Cash Flow – It’s not all about lifestyle

I moved to Byron Bay over 17 years ago to do a renovation on a property. I never left.


For me, commercial property has allowed me to live a lifestyle that I wanted to live. To be able to get up and go for a surf in the morning, to live a healthy, stress-free lifestyle and work when I feel like it.


In fact, I love property so much it generally doesn't feel like work. It's as much a hobby or an art as it is “work”.


I knew a long time ago that I wanted to live making my own money and not having to work a job. It was all about lifestyle.


But as I teach more and more people how to do this I come to see just how many other desires, dreams and strategies people are shooting for with commercial property.


One of my students, for instance, had a marriage breakup and was looking at the aftermath of that seeing what was left. What became clear to her was that when it came time to retire, she would be living a very skinny life if she kept travelling the same path and doing the same things.


She had a PPR (her home) with a decent mortgage still on it, and a job but not enough in the way of Super to live on for very long.


Commercial property was her vehicle for fixing that. I picked up on this because in talking to her she told me how she'd bought two commercial properties so far and she was putting all the cash flow from those properties into paying off her PPR.


She didn't talk about going surfing or moving to Byron Bay. She didn't talk about buying a new car or going on more holidays. She wasn't looking at using that cash flow for lifestyle at all…


Well not yet anyway. She'd calculated, as she was investigating her third commercial property, that if she bought this 3rd property, she would be able to pay off her house in around two years.


Her plans were to turn the cash flow back o itself and start paying down her commercial loans as fast as possible as well.


Some people want out of the rat race as fast as possible; others are happy to wait. She was the latter.


She had worked out that she could afford to leave work in 4 years and be able to retire completely.


Now, on the one hand, I was really impressed by her plan. It was clear, succinct and numbers were driven – you know how I love those numbers.


She'd worked out exactly how those numbers were going to play out with three commercial properties in her portfolio.


On the other hand, when I looked into her eyes, I knew it probably wasn't going to work out like that.


She told me how after the purchase of her first property, her finance broker told her that because the first property was making her positive cash flow, she could “go again”. She could afford to buy a second.


…and that's what she went straight out and did.


When I looked into her eyes, I saw that same fire and excitement that I had when I look for a property.


All her calculations were based on three properties, and I thought to myself: “there's no way this lady is stopping at 3.”


She'd found her new passion, and I could tell that she and commercial property were going to have a long and fruitful relationship.


I sometimes write about “the commercial cash flow lifestyle” and usually when I say that I'm talking about living in paradise and going for a surf every morning etc


But the reality of one aspect of the commercial lifestyle is this: One you start you are in real danger of becoming hooked on the experience. Hooked on looking for properties, thinking about properties, doing due diligence and doing the numbers.


Yes, you'll be making more and more money – your cash flow will increase every time if you follow my rules, but that will become secondary and less important.


Once you've got enough money to live on you'd think you could stop and rest on your laurels, but the truth is that if it get's in your blood, commercial property can easily become a life path just for the fun of it.

What’s your ideal use of Cash Flow? Comment Below