I talk a lot in this newsletter about investing for cash flow.
About building a portfolio that throws off real money into your bank account instead of just playing the “number go up” game with your portfolio balance.
And honestly, I 100% believe it’s the right approach. I’d rather own assets that pay me to own them than purely hope someone will pay me more for them later.
But success creates its own challenge: what do you do with all that cash if you’re not spending it?
Reinvestment into new deals is the common answer. But that’s trickier than it might initially appear.
The Stacking Problem
Let’s say you’ve got $100,000 invested in an apartment syndication returning 8% cash-on-cash. Pretty typical deal.
That’s $2,000 hitting your account every quarter. $8,000 per year.
Awesome, right? Except now you’ve got $8,000 sitting in your checking account earning basically nothing, and every deal crossing your desk has a $100K minimum.
Those minimums exist for good reasons, including operational efficiency for sponsors and meaningful stakes for investors. But high minimums create this awkward middle ground where your distributions pile up faster than you can redeploy them.
Even if you had two of those 8% deals, you’re looking at 3+ years just to stack enough distributions to hit the next minimum.
That's a long time for money to sit idle.
So what's an investor to do?
Four Realistic Options I've Seen Work
I’m not going to pretend there’s a perfect solution here…because truth is, there isn’t. But I’ve watched other investors navigate this challenge, and here are the four approaches that seem most realistic:
Option 1: Stack and Wait
Park your distributions in a high-yield savings account or Treasury bills until you hit the next investment minimum.
This tends to work best when you’re not relying on only distributions to fund your next investment. Many successful investors I know supplement with income from their business or W-2 job.
So you’re not waiting three years. Maybe you're waiting six months while your distributions stack alongside fresh capital. Earning 4%+ for a few months isn’t great, but it’s not going to derail your investment goals.
Option 2: Find Lower Minimum Deals
Look for syndications with minimums in the $25-50K range so you can deploy faster.
But here’s my honest take: smaller minimums often correlate with smaller, less experienced sponsors and lower-quality deals. I don’t have hard data on this, but it’s a pattern I’ve observed over the years.
Take this route with extra due diligence.
Option 3: Mixed Portfolio Approach
Combine traditional syndications with private investments that allow automatic reinvestment of distributions.
For example, the majority of investors in our Private Commercial Credit Fund choose to reinvest their distributions rather than take cash. It just compounds automatically within the investment.
This solves the stacking problem for at least part of your portfolio.
Option 4: The REIT Bridge
I’ve also seen some investors park distributions in public REITs while they wait to hit minimums for their next private investment.
I generally don’t recommend this because it reintroduces stock market volatility to a part of your portfolio that’s often designated for being outside of the stock market.
Nothing worse than stacking cash for two years only to watch it drop 10-15% right when you’ve found a great deal and are ready to deploy.
The Bigger Picture
Here’s the reality: investing for cash flow involves some operational friction that most people don't think about upfront.
But honestly? That friction can be a good thing. It forces you to be intentional about how you construct your portfolio rather than just chasing whatever shiny new deal lands in your inbox.
The most successful investors I’ve seen are the ones who have a plan for their distributions from day one. They know whether they’re going to live off them, reinvest them, or do some combination of both.