Boris Becker - was one of the greatest tennis players in the world.earning millions with many valuable properties and significant assets.
And yet he went broke.
In an interview, Becker describes the problem in four words:
“Cash poor and asset rich.”
He owned properties all over the world but when his debts became due, he didn’t have enough time or liquidity to sell those assets and meet his obligations.
More money was going out than coming in
(LinkedIn)
Here’s the lesson
Cash Flow is King and Queen
You can own $5 million, $10 million or $20 million worth of assets and still experience enormous financial pressure if you can’t fund your monthly commitments.
The problem isn’t necessarily the assets.
The problem can be the structure around them.
- How much cash do you need every month?
- How much income do your assets produce?
- How much debt are you carrying?
- When does that debt need to be repaid?
- How much liquidity or buffer do you have?
- And what happens if your income suddenly drops?
Becker’s story illustrates how quickly an asset-rich position can become a liquidity crisis. The LinkedIn post summarises the lesson well: prioritise liquidity, balance outgoings with recurring revenue and manage debt carefully. (LinkedIn)
This is why getting the lowest interest rate isn’t always the most important thing.
Of course, rate matters.
But strategy matters more.
The right loan is the loan that works with your income, assets, cash flow, investment horizon and long-term objectives.
If you own quality growth assets, particularly property, borrowing can potentially allow you to hold those assets for 5, 10, 20 or even 30 years rather than being forced to sell because of a short-term cash-flow problem.
And time can be enormously powerful.
A quality asset has the opportunity to grow while the original dollar value of the debt remains relatively fixed.
But that only works if you can afford to hold it.
That’s why I believe successful property investing starts well before choosing a property.
You need to understand:
- What should I buy? Focus on assets with strong long-term growth fundamentals.
- How should I fund it? Structure the lending around your circumstances rather than simply chasing the cheapest rate.
- How much buffer do I need? Plan for vacancies, repairs, rate increases, unexpected expenses and changes in income.
- How long can I hold it? Wealth is generally built over years and decades, not months.
- What’s my exit strategy? Know how your debt and cash flow will work as you approach retirement or your income changes.
Property does not rise in a straight line, and no property is guaranteed to increase in value.
But buying quality assets, structuring your debt appropriately and having sufficient cash flow can give you something extraordinarily valuable:
TIME.
Time to allow your assets to grow.
Time to allow rents and income to increase.
Time to reduce debt.
And most importantly, the ability to avoid becoming a forced seller at precisely the wrong time.
Wealth isn’t just about what you own.
It’s about having the financial structure that allows you to keep what you own.
So when you’re looking for a loan, don’t only ask:
“What’s the best rate?”
Ask:
“What’s the right lending strategy for my life, my cash flow and my long-term wealth?”
Because the best loan isn’t necessarily the cheapest loan.
It’s the loan that helps you hold the right assets long enough to achieve your goals.
if you are keen to know more - reach out and I would love to explore whether you have the right loan and strategy to watch your asset grow with the right amount of cash flow available to keep it over the next 30 years!
