The Snow Is Falling
We know when you first heard of the snowball method, you thought to yourself, how in the world are the two words snowball and investment property allowed to be in the same sentence?
Odd, we know. In the world of literature, we have a little something called a metaphor. You know, when we compare something without using the words like or as? That is just the case here. Buying an investment property is on the list of every real estate investor, and making money from real estate is the goal.
The snowball method plays a big role in achieving that goal if it is practiced correctly. So let’s talk a little more about this snowball, and what it has to do with you as a property investor.
Investment Property Shopping-It’s Snowing
We want you to imagine making a snowball as the frosty snow falls on your face. The tiny snowflakes fall to the ground and you are left in awe at the scene of white in front of you.
You start to form a snowball with the white fluff on the ground, and you continuously add more and more snow until this snowball is the size of your head! It becomes heavy now so instead, you start to roll the icy sphere on the ground to collect more and more snow.
What once was a snowball is now a snow boulder. You roll it down the hill and it collects more and more and more snow. Metaphorically speaking, this is just how the snowball method works with your investment property saving.
You want to go shopping with the “snow boulder” you just created (this representing the heaps of money that will form when utilizing the snowball method). Let’s get into more detail of how the snowball method really works.
Investment Property Shopping- You’re Making a Snowball
The snowball method is known as one of the best real estate investment strategies for long term real estate. Being in the real estate business for the long run allows you to make the most out of this method.
Long story short, the snowball method works by taking the cash flow from the real estate investments you already own and using them to either pay off another investment property or invest in even more investment properties. Again, being a long-term property investor calls for getting a good amount of rental properties up your sleeve, and this is one way to get that done.
As you use the cash flow from an investment property you own, you can pay the investment mortgage on another existing property, allowing you to own the investment property in full much faster. Why does this matter? It will increase the profitability of your investment property dramatically. Yes, dramatically. You are able to build wealth from the properties more efficiently and be able to say you own one of the most profitable investments.
This is the more stable approach to owning more rental properties faster, but not necessarily the one that will build the most wealth. Think of the snowball method as a solution to accumulate more than one investment property at a time while increasing your wealth concurrently. They go hand in hand. The more investment properties you own, the more rental income you can generate, resulting in more and more wealth built.
The overall idea here: By using the cash flow from your existing investment properties and using it to secure even more rental properties, you will be able to come out with the best investment portfolio. You generate more rental income, which compounds over time- a snow boulder!
Related: The Snowball Method in Real Estate Investing
Investment Property Shopping-Is the Snow for You?
The snowball method is one of those aspects of real estate you need to apply correctly. You want to figure out if making snowballs is your thing, or if you’re more of a sunshine person. What we mean here is: you need to assess yourself.
This is a Long-Term Solution
Remember, this is the most suitable way for long-term investors to accumulate wealth, as it does present some short-term issues. You can expect to constantly reinvest your collected cash flow into a new investment property. The majority of the time, you will end up with little to no cash on hand from the investment properties. Do you have the willpower to invest every penny from your investment property into a new one? Is that your goal? If you are willing to work for the long run, this is definitely the way to go. The more you strategically save and invest, the taller you stand to build wealth.
It Takes Patience + Another Source of Income
We mentioned how most of the time, you will end up with little to no cash in hand. This is where having another source of income comes in. All the cash flow that comes from your investment property is going to be invested in another investment property. This is also where the patience comes in. You need to be able to have the control to fully invest the cash flow from your investment property into another. No personal use of the cash flow is allowed.
This is why having another source of income is crucial. You cannot rely on your income generating properties to survive, it won’t work. Your real estate investments can be your passive income producing assets. Having another source of income from another job can help you get the petty expenses out of the way and support you until your investment property builds up its real estate appreciation value.
A Below Market Value Property is Perfect
Houses below market value are big winners when it comes to the snowball method, as these investment properties normally have great cash flow. The more you have of these real estate investment types, the more mortgages you will be able to pay off. Try paying off one mortgage at a time. Once one investment mortgage is paid off, you instantly generate more cash flow as you have one less mortgage payment.
