Real Estate Investing: The Advantages Never Change

September 12, 2015 by  
Filed under blog

Yesterday I was going through a bunch of old files and I came across a large envelope that my good friend Joe Sugarman sent me. Joe is the founder of the company that introduced the Blueblocker sunglasses that sold millions, making Joe a very, very rich man. In the package was a few of my old ads that Joe had kept.  On the old yellowed paper I re-read one of my first half page ads printed in the Wall Street Journal on January 25, 1977. The headline read “How to Achieve Total Financial Freedom”.  I am totally convinced that the reason the ad sold so many copies of my first book, How to Wake Up the Financial Genius Inside You, had less to do with the semi-catchy headline than the sub-header that read, “Millionaires Are Not 100 Times Smarter Than You, They Just Know The Wealth Formula”. I’m sure that most people read that and it rang true to them. Because it is true.

In the body of the ad I went on to say, “Millionaires are not 100 or even 10 times smarter than you , but it is a fact that millionaires are making 10 to 50 or even 100 times more than you.” Additionally, I should consider that millionaires are not working 100 or even 20 times harder or longer than you either. There are not enough hours in the day to work 20 times longer than your average worker! And now, 38 years later, I can clearly see that the formula to making big money and accumulating great wealth is basically the same today as it was way back then.

I can tell you for sure that if I were just starting out now as a young man without any money to speak of, just like I was years ago, I would pursue the same path as I did back then.  The only difference would be that I might be a little more aggressive today than I was then. Today’s market is ripe for the picking!  For the most part the only push back that I have had in recent years from readers of the Financial Genius book is that buying properties at the prices given in the book are just not possible in today’s market.  And those critics are absolutely correct, but the ratios are still pretty much the same.  In other words today you can’t find “dirt bag” properties for prices like $40,000 or $50,000 in most markets. And that’s correct.  But the ratios for what you can make on your investment are still the same.

In many cases, you can gain a 33% value increase on a dirt bag property you fix up. On a $50,000 property, that would be a little more than $66,000. But today, you may have to pay $120,000 or $200,000 dollars for a beat up property but after fixing it up, you could sell the $120,000 purchase for at least $159,000 and the $200,000 investment for $266,000 or more. Yes, these numbers don’t take into account the money you spent on fixing it up, but if you leveraged the deal with a mortgage–using someone else’s money to make money–you will find that the return on your investment goes up a ton and will usually more than make up for your fix up expenses.  So bottom line here is don’t get hung up on the lower price examples in the book, invest and pay attention to the percentages you can gain.

To help with that, I have recently updated my Financial Genius book. It will be going to the printer before too long and I will let you know here when it’s ready for ordering.