My Two Cents – Do You Really Want Ownership?
Do you really own your home? Ken Shields talks about owning your cash flow in his regular I Love Chile column.
Ownership of what? It seems we all want to own property as a part of our pursuit of a quality of life we deem acceptable. Things are very different now from two hundred years ago when it seemed like you really could own property. Think about it for a minute. If you own real estate, try not paying the mortgage or the taxes for a while. What happens? Right, the true owners show up and will take it from you.
hat means, your name will be removed from the title and someone else will replace you so that the true owners get their cash flow. How about cars? Do you really own the car? Well, maybe. If you don’t pay the payment or the taxes, what happens? You get my drift. I guess the real question is, can you REALLY have ownership of anything? A company? Well, let’s look at it. I can only attest to what happens in the USA but I think Chile might be similar. You incorporate, organize an LLC or a trust or whatever. THEN, you don’t pay the franchise tax one year and WHAM!; you lose your charter. Why? You didn’t provide the cash flow to the true owner; in this case the government.
I’m going to suggest a change in thinking on your part. I contend that, “Yes” you do want ownership but of something you really control: cash flow. Yes, cash flow just like those people who can strip you of title if you don’t do your part and pay them. Well, I have an idea for you. Maybe you (we) should just concentrate on owning cash flow.
What I mean is to change your thinking patterns and expectations. For instance, don’t buy real estate hoping it will increase in value during the time you must pay more than the income it produces. Only buy real estate that produces a net cash inflow. You say, “What about my home?” Remember that, if you have a mortgage and you can’t pay it, the bank gets it. If you own your home free and clear and can’t pay the property tax, the government steps in and takes it. That means, you are renting in fact if not in name. Rent in name and in fact and use the money you’re not paying the bank to buy more cash flow. That would mean you could buy real estate that produces rent. Needless to say, you have to buy smart so your cash flow is positive. Do you like agriculture? Rent the land you want to use and grow what you want, hire the help and keep the (hopefully) profit.
Ownership ties you down more than renting. If you rent or lease a car instead of buying it, you can change it out more often and, if you get it written in your agreement, if the car breaks down, you get another delivered to you so you can keep at business. Automobile down time costs more than just fixing, it’s lost revenue as well and that’s the really big number. Can you do that in Chile? Of course! Think about this: if you rent your cash generators (land, help, machinery etc.) and manage it properly, you have positive cash flow. The government will want its piece but cash flow can take care of itself; just divert what’s needed and they leave you alone. If governments take too much, there are a number of ways to reroute cash to less acquisitive countries, especially in the age of the Internet. This is a thought provoker. You decide what interests you and go for it.