• About Us
  • Contact Us
  • Privacy Policy
  • Terms
  • Unsubscribe
No Result
View All Result
Live and Invest Overseas
FREE REPORT
BEST PLACES TO RETIRE
*No spam: We will NEVER give your email address to anyone else.
  • HOME
  • COUNTRIES
    • Top Destinations
      • Panama
      • Portugal
      • Colombia
      • Northern Cyprus
      • Belize
      • Spain
      • Mexico
      • France
      • Indonesia
      • Vietnam
    • Browse All Countries
    • Best For
      • Retire Overseas Index
      • Health Care
      • Cost of Living
      • Investing in Real Estate
      • Editor’s Picks For Retirement
      • Establishing Residency
      • Starting an Online Business
      • Single Women
      • Playing Golf
  • BUDGETS
    • Super Cheap ($)
      • Cuenca, Ecuador
      • Chiang Mai, Thailand
      • The Philippines
      • Las Tablas, Panama
      • Granada, Nicaragua
    • Cheap ($$)
      • Algarve, Portugal
      • Medellin, Colombia
      • Boquete, Panama
      • Carcassone, France
      • Buenos Aires, Argentina
    • Affordable ($$$)
      • Abruzzo, Italy
      • Barcelona, Spain
      • Las Terrenas, Dominican Republic
      • Puerto Vallarta, Mexico
      • Costa de Oro, Uruguay
    • Luxury On A Budget ($$$$)
      • Ambergris Caye, Belize
      • Paris, France
      • Panama City Beach Area
  • Real Estate
  • ARCHIVES
    • Living & Retiring Overseas
    • Raising A Family Abroad
    • Foreign Residency & Citizenship
    • Offshore Diversification
    • Our Latest On Coronavirus ⚠️
  • Making Money
    • International Real Estate
    • Banking
    • Employment
    • Investing
  • CONFERENCES
  • BOOKSTORE
Live and Invest Overseas
  • HOME
  • COUNTRIES
    • Top Destinations
      • Panama
      • Portugal
      • Colombia
      • Northern Cyprus
      • Belize
      • Spain
      • Mexico
      • France
      • Indonesia
      • Vietnam
    • Browse All Countries
    • Best For
      • Retire Overseas Index
      • Health Care
      • Cost of Living
      • Investing in Real Estate
      • Editor’s Picks For Retirement
      • Establishing Residency
      • Starting an Online Business
      • Single Women
      • Playing Golf
  • BUDGETS
    • Super Cheap ($)
      • Cuenca, Ecuador
      • Chiang Mai, Thailand
      • The Philippines
      • Las Tablas, Panama
      • Granada, Nicaragua
    • Cheap ($$)
      • Algarve, Portugal
      • Medellin, Colombia
      • Boquete, Panama
      • Carcassone, France
      • Buenos Aires, Argentina
    • Affordable ($$$)
      • Abruzzo, Italy
      • Barcelona, Spain
      • Las Terrenas, Dominican Republic
      • Puerto Vallarta, Mexico
      • Costa de Oro, Uruguay
    • Luxury On A Budget ($$$$)
      • Ambergris Caye, Belize
      • Paris, France
      • Panama City Beach Area
  • Real Estate
  • ARCHIVES
    • Living & Retiring Overseas
    • Raising A Family Abroad
    • Foreign Residency & Citizenship
    • Offshore Diversification
    • Our Latest On Coronavirus ⚠️
  • Making Money
    • International Real Estate
    • Banking
    • Employment
    • Investing
  • CONFERENCES
  • BOOKSTORE
No Result
View All Result
Live and Invest Overseas
No Result
View All Result
Home Investing

Why Real Estate Cash Flow Should Be Your Main Focus

Do This One Thing Before Buying Property Overseas… And The Profits Are Sure To Follow

Lief Simon by Lief Simon
Jun 21, 2021
in Investing, Real Estate
0 0
0
Bangkok, Thailand skyline at dawn.

Alamy/Sean Pavone

231
SHARES
3.3k
VIEWS
Share on FacebookShare on Twitter

Cash is king, right?

Not really.

It’s cash flow you should care about.

Cash flow is critical to most aspects of life, including real estate investing.

Cash flow was my focus when I bought my first property back in 1995… the three-flat building in Chicago I’ve told you about before.

I put together a fancy spreadsheet to analyze and compare all the buildings that I considered. I wanted to show how the cash flow would play out. I believed the answer to that question would tell me which building to buy.

And, indeed, with the help of the spreadsheet, it became clear to me quickly that a two-flat wouldn’t pan out. The price discount compared with a three-flat wasn’t enough to make up for the income loss from that third unit.

So I wasted no more time looking at two-flats, even though there were more of those on the market and many were nicer and needed less work than the three-flat buildings I was finding.

I had very specific cash flow requisites. If someone came to me with the same requirements today asking what I thought, I’d probably tell that investor he was being too restrictive.

But I had no choice. I was just starting out and had a tiny capital budget and no room for error.

My plan was to live in one of the three apartments of the building and rent out the other two. My big-picture objective was to find a building where the income from the two rentals plus the amount of rent I was paying where I had been living would cover the mortgage payment I’d calculated in my spreadsheet.

