DISQUS

Doug McClelland · 1 year ago

Half a lifetime in the finance industry provides a good perspective on debt. I have to agree with Andee's comments in relation to the importance of sustainable cash flow. If I look back over the years at the clients who have really succeeded financially they're the ones who had moderate gearing and strong cash flow either from existing investments or from other sources. I've had a few others who made a big hit with one or two property developments - but longer term they usually took one big risk too many.

One of the first lessons I leant as a lender was the importance of cash flow - the security value only matters when you buy an asset and when you sell it - in between times cash flow is king. One of the first lessons I learnt about investments (I managed a large financial planning / investment advsiory firm in the mid 80s) was that the taxation benefits of any investment were purely a secondary consideration. If tax benefits were a major consideration you should look elswhere.

Business is no different - the basics hold true - strong cash flow and tight control of expenses are major keys. We've have a whole group of workers and employees who have never experienced a down turn of this magnitude. A lot of businesses don't yest realise how deep the water is -

We need to educate our managers, staff families - and a whole raft of "advisers" and consultants how finance works - but we all have different experience levels and we need to start with the basics. Andee - keep up the good work

OneSherpa · 1 year ago

Thanks for taking the time to give us your comments Doug. I think they add another valuable perspective to the conversation on this popular topic

Adrian · 11 months ago

Andee, your message seems clear: treat your real-estate investment as a BUSINESS.

A real business is bought (or started) because it does (or soon will) produce profits and free cash-flow year in and year out, and then MAY be sold at a future date for a speculative gain. At least, that's what happened to me ...

... I can't understand why we shouldn't look at any other investment, including property, exactly the same way?

OneSherpa · 11 months ago

Thanks for your comments Adrian.

I agree with you.. It's the mindset that makes the difference when it comes to investment in real estate. Some people have thought it is simply a matter of buying a property, sitting on it for a few years and then selling it. For me that is more speculation than investment.

Once you are looking cash flow rather than capital gain as the chief determinant in investing I believe you're using a business mindset.
Looking forward to catching up with you soon.

Investor · 8 months ago

I wanna thank you for having this post, you gave your extra efforts to have this and inspired us....

OneSherpa · 8 months ago

Thanks for you encouragement. Sometimes it is difficult to cut through the clutter and rhetoric. This often means people give up before the truth emerges and are then trapped in a financial straight jacket.