Bread, Butter & Jam: Why Real Estate Can Make You Rich on Paper and Cash-Poor
Episode Notes
Commercial real estate can make you wealthy on paper while leaving you surprisingly short of cash.
In this talk, I introduce a simple framework for understanding what your real estate is actually doing for you:
Bread is the dependable cash you need to fund everyday life.
Butter is the cash your properties can safely distribute after debt service, taxes, insurance, maintenance, capital needs and sensible reserves.
Jam is the upside: appreciation, refinancing, profitable sales and other windfalls.
Then there is a second test. Every property is currently a Feeder, Floater or Eater. A Feeder sends you cash. A Floater supports itself. An Eater consumes cash.
The key rule is simple: plan ordinary life as though Jam equals zero. And if you own an Eater, put it on a clock. Know why you are carrying it, what needs to change, by when, and what you will do if it doesn't.
Because in commercial real estate, you can have plenty of equity and still have a cash-flow bottleneck.
This framework is also the basis of my forthcoming book, Bread, Butter & Jam: Why Commercial Real Estate Can Make You Rich on Paper and Broke in Real Life.
Sonny Saggar | Professional Problem Solver
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