In addition, I had specific ideas about location, size of the units, and condition of the property. It wasn’t easy, but I stuck with my requisites and it paid off. As the tenants who came with the building turned over, I was able to increase the monthly rents and was close to covering the mortgage on the building from total income from the two rented units within six months.

I’d met my cash flow goal.

In addition, I was able to sell the building just two and half years later for almost twice what I’d paid for it. The ROI on my initial cash investment was tremendous.

It was my first lesson in the potential of leveraged appreciation, and it made an impression.

I took the proceeds from the sale of that Chicago three-flat and launched my property investing career in earnest… overseas.

The capital appreciation I’d enjoyed from that first investment was intoxicating, but I didn’t let it turn my head. As I expanded my real estate portfolio, I kept a focus on cash flow. That is how I was able to weather the 2008/2009 global real estate crisis.

Diversified cash flow (across countries, markets, and currencies)… and controlled leverage. That’s how I’ve ridden out every investment cycle of the past 25 years.

Property prices fell as much as 70% in some markets post-2008. In most cases, the root problem was that the cash flow from rental income—whether long- or short-term—didn’t support the property prices investors had been paying.

Ireland and Spain stand out as two key case studies in this regard.

That and over-leveraging. Over-leveraged markets saw the biggest drops. Again, Ireland and Spain top the list.

I was buying again by 2010… focusing on properties with cash flow to support their prices… in markets that hadn’t really fallen or that were recovering quickly.

Top of the list was Medellin, Colombia, where prices were good and appreciating and rental yields were good to excellent.

How To Overcome Downturns In Real Estate

The pandemic has created a new crisis in real estate, but one that is playing out differently than the broad global crisis of 2008/2009.

People are moving from cities to the suburbs and from the suburbs to the country…

Or they are buying a country property as part of their new backup plan, preparing for a possible next surge or new pandemic.

We tend to plan for the last war.

This surge in demand coupled with extremely low interest rates has many U.S. markets on boil. People are chasing capital appreciation.

Me? I’m looking for cash flow.

You should be, too.

Lief Simon
Editor, Offshore Living Letter

Tags: 'real estate'buying propertyCash flowdiversificationinvesting in real estate
Share92Tweet58
Lief Simon

Lief Simon

Lief Simon has lived and worked on five continents and traveled to more than 60 countries. In his long career as a global property investor, Lief has also managed multimillion-dollar portfolios of rental properties, for others and for himself. He offers advice on international diversification in his twice-weekly Offshore Living Letter and monthly Simon Letter dispatches.

Related Posts

Beautiful view of the main street of Larnaca and Phinikoudes beach in Cyprus
Investing

Lanarca, Cyprus: The Next First World Lifestyle And Investment Option

by Kathleen Peddicord
February 5, 2023
0

Lief and I have arrived in the oldest city in Cyprus because our contacts here have assured us Larnaca is...

Read more
Beach of Protaras, Ayia Napa, Cyprus

Why An Investment In Cyprus Is My New Favorite Plan B

January 27, 2023
Colorful street in Granada, Nicaragua

The World’s Most Affordable Real Estate Buys In 2023

January 12, 2023
Aguilas Poniente beach Murcia in Spain 

The Best Things To Invest In This Year

January 9, 2023
Yellow vintage tram on the street in Lisbon, Portugal.

Acquiring A Second Residency Through Property Investment

December 9, 2022
Mazatlan as seen from afar with a spectacular cliff line in the foreground

The 2-Step Guide To Finding And Buying Real Estate Abroad

December 1, 2022
Tourist girl in a hat and with a backpack on the background of modern high-rise buildings in Batumi, Adjara, Georgia.

The Top Places To Buy Cheap Real Estate

November 29, 2022

Start Your New Life Today, Overseas ...

A world full of fun, adventure, and profit awaits! Sign up for our free daily e-letter, Overseas Opportunity Letter, and we'll send you a FREE report on the 10 Best Places To Retire In Style Overseas Today.

LIOS Resources


  • New To LIOS
  • Ask An Expert
  • Media Center
  • Contact Us
  • FAQs

Quick Links


  • Best Places To Live
  • Best Places To Retire
  • Finding A Job Overseas
  • Real Estate

Sign up for our free daily e-letter, Overseas Opportunity Letter, and get your FREE report: The 10 Best Places To Retire Overseas In 2023

  • About Us
  • Contact Us
  • Privacy Policy
  • Terms
  • Unsubscribe

© 2008-2023 - Live and Invest Overseas - All Rights Reserved.

No Result
View All Result
  • Home
  • Countries
  • Budgets
  • Archives
  • News
  • Events
  • Bookstore
  • Newsletters
  • About Us
  • Members Area
  • Contact Us

© 2008-2023 - Live and Invest Overseas - All Rights Reserved.

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In

Download your FREE report on

The Best Places To Retire In 2023

New Year, New You, New Life Overseas

Sign up for FREE and learn how to live the good life on a modest budget, find bargain property, and more. Plus, check out our free report on the 10 BEST PLACES TO RETIRE.

RETIRE OVERSEAS AND LIVE LIKE ROYALTY