We’ve discussed recent transactions by my team that have given the Sellers 2x return in 18 months. Why is this important? Why not hold the real estate for fifteen, twenty years, or forever? Because your return from all your hard work depends upon how you manage the portfolio.

Sure, you can hold real estate without a loan through thick and thin. However several factors conspire to re-duce your return if you do that, including:

More equity in one asset makes your portfolio less diverse and more vulnerable to a problem that occurs

in that one location

• Loan terms generally allow for the owner to gain cash flow from every dollar of loan–the more equity you

have in a building, the less hard each dollar of yours is working

…and here’s the kicker, ask yourself if it’s true for you, I know it is for me:

• When you have owned a property for a long time you start to get into a rut with maintenance and especially upgrades; the vision diminishes and your best attention goes towards new projects

These are a few reasons why Velocity of Capital can be important. If you put your effort and attention into a project for a few years and then sell it to a motivated buyer you’ll be able to buy something new that better suits your goals: bigger, better area, much more cash flow, whatever you want. If you hang onto it after you have given it your best shot, then let’s be honest you’re holding what has effectively become an illiquid bond with lots of risk each year to your time, energy, emotions and pocketbook.

Velocity Of Capital is how quickly your money moves from one job it is doing for you to the next. If you don’t give your money (and yourself) challenges it (and you) will underperform.


• At a given purchase price a building will produce far better cash flow if it is separately metered for all utili-
ties, including water.