Fine tune your next acquisition to diversify yourself in Quadrant I. If you are in Quadrant 1, good for you.If you are in Quadrant 2, just know that you are investing in appreciation (shame on you that is not Simple Passive Cashflow that’s called gambling).Where do your investments fall in the Four Quadrants?.If you want to know where the data came from there is none but it is simply my UN-biased opinion (UN-affiliated). I see all these markets as pretty much the same, its just what you are looking for on the appreciation and cashflow sliders. Regarding the above graph: this is my humble opinion of how a few of the popular investor markets relate to each other. For example get some Memphis/Birmingham to offset some Atlanta/Texas. Stay in Quadrant I and diversity within Quadrant I. It’s tough to find real examples but think of places that have positive cashflow and in declining neighborhoods/one economy driver towns. Quadrant IV (below Quad I – South West Quadrant) has negative appreciation and positive cashflow. Example would be Detroit because for all we know they will never figure out the water contaminations problems and you will not cashflow because you are going to have to carry a gun to collect your rent. Written by book fanatic and online librarian Ivaylo Durmonski. Covering the key ideas and proposing practical ways for achieving what’s mentioned in the text. Quadrant III (below Quadrant II – South East Quadrant) are markets with negative appreciation and negative cashflow. This is a comprehensive summary of the book Rich Dad’s Cashflow Quadrant: Rich Dad’s Guide to Financial Freedom by Robert Kiyosaki. Some examples would be Seattle, California, New York, Hawaii, Portland, or San Francisco (typically <0.5% Rent to Value ratio). Quadrant II (to the left of Quadrant I – North West Quadrant) are markets that have great appreciation however, produce negative cashflow because the rents don’t make up for the high home price/mortgage. These are the markets that investors like as cashflow investments because the income typically covers the mortgage and then some. To put it simply these markets in Quadrant 1, have median home Rent to Value ratios above 1% (a 100k property rents for more than 1000 per month – 1000/100,000=1%). Remember the 4 Quadrants, they are labeled Quadrant 1 in the North East quadrant and Quadrant 2 in the North West…etc. I’m going to take you back to high school math class for a moment.
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