You Need 2 Plans – Trust Me!

jimmy moncrief
Jimmy Moncrief

The following is a guest post by Jimmy Moncrief of

As an underwriter, one of the most dangerous things you can do is to make assumptions.  As they say – assumption is mother of all foul-ups.  However, for this article I’m going to make two assumptions:

First of all, as a fellow reader of I’m going to make the assumption that you are serious about real estate investing.  Secondly, I’m going to assume you probably have a real estate investment or two under your belt and are presently growing your real estate investment company.

With those assumptions made, let’s begin…

The Negative

As a real estate investor you know all of the positives: passive cash-flow, appreciation, other-people’s money, tax-advantages, etc.  So I’m not going to focus on that.  Instead, I’m going to focus on a big negative that you may or not yet be experiencing.  But you will face this at some point – this negative item is experienced by EVERY REAL ESTATE INVESTOR.  And it doesn’t matter what kind of real estate investor you are – flipper, long-term rentals, developer, etc.

What negative event am I talking about?


Real estate is a capital intensive business.  This is what keeps newbies from entering the game, and what keeps current players from growing exponentially.  So what to do?


If you are a serious real estate investor, you don’t just need to have a plan for your real estate business.  You need to have a capital plan.  How do you plan to get the capital to acquire and manage the real estate you want to own in the future?

Think about that for several minutes…

  1. Write down on a separate sheet of paper right now, how much money you need in capital to acquire the real estate you want to buy in the next several years.
  2. Write-down how you are going to acquire that capital in the next several years.
  3. Finally, put all of this together in a spreadsheet.

Lacking capital is a primary problem that is rarely talked about by real estate investors.  Everybody wants to talk about whole-selling, flipping, tax-liens, big multi-family – Ben Leybovich is infamous with that.  It’s easy to see why people want to talk about those –  big, bright shiny objects.

I want to talk about something very simple:


Cash – the single most important thing a bank underwriter evaluates when analyzing your credit-worthiness.

Don’t just take my word for it and leave some nasty comment in the comments section.  Look-up any publicly-traded real estate company (note, most of them are organized as REITs).  Find one, listen to the last quarters conference-call.  The vast-majority of the time is spent on cash.  Specifically, with rent and development income (cash-in) and the capital structure (debt, equity, etc).

If the majority of publicly-traded real estate company’s spend their time focused on their capital structure, why aren’t you spending your time like this?

Jimmy Moncrief is a bank credit officer and real estate investor.  He blogs at  He has a special report for JustAskBenWhy readers:“Top 6 Things You Can Do To Negotiate Better Terms From Your Lenders.”


  • otthon vĂ©gezheto munka fordĂ­tás Reply

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    • Ben Reply

      Thanks much indeed!

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