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Always Living Large

June 28, 2019 by  
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So, I’ve been having a bit of a stressful but exciting week as I work on a big real estate deal. Yes, sometimes, even though I’ve been doing this for decades, making deals can be a little taxing but as Mitt Romney, former GOP candidate for President once said to the graduating students at Utah Valley University about experiencing a fulfilling and purposeful life,  “One thing you’re going to have to do is live a ‘large life’”. What great advice. That is something all of us need to pay attention to. We need to go out and do it and do it our entire lives.  I wrote about this some 4 years ago, but I think it’s worth a rerun. So, here’s basically what I wrote in May of 2015:

So many times, we hesitate to “live large”. Why? Because most of the time we fear that we will fail. “Failures don’t have to define who you are,” Romney had gone on to say in that Utah Valley University speech. “Through all my occupations, I have experienced successes and failures. I am asked what it felt like to lose to President Obama. Well, not as good as winning. Failures aren’t fun, but they are inevitable.”

How about you?  Have you racked up a lot of failures or just a few?  It seems to me, from my experience, that the number of failures I’ve had is in direct proportion to how large I’ve tried to live.  So, yes, I’ve had a ton of failures but some of those have led to some huge successes. And the reason for those successes was that I learned so much from my failures.

I remember one huge loss that I learned a valuable lesson from which lead me to some very, very large successes.  What happened was I decided to lend a large amount of money with a restaurant as collateral.  Big mistake on my part! Why? Because I don’t know much about that kind of business so if it failed, I certainly wouldn’t know how to run it. And guess what? It did fail and I lost almost all of what I had loaned.

What did I learn?  Well first I found out that restaurants have a very high rate of failure and second, I learned that I shouldn’t stray from what I know best.  Not that I shouldn’t ever loan money but if I do, I should loan it on assets that I understand as well as being on improved real estate which, ideally, would also be income producing.

I forged ahead and made many millions of dollars’ worth of loans that were backed up by real estate and was very successful.  Later I discovered that I could do even better by owning the right kind of income producing properties. I also, very successfully ventured into the development of condos and warehouses, where the profits were even bigger although they did come with increased risks but in that case, those were risks I was willing to take.  And much, if not most of that success, came from lessons learned from my failures and my trying to “live large”.

Romney’s words are not just for graduating students. They are wise words for us at any age!

Daring to Dream Big

April 12, 2019 by  
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Years ago, I dreamed of being wealthy. I studied the lives of the rich, especially the ones who started from scratch. I mean, I really studied them and analyzed everything they did and how they did it. I discovered that millionaires are not a hundred times, or even ten times, smarter than you and me. And they aren’t working ten times longer or harder. How could they? There are only 168 hours in a week — no one gets any more than that. The difference was an honest to goodness and simple wealth formula that, if followed, works.

Before I discovered this wealthy formula, I lived in Denver, Colorado in a cramped and tumbled down house at 2545 S. High Street, near the University of Denver. I felt desperate and forced into a corner. I had to borrow a $150 from my father and another $150 from my father in law just to buy groceries and help pay the rent. If that wasn’t enough, I was several thousand dollars in debt, but I still kept studying the lives of the rich and dreaming of being a millionaire.

Then it happened. I met Larry Rosenberg, a man who became my mentor and showed me the simple formula that had made millions for him. He convinced me that I could do the same thing.

I began to apply the formula I had been shown. The results were amazing! I couldn’t believe how simple it was. In fact, it seemed too simple. (Please note, I said simple, not easy!) It did take work but oh, how that work was so very worth it!

For the next 3 ½ years, I worked very hard to refine and improve the formula that I’d been shown so it would be easier to get quicker results. As I did this, my assets and income multiplied very rapidly to the point that I didn’t have to work at my regular job. I quit!

The simple formula that I had been shown was to leverage income producing real estate —-as in small houses and apartment buildings. The key to building my fortune was to find run down properties that I loved to call “dirt bag properties”. These were properties that I could fix up and improve the value by 10 or 20 percent and then I could turn that 10% or 20% increase in value to 100% return on my investment, because of that great thing called “leverage”.

