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: Florida real estate sellers slashing home prices as inventory surges to uncomfortable levels New York Post How real estate commission changes could affect buyers and sellers The Washington Post Here’s the latest on commercial real estate sales in Baton Rouge Greater Baton Rouge Business Report The Folly of China's Real-Estate Boom Was Easy to See, but No One Wanted to Stop It The Wall Street Journal Real estate experts share a message for home buyers as they predict rising home prices through 2025 Fox Business Berkshire Hathaway's Real Estate Firm to Pay $250 Million to Settle Real Estate Commission Lawsuits U.S. News & World Report Blackstone makes more real estate moves InvestmentNews Navigating Real Estate Law with The Mullin Blankfeld Group KLAS - 8 News Now Former HGTV star gets jail time for real estate fraud WGN TV Chicago An ongoing issue for the Rockford-area's top-ranked real estate market: Not enough homes on the market Rock River Current Blackstone's Beleaguered Real-Estate Fund Stems Exodus The Wall Street Journal Routt County real estate sales at $26.2M from April 19-24 Steamboat Pilot & Today Warren Buffett's real estate firm pays $250M to settle antitrust suit over commissions New York Post EG Real Estate: A Block of Historic Downtown Hits the Market – East Greenwich News East Greenwich News Judge Approves $418 Million Settlement That Will Change Real Estate Commissions - The New York Times Can Robert Kiyosaki's Real Estate Investing Make You Rich in 2024? Norada Real Estate Investments Reversing the Real-Estate Doom Loop Is Possible. Just Look at Detroit. The Wall Street Journal Real estate, business leaders help honor Milwaukee-area real estate projects: Slideshow - Milwaukee Business Journal The Business Journals The Pipeline: Commercial real estate roundup for 4.26.24 RichmondBizSense Max Azria's Manse Hits the Market, an Edward Fickett House Lists, and More Real Estate News Architectural Digest This is America's Hottest Luxury Housing Market of 2024 Norada Real Estate Investments East Austin real estate booming after Tesla The Business Journals Mike Wyatt's legacy: Longtime Dallas real estate broker remembered - Dallas Business Journal The Business Journals Berkshire Hathaway's real estate firm to pay $250 million to settle real estate commission lawsuits El Paso Inc. 10 Cheapest Florida Beach Vacations for 2024: Affordable Beaches Norada Real Estate Investments This ornate Queens home with $1M of mahogany additions asks $5.77M -- one of the priciest in the borough New York Post A+ Real Estate: See How Much It Costs To Buy a Home in the Nation's Top 10 School Districts Realtor.com News Berkshire Hathaway's real estate firm to pay $250 million to settle real estate commission lawsuits The Atlanta Journal Constitution New Jersey DOI mulls $250m commitment to Bain real estate fund IPE Real Assets Solano Real Estate Scene: Back road to downtown Suisun City Fairfield Daily Republic Rockford Is Now America's Top Housing Market After an Improbable Turnaround The Wall Street Journal Some Exciting North TX Real Estate Projects in 2024 The Dallas Express Solano Real Estate Transactions: April 26, 2024 | Solano Business | dailyrepublic.com Fairfield Daily Republic From First-Class to Super Prime: A Luxury Real Estate Success Story News Channel Nebraska $2.2 million Key Biscayne townhome highlights this week's Real estate deals for Key Biscayne and Brickell Islander News.com reAlpha Tech Corp. Launches Claire, Real Estate's First AI-powered, Zero-Commission Smart Buyer's Agent Business Wire Real estate transfers: 3 Stark County homes sell for $500000 or more Canton Repository real estate market and insurance Sacramento Appraisal Blog San Francisco Buyers Bring Its Luxury Housing Market Back to Life The Wall Street Journal $5 billion real estate firm St. John Properties opens office in Plano The Dallas Morning News Real Estate Investment in Belize - Luxury Beach Front Opportunities | Covington-Maple Valley Reporter Covington-Maple Valley Reporter Berkshire Hathaway's real estate firm to pay $250 million to settle real estate commission lawsuits Bowling Green Daily News Homebuyers and sellers might spend less following major real-estate settlement - Evanston RoundTable Homebuyers and sellers might spend less following major real-estate settlement Evanston RoundTable Coima selected for €500m Intesa Sanpaolo real estate mandate IPE Real Assets Recent commercial real estate transactions - 4/24/24 BizTimes Milwaukee Cincinnati zoning changes: Homeowners rip into city - Cincinnati Business Courier The Business Journals Real-estate agent's ritzy Hamptons home used in fake Airbnb scam Business Insider Is The Housing Market Going To Crash? Bankrate.com 9 Ways Rich Real Estate Owners Save Big on Estate Taxes Business Insider Berkshire Hathaway's real estate firm to pay $250 million to settle real estate commission lawsuits MSN Agencies' headquarters in DC remained 'nearly empty' in 2023, real-estate board finds Federal News Network Real Estate Quarterly: Auctions On the Rise Los Angeles Business Journal Big Tech Is Downsizing Workspace in Another Blow to Office Real Estate The Wall Street Journal Chris Hemsworth's Homes: Inside the Marvel Star's Real Estate Portfolio Architectural Digest |
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 |