Flip and Danny break down seven criteria for evaluating investments: active versus passive income, cash flow, equity, tax benefits, liquidity, growth potential, and safety. Use these to match opportunities to your goals and timeline.
Questions this video answers
Flip and Danny, founders of the Freedom Real Estate Group.
Freedom through Passive Income.
1) Active vs passive income; 2) Cash flow / preferred returns; 3) Equity; 4) Depreciation (tax benefits); 5) Liquidity; 6) Growth / compounding; 7) Preservation / capital safety.
freedomcapitalinvestments.com
Episode 66 — "7 Ways to Evaluate Your Investment Options."
Hey, everybody. Flip and Danny here, founders of the Freedom Real Estate Group family of companies. And welcome to another episode of our.
Podcast called Freedom through Passive Income.
That's right. And this episode is called 7 Ways to Evaluate you investment options.
Yes.
So we actually did a Facebook poll on our Facebook group called Freedom for Passive Income. That's right. And this was the number one thing that people wanted to learn about. So make sure you look at your specific situation because everybody's different, every situation is different, and you decide what you need most.
These are the seven things you're gonna want to evaluate on that path. So the first one we talk about all the time, active income versus passive income. This very much has to do. How much time do you have on your hands and how much can do based on how much control that you want to have? So go back to our past episodes where we talked about those types of things in order to learn the type of investor that you are. Number two, cash flow. Do you want cash flow? Is that the most important thing to you? Usually this means preferred high returns. Preferred returns means you get paid first before the general partners do. When we talk about that, when it comes to syndications, cash flow could be coming on a monthly basis or quarterly basis. And that could be one of the things like passive income is my most important thing. I need the cash back in order to pay these expenses because I'm trying to get out of my job. Right. So that might be your highest and most important thing for you. Number three, it could be equity. You could not necessarily want the highest possible returns in the cash flow. You could be okay with lower returns, but have a piece of the equity. So you have long term cash flow and some upside via that equity and appreciation.
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Number four is depreciation. You could be a high income earner and you make tons and tons and tons of money. You don't care about the returns or the cash flow or the equity. You want depreciation. You want to be able to wipe out as much of the tax implications that you have right now via your ordinary job. And so you say, hey, can I have as much depreciation on this investment as possible so I can pay less in taxes? Because that's ultimately going to save me more money than the returns that you're going to give me. Number five is liquidity. So. So this could be something where, again, you're not really looking at having a high interest rate. You just want the availability to get your money in and out of the investment with, say, let's 90 days notice. That seems to be pretty common with a liquidity fund. So your savings account could be making you, what, flip?
Nothing. I'm sorry. 0.0002, which is more than nothing, but still nothing.
And with inflation, anytime you have money in savings, especially right now, you're losing money. So you really want to capture as much interest as you can with the availability to get it in and out. So you're going to be looking at a lower interest rate, but higher than your savings. And something that you can move in and out of, number six would be growth. So in this situation, you don't really want the cash back. You're looking at, hey, how can I get compound interest? I don't need this money. I'm going to throw $100,000 into this. And then instead of paying me my quarterly distributions, can you just keep that money in there and put interest on top of that interest? That's another strategy.
And we talk about compound interest on that previous podcast.
Yes, that's right.
Episode. Previous episode. Not different podcasts, same podcast.
Different episode number seven. And the last way to evaluate is preservation. So in this one, you're just like, hey, we've got inflation. I don't want to have a high return where there's high risk and I might lose some of my capital. I have exactly what I need, and this is the bucket of money that I just want to keep it. And so then you're looking for safety and hedges against inflation, those types of things in your investment opportunity. So those are the seven things that you want to. Breathe.
Breathe. Now you get to choose. That was a lot to choose. That's a lot.
Yeah. Because it depends on your situation. Right now, you and I, we like passive income, so we're wanting the distributions.
But now, obviously, the first thing you want to do is get educated, which is what this was about. And then now you get to figure out what strategic decision you want to make.
Yes. And it feels so much better. Right, right. Because now you're. You're looking at an investment. You Know what your highest priority is so that you can say, hey, this one's gonna give me 9% plus equity. This one's gonna give me 12% preferred returns. I want passive income and higher return. So I'm choosing this one.
Right?
Ta da.
Now quickly, show of hands. How many people out there thought real estate investing was buying a house, fixing it up, selling it and flipping it essentially, and then doing that again. And that's all you ever knew about real estate investing. Show your hands, let me see. I see you out there. Uh, hu. So again, we like to keep these short and sweet as much as possible. Make sure you join our groups, facebook.com groups forward slash.
Freedom through passive income.
Yep. And we got a group on LinkedIn as well that doesn't have a cool name but just go to the search.
Bar, type in Freedom through passive income.
There you go. We're also, we got a YouTube channel. Make sure you go to there and hit the subscribe button for us. But make sure you hit the heart button, the like button, whatever. Make sure you hit all the buttons. If you're now you might be just listening to this. I hope you had a great workout or a great run or a nice drive to work. But again, make sure you're joining all of our groups. Also on our website, which is right down here, freedomcapitalinvestments.com we do have a secret club. What's it called?
It's the freedom investor club. And that's how you get shown our deals and develop that relationship with us, get some communications about monthly updates, things like that. It's secret.
But again, make sure you're out there, let us know how we're doing, give us recommendations, give us questions, suggestions, whatever it may be. But we always like to end all of these episodes with invest smart, Live happy. Bye, everybody.
Nothing on this show should be considered specific personal or professional advice. Please consult an appropriate tax, legal, real estate, financial or business professional for individualized advice. Opinions and information on this show are not guaranteed. All investment strategies have the potential for profit or loss, y'.
