so hard to acquire.

Here’s the question you should ask yourself, “If you have $30,000 in equity in a property and cannot make the payment, is this property an asset or a liability? (The Answer: Liability)

If you find yourself in this precarious situation, as I had, you only have 2 options. The first option is borrowing money and going deeper into debt. This option is not very responsible for a real estate investor. The only responsible way to bail yourself out is by increasing your cash flow thru multiple streams of income.

Multiple streams of income are income that comes from multiple sources. If one source stops paying, you have the other sources to rely upon. Your job would be considered a source, so would rental properties (IF, your income is greater than your expenses). Having more than one stream of income helps you to achieve your financial freedom. If you use multiple streams of income to build cash flow, you may be able to quit your regular 9-to-5 job.

I learned multiple streams of income when I was a door-to-door salesman for ADT. I used my phone often and drove to appointments. It wasn’t long before I noticed that I had the opportunity to sell more products throughout my day, and that is what I did. Below, is a list of several different streams of income that you can use to either bail yourself out of a mess like I did, or use the information to achieve your financial goals faster.

I started noticing broken windshields everywhere I travelled and knew a guy who worked for a company that paid him $50.00 for every broken windshield that he had replaced. After finding someone with a broken windshield, all I had to do was call their office and schedule their technician to install a new windshield. So I did it. They gave me some cards and a phone number for the office and I was on my way. If I had time before a sales appointment, I’d simply drive through a large parking lot and look for windshields. If I found one, I could easily make $50 Dollars in less than 10 minutes. Not bad.

The next stream of income I was able to use was signing people up for phone service with a smaller phone provider. As I was selling someone a security system, I’d simply ask them what they were paying for phone service. If their rate was high, which I could easily discover when they showed me their phone bill, I would sign them up for new phone service plan. I got paid an upfront fee of $50 for signing them up, then, got a small residual amount every month as well.

Multiple Streams of Income can come from nearly anywhere. You can buy and sell almost anything to increase your streams of income. The trick to having multiple streams of income is to choose streams of income that coincide with each other. That means if your main source of income involves being on your cell phone and selling all day long, then any other job that involves those same actions can easily be incorporated into your day.

Another great income stream is achieved by advertising. After becoming a real estate investor, I quickly realized that I could buy and sell nearly anything by simply dealing with motivated sellers. Motivated sellers are people who want out fast. Some will even give you their property, if you’d take it. In order to find motivated sellers, you must first learn how to advertise & market for them. Once you figure out how to find motivated sellers, you can find motivated sellers of nearly anything. (Piano’s, ATVs, Jet skis, Boats, Cars, Trucks, Heavy Equipment, Planes, Antiques, RV’s, Mobile Homes, Houses, etc.) Locating motivated sellers “has and always will be” the best way to get the BEST deal on anything. Buy low then sell high on Craig’s list or eBay. Piece of cake!

Another way to generate income is to simply solve motivated sellers’ problems. You don’t even need money to do this. All you need to do is advertise on Craig’s’ list to find them. Once you’ve heard their problem and how little they will sell for, simply tie-up the property and sell it to an end-buyer for retail price. You could also sell it much faster to an investor for wholesale price. This technique applies to nearly anything that can be bought or sold.

The following is the income stream that I used to bail myself out of the mess I had made by acquiring too many No-Money-Down deals on houses. I used my new advertising savvy to run adds in the service section of my local newspaper. The ads cost me $125.00 per month for advertising. All I had to do was get one job to pay for the whole month. I ran ads for both electrical and heating and air-conditioning work. When customers replied to my ads, I simply acted as the secretary fielding the call for the company. I assured my caller that I would send someone out immediately to fix their problem. I would then call an electrician or hvac technician who I knew wanted extra work on the weekends or during the evening. I would supply the material cost and the business lead, all they had to do was bid the job, complete the work, and bring back a check. There was no need for any type of licensing or pulling permits because we only did repair or replacement work. Replacing someone’s’ are conditioning compressor usually meant that my tech and I would both split the profit of $1,000 Dollars. Since my tech could replace 2 per day. I made an extra $2,000 every weekend. Check with your states guidelines. (This stream of income can be used with most any other type of service as well.)

