Real Estate Information |
|
How To Start Investing For Financial Independence, Part 2
Last week, we started a multi-part series about how to go from being a beginning investor to being "financially independent" in a steady and predictable way. Many, many people want to overly complicate this process so let's briefly, let's recap that discussion. The bottom line steps that I suggested in the last article was: 1) Look for an opportunity that will return at least 150% in 2 yrs or less; 2) Be mentally and financially prepared if the investment does not work out; 3) Have VERY good reasons why you don't think you will lose money?? You may not make as much as expected, but you would rather not lose money at this stage. 4) Be patient. This single result should not either make or break you but it is crucial to a longer term plan. I gave an example where a hypothetical person had gone through this process and ended up with a profit of $43,000 (before taxes) and $36,000 of after tax profit. When this profit was combined with their original investment, they now had around $55,000 of operating capital for Step 2. Before we get to Step 2, let's take a step back. For a lot of people, if I told them that somebody made $43,000 on a quick investment, they would think these people had "struck it rich". Kind of like winning the lottery, right? NO! In the grand scheme of things, this investment will do very little to impact their financial independence. That is, it will take discipline to now use these profits to go into the next investment, and then use those new profits to go into the 3rd investment, etc. So, in our opinion, this first investment was merely a stepping stone towards a much bigger objective. In Step 2, most savvy investors will now realize they have just been given some extra monopoly money, or money that was not originally theirs, to work with. In the investment and trading world, this is referred to as the "market's money"; i.e., money that you got from the market that you can then use to generate revenues above and beyond what was possible with your original investment. Quality traders can use this concept to produce huge % returns in a year while risking no more than 10% of their original portfolio. So let's say the investor now decides to repeat the process and buy two more preconstruction lots in a different development. In the two years since the first investment was made, suppose now that property has escalated. In addition, the investor finds a good deal on two lots and each is $250,000 to purchase. Now, the investors visits their check list to see if this makes sense: 1) Look for an opportunity that will return at least 150% in 2 yrs or less -- yes, they have reason to believe this will occur for their down payment amount; 2) Be mentally and financially prepared if the investment does not work out--yes, they don't think it will happen but if they lose their entire 10% down payment, they are ok with this. 3) Have VERY good reasons why you don't think you will lose money?? You may not make as much as expected but you would rather not lose money at this stage -- They have done their due diligence and feel strongly about the investment. 4) Be patient. This single result should not either make or break you but it is crucial to a longer term plan-- they are not swinging for the fences but rather patiently using the previous market's money to increase their investment. Well, like the other investment, suppose this one works out in their favor. In their two year holding period, the lots experienced a 35% increase in price. Not bad. They were hoping for more since they knew some places had that kind of increase in a few months but they are not complaining. After closing costs, the investor had about $55,000 invested and netted a total of $162,000 after expenses. Of course their silent partner, Uncle Sam, wanted their cut so now they are left with a $137,700 in profits and $192,700 in working capital. Not too bad after only 4 years. Now let's ask the question are they financially free? We'll, I doubt it. The investor could probably now survive for 2-3 years on the nest egg but only if they did not reinvest it. However, if the family and friends find out about this gain, then they will think the investor is now "rich" and living like the Vanderbilts...... For anybody that has made it to Step 2, you know they are far from rich because now they want to invest to go to Step 3 and this will likely consume most of their money. Frequently you will find people in the $0.5 -$2Million dollar net worth in this category where they are doing great on paper but they don't have any more "extra" money to spend than they did a few years ago. After Step 3-4 however, this can change dramatically. Before we conclude this week's article, let's talk about a very common, and deadly mistake. In the language of Texas Hold'em poker, it is the All In mentality. Frequently, after a first success, people now feel bulletproof and decide they want this process to go faster. They leverage everything the have and take on as much risk as the banks will allow them. If things work out for them, they will explode their wealth with that step. However, if something slips up, they are in trouble. Most people believe nothing like that can happen to them they are too smart. I mean everybody knows that real estate does not go down, Right? I know a gentlemen who is extremely smart, extremely business savvy, and grew his net worth to well over a BILLION dollars. Within a few years of that mark, he net worth was NEGATIVE and had to declare bankruptcy because of real estate. The process of building wealth in a controlled fashion over 6-10 years is so straightforward that I cannot see taking those kind of risks to make it happen in a much shorter time frame. Chris Anderson is a leading authority on preconstruction real estate investing and has been referenced in many venues including the New York Times and USA Today. Get up to the minute information about preconstruction projects at GetPreconstructionDeals.com.
