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How to Turn Your Assets Into a Cash Flow Machine

How to Turn Your Assets Into a Cash Flow Machine

(Dollar Photo Club)

By    |   Tuesday, 01 November 2016 07:33 AM

 

Most of us have assets that are of little value. It may be something as large as your home, or as small as items in your garage. If you took an inventory of your assets then created a plan so that each asset was producing a steady flow of cash, you could have more income than you know what to do with!

There are tremendous ways to turn your existing assets into a cash flow machine. For those of you assuming you don’t make enough money, or you’ll never be rich because you didn’t graduate from an Ivy League school, this program is not for you. Get ready to put in the hard work and don’t ever use the word “can’t!”

First, you need to transform your thinking from that of a growth investor to an income investor.

Here’s the difference:

a) Growth Investor: An investor whose primary objective is to grow their assets large enough to produce income at some point in the future.

b) Income Investor: An investor whose primary objective is to produce multiple, reliable streams of income from both current and future assets.

When placing a value on our assets, there are two types of value - monetary value and emotional value.

Here’s the difference:

a) Monetary Value: An asset that will either grow in time or one that will produce cash flow for us at some point i.e. a small business, investment real estate, stock market investments.

b) Emotional Value: An asset that gives us absolutely no monetary value, but gives us positive, emotionally satisfying experiences.

A personal example of emotional value is my toys. My CPA (who is also my brother-in-law) used to get upset at me every time I purchased a toy, such as my dirt bikes, boats, etc. I explained my philosophy that these assets provided emotional value. He may have been right that it would have been financially prudent to use the cash to buy an asset that grows in value or provides a tax benefit. But, in my opinion, my toys give me quality “down time” with my family. Therefore, I am more productive, happier and I will do a better job for my clients come Monday morning. He agreed.

When creating multiple streams of income from assets of monetary value, there are two steps.

 

First, take an inventory of your assets that could give a monetary value and create a stream of income. You will need to derive a conservative and realistic cash flow value to these assets – one that is created when cash is actually being placed into your pocket or providing you tax benefits. Please be sure to check with your local and state licensing laws and ordinances, as well as zoning and insurance requirements, prior to implementing any of these ideas.

1) Personal Residence


a) The ability to write off your interest and property taxes is a simple current cash flow benefit.

b) Spare bedroom: Start a home-based business. While building an asset to sell at some point in the future, you could be eligible to take a home office deduction on your taxes, including a write off for that portion of your home, depreciation and write off a pro rata share of the utilities. This generates approximately $500 per month.

c) Equity: If your home has appreciated in value, the equity you’ve built up is doing nothing for you. Take out a HELOC (Home Equity Line of Credit) and invest the cash into something that will provide cash flow. Plus the interest can be tax deductible. This generates approximately $100 per month.

Garage: Take an inventory of the things you don’t use or want. List them on eBay or hold a garage sale. Invest the proceeds into something that will provide you cash flow, such as stock market investments or a small business. Secondly, take a look at some of the tools you may have in the garage, like a pressure washer and see if you can form a business around them. Potential income from this asset is approximately $500.

When I was 18, I turned my dad’s weed whip, edger and lawnmower into my first gardening business that produced over $6,000 per month by age 19.

d) Boat: Consider starting a charter service, or if you are a good fisherman, start a fishing guide service. Approximately $200 per month.


e) Camping Trailer: Rent it out to friends on a nightly or weekly basis for an estimated $200 per weekend.

f) Land: If your home is located on excess land, rent out a portion of it as storage for a friend’s RV or trailer for an estimated $100 per month.

2) Stock Market Investments


a) Change a portion of your “growth-oriented” investments into income producing investments for approximately $150 per month:
1. High dividend paying stocks or mutual funds
2. Preferred stocks
3. Government and corporate bonds
4. Real estate investment trusts (REITs)
5. Annuitization payments

3) Investment Real Estate (estimated monetary value is $300)
a) If you can find the right deal, use real estate to help generate some cash:
• Single Family Rentals
• Lease Option
• Flips

4) Vehicle (estimated monetary value is $100)
a) If you have a truck, you have an asset that is in demand:
• Advertise to haul things for people with a car.
• Contract with a local home improvement center for people who aren’t able to transport things such as lumber or plants to their home.
• At Christmas time, form the same transportation agreement with Christmas tree lots.

5) Computer (estimated monetary value is $300)
a) Start a business using the computer you already own.
b) Sell unused items on eBay.
c) Sell handcrafted items on your own website. They make great gifts available for purchase online. Remember internet is running 24/7, even when you aren’t working.

6) Intellectual Property (estimated monetary value is $200)
a) Intellectual property is the brain power and smarts you naturally have. Sell your knowledge via consulting services outside the normal scope of your 9am-5pm job.

7) Fill a Need (estimated monetary value is $200)
a) Look around you, where you live, where you work. Is there a product or service that you want, but that is not being provided? Fill that need and generate an income.

8) Network Marketing (estimated monetary value is $300)
a) Hire people below you so that for every sale or service, you get a cut of it. Do your homework, investigate, and take action.

Secondly, review how much cash-flow each of these ideas will produce. In our examples, the total is $3,150 per month, or $37,800 per year. Now let’s assume this money will grow. Your current $37,800 in cash flow per year, growing at 10% tax-deferred for 20 years, could be worth $2,392,011! Take 10% of this as a retirement income and you would be producing $239,201 per year, or $19,933 per month.

As an advocate of a balanced life, I believe it is one driven by goals, wealth, career, family, health and religion. Without this balance, you WILL NOT ACHIEVE your goals, experience a burnout, or possibly suffer from extreme stress that could ultimately impact your health.

Turning your existing assets into a cash flow machine is only limited by your imagination and your desire. With these tools, you CAN make it happen.

 

Jon Sanchez is a registered representative offering securities and advisory services through Independent Financial Group, LLC (IFG), a registered broker-dealer and investment advisor. Member FINRA/SIPC. OSJ Branch: 12671 High Bluff Drive Suite 200 San Diego, CA 92130. Sanchez Wealth Management, LLC and IFG are not affiliated entities. CA Insurance Lic. #0772626.


Jon G. Sanchez is the CEO of Sanchez Wealth Management, LLC, located in Reno, Nevada. He is the host of the Jon Sanchez Radio Show heard each day on Newstalk 780 KOH as well as an author of The 3 Pillars of Life, a speaker, cattle rancher, volunteer firefighter, a husband and father of three beautiful children. He can be reached at jon@sanchezwealthmanagement.com or (775)-800-1801.

 

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Turning your existing assets into a cash flow machine is only limited by your imagination and your desire.
cash, flow, machine, assets
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2016-33-01
Tuesday, 01 November 2016 07:33 AM
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