And as I’m sure you know a 100% return on your money can and will increase your net worth quite quickly! In my experience leverage income producing properties is the most reliable, fastest, and safest method of making big time money. Most people have a little bit of that “leveraged real estate” in the home they bought. But if you have to go a step further and but some dirt-bag or rental properties and fix them up and make those huge 100% percent returns. If you buy right, it will work wonders for you.

 

The Shotgun Investment Strategy

March 8, 2019 by  
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In my opinion, and from my experience, the best type of asset that lends itself to forced improved value is good ol’ real estate, and specifically properties that need a face lift. These are beat up houses, duplexes, apartment buildings or what I have often refer to as dirt bag properties.

The key is to just do a face lift, not perform bone surgery, so you would need to find properties that are run down mainly on a cosmetic level. You really don’t want a property that needs to be fully rewired, have plumbing pulled, or the foundation replaced. I look for properties that haven’t been painted for 25 years or the front lawn is dead and the fence is falling apart. It may just need new carpet and window coverings to turn it around. Those kinds of properties can make you a fortune and can do so in a few short years.

I do want to add that when I was introduced to leverage, I was a stock broker. I began trying to use leverage with stocks and bonds, but I found out very quickly that the real problem was I really couldn’t fix up a stock and I didn’t have any control over the company whose stock I was buying or the stock market itself. I did, however, have some control over a little beat up house that I would buy, even though that is where the real work began.

Once you have found the dirt bag property, the next big chunk of work is actually doing the fix up to greatly improve its value and give you those big fat returns on your invested dollar. So how do you find those fixer uppers and exactly what kind of work does it take?

There are several ways this can be done. You could drive through the right neighborhoods that are a bit run down and in your price range, but that is the hard way to do it and it takes a ton of time. Since time is one of those things that none of us seems to have enough of, I recommend what I call the shotgun method. The concept of a shotgun is that when a hunter shoots at a bird the shotgun blasts hundreds of BBs that spread out as they speed toward the target. Most of those BBs miss the mark but it only takes one or two BBs to bring down the target. Likewise, my shotgun method of finding the right properties is very efficient and a real time saver and it only takes one or two hits to score your target.

All you do is use the internet to observe all the for-sale properties that even roughly fit your specs and then make low ball offers which would be around 20% to 25% lower than the asking price. You do this without even driving by the property. The real key here is to be sure you have a “subject to” clause in your offer, which basically says that this offer is good only if certain conditions are met. Those conditions can be acceptable financing or even something simple like “subject to my spouse or partners approval.”

So now when you shoot your shotgun at many dozens of properties each week or each month, you only get in your car and drive by and/or do an inspection after you get a counter offer or, sometimes, an actual acceptance on your super low-ball price! It does happen once in a while!

Using the shotgun method works if you make enough offers. Eventually, you’ll score a property and then the physical work begins. It’s not easy but it’s simple and, most importantly, increasing its value is within your control.

When You’re Not Brave

March 1, 2019 by  
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This week I want to continue on this big thing we all know and have experienced called fear. Let me start by asking, what do we know about these fears?

Well, first remember that fear is a natural emotion, one that must be understood, confronted, and controlled. So maybe when you have great fears for whatever reasons, this would be an appropriate time and place to “fake it till you make it”. Some people who know me are surprised to learn that I have been very fearful many times but have gone ahead and done the “fake it” thing.  Maybe we ought to whistle a happy tune and no one will suspect you and I are afraid. If we pretend to be brave, acting the way a brave person would act, the results can be amazing.

Consider the many times you have lain in bed thinking about some tough assignment, something that you are slightly or very fearful of doing. If you’ve never done it before, quite naturally you are reluctant and anxious. For example, if you are giving a speech for the first time to some very important people, or asking a banker for a huge loan, or presenting an offer to buy a particular property for a ridiculously low price. Or it may be visiting a new state, city, or country, or being a master of ceremonies. If you are normal you become very fearful with these new situations.

Whatever you have to do on that particular day as you lie in bed, if you have a few fears of doing it, they will only intensify the longer you lie there and think about it. What will overcome those frightening thoughts and imaginings is action. Even if it is incorrect action, get up, get going, and get the blood running and the brain thinking. Take a shower, get on the phone, write a few text messages and emails, go see people, or set up a lunch appointment. Make things happen!

Action overcomes fear because most fears are in your mind and action lets the physical part of you dominate for a while. The physical side of you needs to dominate because the mental side of you, in many cases, has become too introspective and too analytical. We tend to analyze so many things to death. We have all heard of “analysis paralysis,” which is more than two cute rhyming words.

