It really is when you are starting a business. Having incoming cash sometime in the future is nice but what about if you need it today or tomorrow? There might be a great investment opportunity but they may not want to let you in if you don’t provide the cash up front. A promise of incoming cash flow can only go so far.
People often confuse profits with cash flow. Profits are income and expenses while cash flow is actual cash coming in and going out. That can lead to downfalls for any business not understanding the difference. Mastering cash flow and understanding the ins and outs can be very difficult to understand but as long as you know the difference between profits and cash flow, its a very good start in the right direction. Cash flow allows real estate companies to operate successfully. You find and buy a rental property with a great cash flow then your of and running. This is the safest bet on ensuring a return on your investment. Again just make sure that cash flow is more positive than the monthly expenses and debt service.
This is just a scratch of the service of cash flow. Here are some solid definitions as it relates to cash flow in terms of investing. This is a good example of calculating cash flow in real estate. And of course don’t forget to talk with the experts in real estate in the St. Louis and St. Charles Starting Point Real Estate.