Cash On Cash (VERY IMPORTANT)

[Grant Cardone]

While most investors talk about price and cap rate when buying, there is no figure more important to me than cash on cash. How much unencumbered cash can be distributed to investors and myself after all operations and debts are handled. Positive cash flow, not just percentage, but the actual dollar amount of free cash flow after all operations, is what will allow you to weather economic pullbacks and avoid having to sell in down markets. 

Positive cash flow is why I have never lost a property! When all the speculators and builders were losing everything during the worst housing crisis since the Great Depression, I held on to all my properties. Even the bank where I got my financing went down, but me. Cash flow makes you bulletproof.

Imagine that! The bank that lend me money, busted out, and the apartment building never missed a payment to that bank. The bank made loans to a bunch of amateur speculators who over - leveraged, who didn't know how to calculate cash flow using worst case scenarios (or didn't bother to), and they all failed when the market got tough. I lost nothing, because I had cash flow. 

When you have enough positive cash flow, you will be able to continue operations, while the competition across the street can no longer replace carpets or advertise. 

-GC