Sometimes we think too much. In today’s educated, deep thinking and analyzing world, it sure seems that we have a lot more planners and thinkers and analyzers than we do action people. Obviously, we do need some kind of plan, but the greatest plan in the world is worthless without action. I would much rather have a mediocre plan and some real action people to carry it out than the most phenomenal plan in the world with a bunch of inactive and do-nothing people.

Action really is the critical key to huge success and accomplishment. I have never met a person in my life who has total confidence in themselves and doesn’t experience fear from time to time. There is not one of us human beings on this planet who won’t have some serious questions about their own ability to succeed in every new venture they start. We all need to remember that and as the great title of Susan Jeffers book says, “Feel the Fear and Do It Anyway”!

Smart Money Hedges Bets In Tough Times

February 15, 2019 by  
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We’ve had quite a few very good years, economically speaking, and we may very well have a few more to come. There are, however, some warning signs that things are starting to change but it’s a slow change. Here are few things the so-called experts are predicting that, in my opinion, are very likely to happen:

  1. European expansion will slow down.
  2. Japan’s recovery will remain weak.
  3. China’s economy will keep decelerating.
  4. The rate of inflation will stay around 3%.
  5. The Feds will raise interest rates 3 times in 2019.

The experts, however, are predicting that changes will take maybe 2 or 3 more years, and will no doubt happen slowly. Regardless, many of us investors are thinking about hedging our financials that’s right now. You might ask why wouldn’t anybody or everybody hedge their bets if they knew tough times were coming? Of course, many people would, but the average person doesn’t know that tough times are ahead.

Smart money –money that is invested by people with expert knowledge – does not always do well either, but there are indications that give the smart money people a head start on everyone else. No, they are not always right, but they are more often than not.

A very important part of the formula is to be an independent thinker. The overall economy is like a gigantic river. Sure, you can swim upstream, but it is very difficult. What smart money does is watch the general direction of the flow of that giant stream. Smart money people know that the flow doesn’t suddenly turn around and run the over way.

So even though some of the experts are saying our markets and economy is ready to turn around and go down, it most likely will not happen fast. So, these days, I am advising people to do two things to hedge their money and investment bets:

#1 – Save cash. Build up a cash reserve to be invested after the economic pull back.

#2 – Even though you are building your cash reserves, keep making low ball offers to highly motivated sellers. Granted, there are not a lot of motivated sellers right now because the economy has been in an uptrend for quite a while and many people think it will continue. Still, there are always some motivated sellers out there that need to sell for various reason and some of these people need to do it now at under market prices.

Finding those motivated sellers and making those lowball offers is still smart money, especially if you can do so while building up your cash reserve. So, you might as well keep throwing you net out there and see what you can find. That kind of smart investing and saving is the kind of thing that will get you through the tough times, whenever it is they get here.

 

 

The 100% Return Goal

January 18, 2019 by  
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As we begin a new year it’s a very good time to remember the basics, specifically the basics of financial independence through which you make and keep your own fortune.  It’s so easy to forget the basics, especially when we are all caught up in the details of our daily lives, even those details that are involved with building our wealth. For example, if you have a big problem with the plumbing at a rental property or the property taxes just got bumped up, it’s easy to focus on just that, but that can get you frustrated or make you kind of space out on your overall plan.

What you should not forget is that you have to continue to look at the big picture, looking for ways to take advantage of leverage whereby you could earn as much as 100% of your money due to compounding. I’ve certainly been there and done that. Even on the very property that is giving me fits, I many times have failed to step back and realize that my equity on that very property has already exceeded a 100% return on my money and I should be motivated and reminded to keep doing that.

There is a simple example that I used in my fist book, How to Wake Up the Financial Genius Inside You, where I showed how 1 single penny a day compounded at 100% a day turns into just over $339 million on the 35th day alone. Now I know there is no way you can compound your money at 100% per day, but it is possible to compound your money at 100% per year, especially in the first few years. The key to those huge numbers is using other people’s money (your leverage). So, maybe only 10, 20 or 30% of the price you pay is with your own money and then the rest is in a loan from the bank or the seller for the balance. It’s not only possible but many people are doing just that, every day, including myself and many people that I know and have helped.