I used this last income stream to bail myself out of a mess I had made by acquiring too many “no money down” deals on houses. But once I had bailed myself out of the mess I had made, I then used this extra stream of income to help build passive monthly income by investing in low-risk assets. I bought small parcels of land, RV’s, Mobile Homes, and even a few different vehicles. Each asset was created into a note in which someone had to pay me a monthly payment. If they stopped paying, I got the asset back to do the whole process all over again.

By applying this extra income stream to my multiple streams of income, and then applying it towards low-risk investments, I was able to create a monthly passive income of $6,000 dollars within 24 months. That’s $72,000 dollars per year without ever having to get-up and go to work in the morning. I was able to achieve such a feat because I used multiple streams of income.

It is possible for you to achieve such feats as well.

***If you’d like to know more about topics like this, or would like to know more about Robert, join him at www.theKeystoCashFlow.com or visit him on Facebook. http://www.facebook.com/#!/rwoodruff

Robert Woodruff is the President of The Charleston Real Estate Investors Association, & Author of "TheKeystoCashFlow." Robert lives on a small island outside of Charleston SC with his two boys & lovely wife Dr. Stephanie Woodruff.

Freedom of Movement

By: www.RobertWoodruff.me

Freedom of movement is probably one of the biggest freedoms you will enjoy in this profession. With today‟s cell phone technology, you can be anywhere your heart desires and still field your calls and emails. Whether it be in Tampa, FL. or Cancun Mexico, you can still field all of your calls. If you happen to miss a call, call them back as soon as you possibly can. When buyers are hot to buy, they are HOT! Don't waste a chance at a sale. When I was recently on vacation in Clearwater, FL., I sold a home in Charleston, SC! A student of mine recently sold a home of mine in Charleston while he was in Charlotte!!

My first investing rep and I used to go out in the morning and advertise for our buyers and sellers and would be hanging out at the pool by noon. We'd sit around at the pool and field all the phone calls that would flood in from our advertising and marketing efforts. We immersed ourselves in a really comfortable setting and enjoyed our work. Be creative. Think about your quality of life. Freedom of Movement offers you a better Quality of Life.

If you want children or have children, I highly suggest this profession. Freedom of Movement enable you to spend more time with your family. Being able to answer your phone anywhere you choose enables you to travel to and from without much need for an office. Since you do not need an office for this profession, you can work from home, or your local Chuck-E-Cheese . No more slaving away long hours at a job missing the development of your children.

When I get up every morning, I usually follow banker's hours. As I walk down my driveway in the morning, I realize that everyone in the neighborhood has already left for the day. But because of Freedom of Movement, I am still here. Even my wife and children have gone for the day. How come? Why does my cul-de-sac look like such a ghost town by 9:00 a.m.? All of my neighbors obviously had somewhere to go. Even my wife, who's a doctor, has to be at an office.

Real Estate Investors buy and sell homes to people. Often, I do it over the phone. When someone asks me where my office is, I give them the address of the property they'd like to see. If I had an office, I may be expected to be there, and that would restrict my Freedom of Movement. For this reason, it's an very easy choice for me to not have an office.

Most people have to be at work by the time the 8 a.m. or 9 a.m. bell rings. It's just like an extension of high school. The majority of Americans will graduate high school and college only to go to work for someone else for the rest of their lives. What they do, where they do it, and what time they show up and leave is all dictated by someone else. Even the number of personal phone calls they can recieve or cigarettes they can smoke is dictated to them. So I must ask, "Are they truly free?"

Would you like to enjoy Freedom of Movement, Financial Freedom, or increase your Quality-of-Life???

Would You like to break-out of the Rat Race and enjoy the lifestyle of a Real Estate Investor?

If you answered, "Yes" to any of these questions,

Click Here:

www.thekeystocashflow.com

www.Woodruffinvesting.com

-Robert Woodruff