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Use Your Assets to Boost Your Cash Flow

Jon Sanchez

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

There are several tremendous ways to turn your existing assets into a cash flow machine. However, 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 growth investor to 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.

a) Monetary Value: An asset that will either grow in time or will turn into a cash at some point (i.e., a small business, investment real estate, and stock market investments).

b) Emotional Value: An asset that has absolutely no monetary value but provides positive and 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 provide quality downtime 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 provide monetary value and create a stream of income. You need to derive a conservative and realistic cash flow value, one representing the cash in your pocket or providing you tax benefits. Also, please be sure to check 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

  •  Interest: You can write off your interest and property taxes and turn them into a current cash flow benefit.
  • Start a home-based business: While building an asset that adds to the value of your home, you could also be eligible to take a home office deduction on your taxes, including a write-off for that portion of your home, a write-off for a pro rata share of the utilities, and depreciation. This addition can generate approximately $500 per month.
  • 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. A line of equity can generate approximately $100 per month.
  • Inventory: Take an inventory of the things you don’t use or want, and 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 have in the garage, like a pressure washer, and see if you can form a business around them. Potential income from these assets 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.

  • Boat: Consider starting a charter service, or if you are a good fisherman, start a fishing guide service. You can earn approximately $200 per month.
  • Camping Trailer: Rent it out to friends on a nightly or weekly basis for an estimated $200 per weekend.
  • 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 (estimated monetary value: $150 per month)

  • Change a portion of your growth-oriented investments into income-producing investments:
    • High-dividend paying stocks or mutual funds
    • Preferred stocks
    • Government and corporate bonds
    • Real estate investment trusts (REITs)
    • Annuitization payments

3) Investment Real Estate (estimated monetary value: $300)

  • If you can find the right deal, use real estate to help generate some cash:
    • Single-family rentals
    • Lease options
    • Flips

4) Vehicle (estimated monetary value: $100)

  • 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 like lumber or plants to their home.
    • At Christmas time, form the same transportation agreement with Christmas tree lots.

5) Computer (estimated monetary value: $300)

  • Start a business using the computer you already own.
  •  Sell unused items on eBay.
  • Sell handcrafted items on your own website. They make great gifts available for purchase online. Remember, the internet is running 24/7, even when you aren’t working.

6) Intellectual Property (estimated monetary value: $200)

  • 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: $200)

  • Look around you, where you live, where you work. Is there a product or service you want that’s not being provided? Fill that need and generate income.

8) Network Marketing (estimated monetary value: $300)

  • Hire people to work for you so that you get a cut of every sale or service. Do your homework, investigate, and take action.

Secondly, review the amount of 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 potential $37,800 per year, growing at 10% tax-deferred for 20 years, could be worth $2,392,011! Take 10% of this as retirement income and you could be producing $239,201 per year or $19,933 per month.

As an advocate for a balanced life, I believe your life is 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 extra cash is only limited by your imagination and your desire. Look around your home and see what you CAN make happen!

Sanchez Wealth Management, LLC is an independent financial advisory firm. Our broker/dealer is Independent Financial Group, LLC [(IFG) www.ifgsd.com, Member FINRA/SIPC], and our clearing firm is Pershing LLC, a division of Bank of New York Mellon. Securities and advisory services offered through Independent Financial Group, LLC (IFG), a registered broker-dealer and investment advisor. Member FINRA/SIPC. Sanchez Wealth Management, LLC and IFG are unaffiliated entities. OSJ Branch: 12671 High Bluff Dr., Suite 200, San Diego, CA 92130. Licensed to sell securities in the following states: AR, AZ, CA, CO, FL, GA, ID, IL, LA, MT, NV, OH, PA, SC, TX, UT, VA, and WY.

About the Author:

As CEO of Sanchez Wealth Management, LLC, Jon Sanchez and his team manage over $92 million (fee-based only) in client assets as of August 2016. With over 20 years’ experience in the financial services industry, he is a veteran of the securities business. Jon specializes in the vast and complicated areas of retirement and wealth building by utilizing equity investments, real estate, and small businesses. As a leader in the Northern Nevada and California financial community, Jon has created, bought, or sold over 20 businesses.

 

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