Last week I talked about the 10% method for building the capital you need to get into what is today’s top investment opportunity—real estate. The only issue with the 10% method is that it will take some time to pull enough from your paycheck to have the seed money for your first real estate investment. So how can you take advantage of the great opportunities out there right now?
Simple. You have other people put the money in for you.
The best “super leverage” method I’ve seen is what I call the “Hansen model” after a particularly ingenious investor by the name of Dell Loy Hansen. You can read about Dell and his method in detail starting on page 184 of my book How to Ignite Your Passion for Living, but I’ll give you the gist of it here.
To start, you need a few people looking to invest in a safe, reliable project that will give them a regular and consistent return. Get them to collectively fund a down payment of 20% or more on the property you want to purchase and promise a reasonable return–say a 10% APR, an amount that is presently 500% higher than the best CD can offer. If you can put in some of your own money as well, it makes the investors feel much more secure as you’re backing your confidence in the investment’s potential by also putting your money at risk.
Then when you flip that house or rent those office spaces, get the best return possible and get the money back to your investors with a higher than expected rate of return. When they see that you not only lived up to but exceeded their return expectations, you will have created a enthusiastic group of investors for future projects as well as getting wonderful word of mouth that could bring even more money flocking to you.
There are plenty of people out there right now who have cash to invest but don’t want to bank on the unpredictable stock market and aren’t getting anywhere with the meager CD returns. So start working on cultivating those investor relationships and get access to the “leverage” you need to gain financial freedom sooner than you thought possible.
The recession is still being felt in many parts of the country and the depressing talk about how bad things are continues. Real estate prices are still depressed, interest rates are still uncommonly low, and jobs are still on the scarce side, but those indicators aren’t actually signs of doom and gloom, they are shining signs of opportunity. It is unlikely that you will see better deals on real estate or find lower interest rates on loans in your lifetime and if you are stuck in a job you aren’t happy with because you can’t find a new one, start your journey to financial freedom by investing now and investing wisely.
Of course, the first question you are asking yourself is, where do I find the money to invest? The common belief is that you need to be making big bucks in order to have extra money to invest. But the fact is, it doesn’t matter how much you make. All you need is a plan and a little discipline.
If you have ever had a big jump in salary you may have been amazed 6 months into getting those fat paychecks that you were not able to save any more money than before. That’s because we tend to spend at our income level or beyond it so if you make more, you feel like you can, or even should, spend more. Nicer dinners, more expensive clothes, a few more nights out, a pricier car or vacation and the “extra” money you are making is gone. So how do you get around this tendency?
You can do this by putting away 10% of every paycheck—automatically, without exception, every pay day–then pay yourself (i.e. pay your bills as well as earmarking money for essentials like groceries and gas) before spending on any non-essentials. This will keep you within budget and on track to gathering a sizeable sum that you can then invest and start making even more money from. In today’s economy, real estate is an accessible and wise investment opportunity that you should really be taking advantage of. And starting with this smart savings tactic will get you there far sooner than you think.
You can read more about the potential of real estate investments on pg 191 of How to Ignite Your Passion for Living as well as on page 31 of Waking Up The Financial Genius Inside You (write me directly to order this book for just the cost of shipping).
You might have already noticed that no matter how well you map out the steps you need to take to reach your goals or how intent you are on hitting every deadline you set for yourself, you don’t always manage it. Sometimes unexpected circumstances arise and other people need your time, attention, and support. It’s important that you make the needs of your family and friends one of your priorities-—helping them and others is a big part of living a fulfilling, passionate life–but you must never forget to take care of yourself as well.
I know this can often be very difficult and some days you just want to throw your hands up in surrender. Well don’t. No matter what is happening you really can help the people you care for, keep making progress on your own goals, and keep sane all at the same time. The way to do this is to use that “L” factor I talk about in Chapter 8 of my book, How to Ignite Your Passion for Living–list making.
Lists are the ideal life line for when things get hectic so be sure you make a list of what you want to get done for yourself and others every day. Then when the proverbial wrench gets thrown into your plans get the issue resolved or the interruption wrapped up as soon as possible and return to your list. Don’t worry if it takes hours to get back on track or even the next day. The important thing is to keep the list as the guideline for your day so you don’t get sidetracked or lost in the chaos.
You will also find that if you complete the items according to their priority for that day that even if you are interrupted, the most important things still get done. Anything left undone should be transferred to the next day’s list and made a priority for that day. If one or two of your top priorities are steps toward accomplishing your goals, you are certain to make the progress you need to keep up your enthusiasm and eventually accomplish what you are after. Because, in the end, it’s not how quickly you reach your goal but that you have something to strive for that fuels your passion and creates a life worth celebrating.
Have you ever sat in front of the computer reading email while talking to someone on the phone and listening to the news on the nearby TV? Such multi-tasking is pretty common place these days. I’ve even seen people strolling on the beach and texting away on their Blackberry while holding a conversation with the person walking next to them. Life has sped up so much that we feel like we have to do as many things as we can at once just to keep up. But then the question is, what information and experiences are we really taking in at these times?
The thing about multi-tasking is that we can’t actually do multiple things at the same time, not fully. Our brains are built to focus, not run multiple programs at the same time the way a computer can. This means that when we have multiple things going on but we aren’t fully experiencing any one of them. We are not “living in the now” but rather in a shallow, half-realized moment. How much do you fail to notice while multi-tasking? What personal connections do you miss out on? What amazing moment in your child’s life will you never have a memory of to cherish because you are half focused elsewhere?
In our high tech, fast paced world, it might not be fashionable, but taking time to slow down, put the high-tech toys away, and become completely aware of your surroundings, the conversation you are engaged in, and the way you are feeling at the moment may actually be the ‘edge’ you need to keep up with the rat race. You will be more content moment to moment, probably much less stressed, and certainly happier with your life and your progress because you would know exactly where you are and where you have been. So next time you are ambling through the great outdoors, attending a family gathering, or even just talking on the phone, turn your focus and your full awareness on where you are and what is most important at that moment. See if it doesn’t make a huge difference in the quality of your work and the quality of your life.