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Strategies for Escaping the Rat Race Part 3 – The Hybrid Strategy

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Strategies for Escaping the Rat Race (Part 3 – The Hybrid Strategy)

Hybrid Strategy - Capital Appreciation

The Hybrid Strategy for escaping the rat race

Robert Kiyosaki says, “Intelligence lies on the edge.” A financially intelligent person knows that to escape the rat race in the shortest possible time (without financial leverage, i.e. debt), he must learn more than one asset class. In this article, I am going to show you my favorite strategy for escaping the rat race. This strategy is a hybrid of the last two, it employs the use of both capital gain and cash flowing assets.

In this strategy, you build up cash reserves to $5,000.00 and purchase a stock at it’s lowest point. (typically $1.00 or $5.00)
While you go around the rat race looking for the opportunity to claim capital gains on your stock, keep an eye out for unique real estate deals. These deals must satisfy two conditions:
1. They must be cash flowing and
2. They must require down payments of no higher than $2,000.00.One of the real estate cards I like most offers $250 in cash flow for a down payment of $2, 000.00 with the cost of the property being $45,000. This is not just a great cash flowing asset, it is a remarkable potential for capital gain as well.

great real estate sdeal

Irrespective of which of these opportunities materialize first, you will have a significant amount of capital available for investing in big deals. My personal advice is that you stick to the small deals until you can realize the capital gains from both of your initial investment. This will give you all the more capital to use in acquiring big deal assets.

The Upside

1. Maximum possibility for capital gains.

Hybrid Strategy - Capital Appreciation

Since you will purchase high volumes of stock at its lowest price and pay low down payments for cheap cash flowing properties, you stand to gain maximum returns in a relatively short time using this strategy. There is a finite number of cards for each type of deal so either your stocks will appreciate or you will encounter an offer for your rental property.

2. Positive Cash flow

Since you acquire cheap real estate along with your stocks, you are constantly increasing your payday. These properties provide positive cash flow which will mitigate loss in the event that you downsize or acquire expensive liabilities. These also offset doodad spending.

3. Certainty

With this strategy you are guaranteed a profit on both of your initial investments with time. This is based on the simple fact that you acquired them at the lowest prices possible.

4. You will spend a lot less time in the rat race

Based on the fact that you have acquired assets in two classes you can choose to move on to big deal opportunities as soon as the first one realizes sufficient capital gains. Consequently, this strategy allows you to escape the rat race much faster as compared to those previously mentioned in Part 1 and Part 2,

The Downside

1. Wining isn’t guaranteed

The hybrid strategy is NOT fool-proof. Unforeseen circumstances may cause you to loose on both counts. Though the probability of this happening is small, it is worth mentioning a scenario that could account for this reality. A reverse split on your stocks will cost you 50% of your initial investment. We have already looked at the downside of having real estate, click here to revisit that post.

2. You have keep watch of more information

With the hybrid strategy, you have to pay more attention to more information. While you could ignore cards related to real estate in strategy number one, and those related to stocks in strategy number two, this is not a luxury you will have if you decide to use the Hybrid Strategy.

3. Emotional Control Required

A great deal of emotional control is required when using the hybrid strategy. It can be tempting to take on debt to acquire “can’t miss” deals BUT be warned. The use of Debt is no simple matter. You may end up taking on more debt than your cash flow is able to facilitate. The inevitable end of this is bankruptcy.

Bonus

A few words on Debt, Acquiring it and Paying it off.

I have been playing cashflow101 since March 2015 and I have had my fair share of losses (read as lessons). I have never seen a person in the game start out cash flow negative. We have found it noticeably unfavorable for someone to begin paying off their debts when they begin the game as a means of increasing cash flow. Watch this video for a case in point.

An attentive reader will recognize that none of the strategies we have been discussing encourage paying off debts. Is this irresponsible, not if you are making the payments. I suggest that it is better to conserve your cash for the acquisition of cash flowing assets so long as you are making the minimum payments for your debts.

The Leveraging Strategy

Albeit, none of the strategies suggested advocate taking on debt for the acquisition of assets either. I am still learning how to escape the rat race using debt. Once I do, I will share that strategy in another article. It will most likely be called the Leveraging Strategy.

If you enjoyed this article, please like and share it. Also, if any one of you guys have won the game using the Leveraging Strategy, we would love to hear how you did it. Leave your strategy in the comment box below.

Bandicam software was used to create the videos in this article and is available for free download on Windows.
We would love if you film your gameplay and post it on YouTube. Then you could post the link in the comments box below.

Let us know what you think of this strategy. Read the other two strategies here and please let us know which strategy is your preferred route out of the rat race.

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