This extra cash flow goes onto the next investment mortgage and gets paid off even faster than the prior. And the cycle continues on and on until one day, you find yourself debt free, owning multiple rental properties fully. The snowball method will have you paying off one property a year, then two, then three and so on.
Another way to find positive cash flow properties is through Mashvisor. Our real estate platform aids you in finding an investment property. With the number of real estate investing tools we offer, we become a necessity for your “snowball making” journey. For example, Mashvisor is able to give you property analytics like cash on cash return and cap rate. Two of which can give you an idea of how the cash is flowing-literally.
By using Mashvisor, you can make sure the investment property you choose will indeed fit into your investment property portfolio and is considered the best. We have much more to offer to you and would be honored to make some snowballs with you.
To learn more about how we will help you make faster and smarter real estate investment decisions, click here.
Investment Property Snowball Making-We See Benefits!
We want you to like your snowball. You should stand tall and proud as you’re creating your frozen masterpiece. The benefits of this real estate investment strategy are endless if you make it work for you. Here are some of those advantages:
You’re Behind the Wheel
You are in full control of your payments when it comes to the snowball method. Not inflation, the economy, or a random individual on Wall Street. It’s all you. And Mashvisor of course, we are in your passenger seat. What we mean by this is that you have full responsibility and the power is in your hands. The success of the snowball method depends on three things you choose:
-You purchase suitable, profitable investment properties from the start
-Your financing options are good- the loans are suitable for you
-You remain disciplined and have the goal to save and invest for the long run
All of which you are able to conform to and do. You’re a good driver, and we’re good passengers. Education, focus, and determination all stir into the mix. You’ve got it. Your success is determined by your own effort, disciplining yourself to be one of the most successful investors from the get-go.
You Can See The Progress, Literally
Now we don’t mean you can see a giant snowball forming in front of your eyes. We do mean that you can measure, detect, track, and visualize the progress of your success. You are able to track the progress you make in investment property mortgage payments each month. Take down each chunk you take out of one investment mortgage and watch yourself grow closer and closer to your final goal.
Not to mention you get that little ‘pat on the back’ from yourself as you watch your steady progress. We all know the good feeling of actually seeing our success. It plays as the perfect reminder that you are growing each and every day, and progress is being made. Before you know it, you will be popping champagne bottles celebrating the success of investment property ownership, debt free!
Learn More: Owning a Rental Property: Hearing From an Investor
Let’s Talk About the Flexibility
The real estate business is unpredictable and you never know what happens. Some investment strategies can fail right before your eyes if things don’t go as planned. However, that’s not the case with the snowball method. If anything, it is the complete opposite. You are able to stop, slow down, or expedite the process as much as you would like.
Find yourself in a job crisis that is cutting from your savings? Pause the snowball method until you’re financially comfortable to start rolling again. You will still make progress, just a bit slower. Your financial situation is not the only thing that flexes for the snowball method.
Who said you need to own a million investment properties to become wealthy? No one. You are able to decide how long your investment property chain will go. Four, five, six, twenty-five, the number is completely up to you. See what case suits you the most and go with it. There is always room for growth in the future, so take it day by day.
Let’s Get to Snowball Making
Donald Bren, one of the most successful real estate investors, has a net worth of almost 17 billion U.S. dollars. Yes, a whole 17 billion dollars. Bren turned his $10,000 bank loan into his multi-million dollar real estate empire. This is where the snowball method comes into play for you. Sticking to your real estate investments gets you that accumulation of wealth. Maybe even 17 billion dollars worth. If you are able to maintain your self-control while still remaining financially comfortable, you can achieve exactly what Bren did.
As Dave Ramsey, a personal finance teacher, would say: Success with money is 80% behavior and really only 20% math. Well, we would say it’s more like 80% behavior and 20% Mashvisor. We like to do the math for you. Now go out there and make some snowballs!
Read More: The Most Successful Real Estate Investors and Their Secrets
