How much cashflow or flipping profits do you keep?

[Kyle Davis]

This is a two part question, I'm curious to know how both buy and hold and flippers distribute their cash flow or profits to themselves.

Scenario #1: Your a house flipper, you finish a project and profit $30,000.  Of that $30,000, how much do pull out to 'keep to pay yourself'?  Do you take the entire profit as 'income'?  Do you take say $15,000 in 'income' and leave the other $15,000 in the bank to help invest in the new flip? 

Scenario #2: Your a buy and hold investor, you cashflow on a property $500/mo.  Of that $500, how much do you provide to yourself as 'income' vs. keeping it in the bank or invested back to your business.  I.E. will you pay yourself say $250/mo. and then leave $250/mo. in the bank to account for potential repairs, capital for new investments etc.?  

Thanks!

[Thomas S.]

Starting out you must have a full time job. Initially you should be reinvesting 100% to grow.

Once you reach the point where profit margins allow you to continue to grow and there is left over profits you can begin to pull some out. When the surplus surpasses your employment income you may then choose whether you wish to continue to work. Stopping working will of course have a major impact on your new income and will impact your future ability to grow due to financing issues.

Once you decide you have reached a level of not requiring any further growth, retirement, you may then assess other passive investment options.