MORE RESOURCES:
Landmark Settlement Breaks Up the Real Estate Cartel The American Prospect Top real-estate CEO sees decades of housing pain ahead: 'What the Fed did will have a 30-year tail on it' Yahoo Finance Commercial Real Estate's Systemic Threat: Separating Fact From Fiction Commercial Observer Rules that helped set real estate agent commissions are changing. Here's what you need to know The Associated Press Brockton-area real estate sales for Dec. 26 to Dec. 29, 2023. Enterprise News Refined Real Estate: Historic Queen Anne Polson House lists for $6,950,000 seattlerefined.com Pension funds snap up real estate at steep discounts Financial Times Luxury's Latest Battleground: Real Estate | BoF The Business of Fashion The Realtors' Big Defeat The New York Times Local real estate agents face uncertain future with new negotiation rules WJHL-TV News Channel 11 Investigation underway after 44-year-old real estate investor seen on video firing shots off boat docked at Lakeview ... WSVN 7News | Miami News, Weather, Sports | Fort Lauderdale Will March bring more madness to Craven County's real estate market? New Bern Sun Journal A luxury agent on how the NAR settlement will change his business The Washington Post Rules that helped set real estate agent commissions are changing. Here's what you need to know Lufkin Daily News Cities Face Cutbacks as Commercial Real Estate Prices Tumble The New York Times Rules that helped set real estate agent commissions are changing. Here's what you need to know KXLY Spokane What National Association of Realtors agreement means for Texas real estate KAMR - MyHighPlains.com Realtor group will pay $418M to settle commission lawsuits The Associated Press Israeli real estate event: Legal complaints escalate NorthJersey.com National lawsuit could shakeup housing market, cut into real estate agent commission 11Alive.com WXIA Swimmo Invest Opens up a New Chapter in the Real Estate Industry Markets Insider Realtors settlement to lower home sale costs, alter commission structure - The Washington Post The Washington Post What Seattle-area homebuyers should expect after national settlement The Seattle Times CrewBaltimore’s mission to accelerate women’s success in real estate Afro American Newspaper Realtors Reckon With a Seismic Shift to How They Get Paid The Wall Street Journal Settlement will affect Iowa homebuyers KCCI Des Moines What the death of the 6% real estate commission means in D-FW The Dallas Morning News China's Real-Estate Market Just Set a Record—but Not a Good One The Wall Street Journal Real estate commissions, unassailable for decades, could crumble after landmark settlement The Denver Post Making Sense of New York's Confusing Luxury Home Market The Wall Street Journal Is the Era of the Celebrity Real Estate Agent Over? Industry Reacts to Settlement That Could Slash Commissions Hollywood Reporter National Association of Realtors Agrees to Slash Commissions to Settle Lawsuits - The New York Times Rules that helped set real estate agent commissions are changing. Here's what you need to know Northeast Mississippi Daily Journal A commission settlement may affect housing market 9News.com KUSA Illinois real estate: Home sales in Peoria, Tazewell, Woodford counties Peoria Journal Star Bay Area Real Estate Executive Charged with Wire Fraud, Identity Theft in Investment Scam - Hoodline Foreclosures Are Rising—Especially in This One State—but Not for the Reason You Might Think - SFGATE Realtors Reach Settlement That Will Change How Americans Buy and Sell Homes The Wall Street Journal Rules that helped set real estate agent commissions are changing. Here's what you need to know News10NBC Once America's Hottest Housing Market, Austin Is Running in Reverse The Wall Street Journal Real estate lawsuit settlement upends decades-long policies that helped set agent commissions WQAD Moline End of 6% real estate commissions could mean lower home prices The Atlanta Journal Constitution Real Estate Credit Investments (LON:RECI) Shares Pass Below 200 Day Moving Average of $126.75 Defense World A Look Into the Future of Home Buyers' Agent Commissions The Wall Street Journal Manhattan Real Estate Update westsiderag.com Granite Real Estate Investment Trust (TSE:GRT.UN) Given Consensus Recommendation of “Buy” by Brokerages Defense World National Association of Realtors to cut commissions to settle lawsuits. Here's the financial impact. CBS News Bridgemarq Real Estate Services (TSE:BRE) Share Price Passes Above Two Hundred Day Moving Average of $12.93 Defense World Blackstone, World's Top Alternative Asset Manager, Eyes Record Highs Amid Real Estate Bottom Investor's Business Daily Chicago Voters Face Choice on Tax to Fund Homeless Programs The New York Times 4 Ways a Settlement Could Change the Housing Industry The New York Times Colony Ridge violated deceptive trade practices, Texas says The Texas Tribune Real Estate Stocks Drop As NAR Agrees to $418 Million Settlement Markets Insider |
RELATED ARTICLES
