The worst mistake any real estate investor can make is to purchase a property that bleeds money each and every month. This is called negative cash flow. The term negative is used because the investor is required to dip into his own personal pockets to produce cash to make the investment break even each and every month. Unless you have an endless supply of money this is a losing strategy. This is why you need to understand the importance of cash flow.
Cash flow ordina notes often come with a pre-determined schedule of payments. This simply means that you can expect to receive a periodic flow of cash from the note, perhaps in the form of interest payment.
Today, the most popular type of mortgage notes are the ones obtained from the real estate industry. What happens is that the investor sells the mortgage notes to collect payment in lump sum form. This is a more profitable option as compared to waiting for payments to be forwarded every month. If you want to profit from these notes, you should learn how to use them as an instrument for property investing. Basically, you need to be able to locate, buy, and sell these notes. Familiarizing yourself with the techniques on how to do this will help boost your knowledge about the ins and outs of cash flow notes investing.
So the worst case situation could be sales target made, sale made at a loss and cash flow is negative or worse still no cash in from sale as customer does not pay in 60 days or ever.
Part of the deal to sell your business is setting an asking price for your business. Once this is done, then another decision must be made. Will you accept terms in order to sell the business? Terms mean you will wait for part of the purchase price to be paid at a later date. Many sellers will do this, but they sweeten the deal by asking for more money if terms are part of the purchase. So the seller has two asking prices. One price is a sale for cash and the other price is higher if terms are necessary in order for the deal to be made.
The very first thing you should look at is whether or not you happen to be truly in profit. Perhaps, despite your projections, you might be only barely covering your fees. Are there expenses you weren’t expecting?
Bring your debt under one roof to grow your funding. With multiple lenders come multiple interest rates and multiple minimum payments. You can get rid of both of these by consolidating your debt with one lender. One minimum payment means that you will be able to put more money each month towards the principle of the debt and one interest rate will allow you to keep track of how much you are spending on this expense and allow you to negotiate this rate with one phone call.
It is the lifeblood of every business. The concept is much broader than that of profit, alone. Close monitoring is critical to success. Just as you need to maintain a healthy heartbeat by eating right, exercising and consulting your physician, you must have a firm grasp on carefully monitoring and managing the cash-flow pulse of your business.