How to level up your cash flow with Calvin Hexter & Tim Tsai!
Calvin: I am here with the one and only Tim Tsai with Trust Your Talent. Tim, how are you doing today?
Tim: Great, Kelvin. How are you doing?
Calvin: I am doing good. I’m going to ask you a question right off the beginning. There’s so many people that are coming in to the investment world and it seems like the key term that most of them are looking for is cashflow.
What’s kind of, is there any tip you’d offer anybody that’s looking at getting into an investment, you know, or getting into investment real estate in general and their focus being foremost cashflow?
Tim: Yeah, absolutely. I mean, over the last 20 years, I’ll say, because I did acquire my very first property back in 2004. So 20 years later, I think cashflow means so many different things to me personally. And, you know, when I do help others understand getting into investing in real estate, because I always like to say investing first and foremost is about learning how money works. And once you know how to do that, you want to make it work harder for you. And then a lot of us, we like real estate because it’s a tried and true asset class.
And so I like to ask people and show people the difference between the two and then how you can actually combine the two. And so the word cashflow is really popular because who doesn’t like the idea of having additional sources of income? We will all say yes. And especially when that source of income can be passive or somewhat passive, because again, I think there’s also that stigma about one tribe says “passive is amazing, that means you do it once, you never have to look at it again.” And then there’s the other tribe that says, “well, you know, passive is never really a hundred percent passive.”
And so where do you fit in? It all depends on your ultimate financial goals and the strategies that you choose, in my opinion, having been doing this and like this, I’m. Investing professionally for about the last 14 and a half years now. And so first and foremost, the cashflow to me, I will break it down to three different main reasons why, and why people should look for it.
Number one, it’s for safety. It is for safety. And so many people want to grow and scale. And I get that. It’s very, very exciting. And it sounds really grand. And ultimately that is also what we all want as investors. However, again, cashflow is your basic amount of safety in terms of investing in real estate or investing in anything. I treat every single property that I get into like a business and like a business, it has to be viable and profitable. I don’t care if it’s making $10 or $10,000 a month. If it’s actually in the red every single month, how sustainable do you think that business actually is?
And the funny thing is every time I ask somebody, would you buy a money losing business knowingly? Most people will say, no, I run away from it as soon as I hear about it. And yet they do the opposite a lot of the times when it comes to real estate. And so just because real estate is real estate as an asset class, it doesn’t mean that you don’t have to focus on cashflow. And so cashflow first and foremost is about that safety.
And obviously number two is the income. We all want additional sources of income so that we like to say money isn’t everything. However, it is a great lubricant in life. It does make our life a lot easier, you know, living in the modern days. And so that is where cashflow really comes in handy and how much or how little cashflow are you looking for ultimately is dependent upon the strategies and the markets and the property type that you choose to go into. And so it is not one size fits all. And as a financial educator, I mean, this is really what I would usually identify, identify myself as more so than real estate investor or real estate investing coach or mentor, so to speak – is the fact that I want everybody to know that nothing is ever one size fits all, especially when it comes to the pursuit of your financial success.
And so number one, again, safety. Number two is how it can actually feed into your bottom line on a day-to-day basis so that you can also sleep better a night.
And at the end of all of this, number three is what we just talked about is the growth and the scaling. And a lot of us, we understand that one of the main reasons why we love real estate as an asset class to invest in is because the power of leverage, meaning we’re able to actually leverage a big chunk of the purchase through debts and loans and mortgages. And so if you actually have a performing portfolio as you are growing, it makes that journey much smoother and much quicker and much more secure for everybody. So absolutely cashflow is, it’s not just extra money. Yay. It’s very much for those three reasons that I believe in.
Calvin: I love the layers that you added to it. And I think you’ve offered, I think you’ve just blown a couple of brains right there on, on the depth that you just created in their brain of knowing that it’s not just black and white cashflow. There’s more to it.
Tim: Absolutely.
Calvin: Yeah. Fantastic. There’s a lot of people that want to make a change in life. There’s a lot of people want to upgrade their, upgrade their life, you know, financially, and maybe, maybe there’s a tip you can offer somebody. So maybe they are brand new looking at getting into their first investment or just have one property, want to get into the next, but they’re having a hard time finding what that clear step looks like.
Tim: This case, whether or not you’re just getting started or just one property. I believe that many, many of us, when we first get into real estate investing, we think, yeah, you know what? One property at a time. And that’s absolutely okay. And at the same time though, it has to be sustainable in the sense that, hey, let’s take a look at your current financial situation, the financial goals you want to get into, first of all. Second of all, let’s take a look at your lifestyle right now. Somebody who’s in their twenties, for example, no family yet, no solid commitments yet, they probably have a lot more time and disposable income that they can really put into pursuing their goal as to become a better investor and a more scaled investor. And somebody that’s in their maybe thirties and forties, they have a whole family that they got to take care of. The debt load is a little bit higher. And that means the path is very different.
And so it’s, once again, I always say it’s not one size fits all. And so what I mean by that is the first step to take, as I’ve learned again, is: feed from somebody that is, that has done what you’ve done, whether they come in the capacity of, you know, coaches and mentoring, uh, mentor offering services, or just another person that simply has done what you wanted to do 5, 10, 15 years ago, that’s sitting next to you at a conference that you’re about to go to. It doesn’t really matter. The point is a lot of these people, they have the knowledge, they have the experiences, and internally, I always, I have a bit of a chart that says, you know, what information when it’s actually structured and distilled properly, turns into knowledge and education. And education when it’s actually backed by, backed by comprehensive delivery, then it becomes solid knowledge that people can absorb. And then knowledge backed by experience becomes applying knowledge, and that helps you create the results that you want to get.
And so that is sort of the learning loop, because again, information is everywhere these days. And I don’t exactly remember where I heard it from, however, I think you can also relate to this – If information is everything, we would all be billionaires and have six packs, but that’s not the case. And so, especially these days, everybody’s got a cell phone. Information is everywhere. And so how you choose how to build your next step is think about your own sustainability because somebody that’s got a different scenario as you may not give you the, the most relevant advice that you are looking for.
So look out for that person and look out for any guidance that you can possibly get so that you can start to really put it into practice that fits your own life, because you might have a different life background. You might have very different skillsets. Professionally speaking, you, your level of risk tolerance might be very different from the next person as well. So make sure that you do that legwork and go out and talk to people that have done what you’ve done.
Calvin: I love it. I think the most important part is have fun in the journey. I mean, don’t rush to that finish line because there’s so many valuable lessons you’ll learn along the way that will eventually help you maybe help someone else and everyone’s journey is different and that’s the coolest, most unique part about this process.
And I love, I love the way you articulate that, Tim.
Tim: Thank you.