Condos Vs. Condo Hotels For Vacaton Home Ownership Condo hotels, also called condotels, are a relatively new concept in vacation home ownership. Rapidly gaining popularity, numerous condo hotels are now being built in Florida, Las Vegas, Chicago, Toronto, the Caribbean and many other locales around the U. Guide To Finding The Perfect Central Illinois House Central Illinois is an area rich in cultural activities andbusiness opportunities. The quality of life experienced bythe residents of the numerous close-knit communities issecond to none. Home Equity or Debt Trap? Are you using the equity from your home to purchase everyday things? This is a dangerous trend growing more popular every month as millions of Americans tap into the value of their home to fund a lifestyle.How many times have you heard the saying "Your home is the best investment you'll ever make"? How many times have you also heard that your home will be the most valuable asset you will ever own?Both of these are as true, if not truer, today than at any time in the past. How to increase the Saleable Value of your Home When selling your home, you'll want to fetch the best price possible for your home yet it so happens in many cases, that buyers give offers that just don't meet your expectations. Of course, you will have to negotiate but you still may not end up getting how much you want. Escalation Clauses - A Home Buyers Secret Weapon Today we discuss escalation clauses because much of the country is experiencing an extreme "sellers' market." By that, I mean there are more buyers than there are sellers, and that results in sellers' getting more than one offer to buy their property. Commercial Income Property Financing: Part 1 of 3 Welcome to this first portion of a three-part series about income property. In this first segment we will be discussing financing options for commercial income properties as well as the upside (and downside) of owning this type of property. How Home Buyer Rebates Work In today's tight housing market, many buyers are looking for ways to stretch their dollars far enough to make that dream home a reality. One little-known strategy that's gaining popularity with consumers is the home buyer rebate. 3 Top Real Estate Investing Methods for Maximum Wealth Real Estate investing can be used to gain wealth in three major ways -1. Long-term Real Estate investing is most often utilized using appreciation as a planning tool. Searching For Maui Beachfront Houses? Who wouldn't want to move into a Maui beachfront house?From the custom architectural jobs done on many Maui homes,to the beautiful beaches and other natural attractions inMaui, you're bound to find something you will love aboutMaui beachfront houses. However, like any home buyingprocess, you'll need to make sure several things are inorder before you make your move into your new Mauibeachfront house. Termite and Moisture Damage Not Reported I have done so many appraisals where I saw obvious damage that was not reported by the other inspectors. The first couple of times I thought it was just carelessness. Many Ways To Make Money In Real Estate! Real Estate is a multi-faceted investment arena - there are MANY different methods to earn money from different niches in real estate. One or several may work for YOU!Here's the typical experience: "buy your own residence and sell it when its all paid off and you want to retire, oh my gosh look at all the money its worth". Flipping or Fixing Houses for Profit Many real estate investors make $5,000 to $10,000 or more by flipping houses. These investors buy a home from a distressed seller and resell it quickly for a profit. Real Estate Values or Just Bad Habits There are several small businesses that retain hundred year old traditions. Hand-dipped chocolates, fresh flowers and cloth napkins on every table in a restaurant, or mints and roses on a guest's pillow at a B&B. Is It Wise to Take My Home Off the Market for the Holidays? Let's say you've had your home on the market for many months without a sale. The holidays are drawing near. Secrets of Making Money from Real Estate - Part 2 Leverage: With real estate, people and companies will lend you money to invest. How much real estate can you buy with $20,000? Probably between $100,000-$300,000, depending on the lender. Kings Bay Georgia Real Estate - An Amusing Tale About a Real Estate Agent This story is true and not meant to hurt anyone, but the more that I think about what happened, the more it makes me laugh. I hope that you not only get a chuckle from it as I did, but take your time and look for a professional real estate agent. What's Your Style? A Guide to America's Most Common Home Styles Styles of houses vary across the country. From the New England Cape Cod to the Victorians of San Francisco, the choices are almost endless. 11 Steps Away From Buying a Home There is no doubt that the market for houses has been on fire recently. More and more people are taking advantage of low interest rates and easy mortgage loan terms to go from being renters to being home owners. Reinventing Real Estate, Part 1: Online and Empowered Consumers Are Taking Charge and Paying Less For decades, the real estate world turned in a predictable manner. The roles of buyers, sellers and real estate professionals were fairly well defined and transactions followed a predictable path of yard signs, newspaper ads, open houses and miles of paperwork. Selling a House is Easy The thought of selling a house strikes fear into most people. The contracts, the legalese, the exorbitant costs - they all conspire to make the experience unpleasant at best, and a nightmare at worst. |
home | site map |
© 2006 TIGER MEDIA |