I do know that finding beat up properties these days can be a bit more difficult, depending on where your market is, but things change and prices go up and down and you and I need to always be looking for those bargains, especially those properties that need fixing up, the ones I like to call “dirt bag properties”. Then, always remember that good ole leverage formula:
If your down payment is only 10%, and you improve the property enough to increase the value by 10% you have made a 100% return on your money. That formula is a little simplistic since it doesn’t take into account your expenses, but you can keep those pretty darn low if you do most of the work yourself. Just don’t let the goal of a 100% return on your investment scare you away because it seems too difficult. If you can get even part way there, say just a 30% return on your money per year on only $10,000, that fraction of the big goal will still add up to over $1,124,000 in just 18 years.

My big point here is that we must keep the big picture in mind and remember that those potential returns are there. If you do, it becomes easier to not be deterred or discouraged by those plumbing issues, property tax increases, or other relatively minor problems.  Keep your eye and your dreams focused on the big prize, because it is all together very possible to achieve that big goal.

Give Big, Live Big

December 14, 2018 by  
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Have you ever noticed that with my blog I am never really trying to sell you a product? Well, I guess I’m selling something, or more accurately I’m trying to give you something and hoping that you’ll snap it up. What I’m “selling” is information and ideas and, hopefully, inspiration and motivation. It’s not that I’m against selling stuff such as books, seminars and, oh yes, an old beat up piece of real estate that I’ve fixed up and increased the price – and value! – substantially. But at this point in my life, I feel so much more like giving rather than selling.  As I’ve said before, “If you want to live big, give big.” And, of course, we are now in that wonderful giving time of year and I think you will agree with me that it feels so very good to give.

What’s amazing about giving is that it can be somewhat selfish. That may sound odd but when I give a lot it makes me feel so very good inside so wanting to feel that good is kind of selfish but in a very positive way. I love to share with others what I’ve learned about making tons of money and expanding the possibilities and experiences of one’s life and most of us need help and assistance to lift up our lives to higher levels. I mean who among us has a perfect life and doesn’t need some motivation and help in at least in at least a couple parts of our lives? Every single person that I’ve ever met that have been super successful, whether it was with money matters, business, sports, family, or love, have been helped by someone. Sometimes it is in person through work, networking, friends, people met at clubs, etc. Sometimes it is more indirect such as the things we learn from someone through books, seminars, or even blogs. We all have others to thank and appreciate.

I certainly have lots of great books, friends, coaches, and leaders who have lifted so many parts of my life. At this juncture of my life, I feel stronger than ever and so it’s time for me to give back – it’s time to pay it forward. I want to be of great help to others and not just through my books and lectures. I love to give my time and money to charities. And no, I am not talking about those huge charities that pay their CEOs or presidents one or $2 million a year. Ugh. I’m pretty sure they could find an equally qualified person that is retired or semi-retired that would do the same job for free or a small salary. It’s just not going to be me.

So, in the spirit of the season, I’d like to challenge you, my readers, to give, give, give! And, yes, even though it feels a bit selfish, you will see, as I’m sure you have in the past, that when you give BIG, you really do begin to live BIG!

Invest in a Basic Need

October 26, 2018 by  
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Just yesterday, I was on a conference call discussing options for doing a 1031 exchange as a big property that I’m a part owner of was recently sold for many, many millions of dollars. We did make a huge profit on this property and it had a great cash flow during the time we owned it, just like most of the income properties I’ve invested in, but it was time to sell. So, we were looking at our options to buy into other properties which would allow us to avoid paying a huge capital gains tax. We discussed several properties that looked quite promising when one of the partners—a guy much smarter than me—talked about the possible softening of the real estate market due to rising interest rates. Whereas he and others agreed that we are probably due for a pull-back of property values, the new acquisitions looked so promising that a pull-back in prices in the area would not likely have much effect on our possible purchase but it was still a risk.

I was faced with a similar dilemma many years ago and just recently happened to come across something I wrote back then when everyone was worried about a down turn in the economy and a pull-back of real estate prices. My headline was “A Basic Need”. In this piece I wrote, “Why is real estate such a good investment? Why do experts predict that the real estate market may slow down but will probably never fail?”

My answer to those questions is the reason why real estate is such a super great investment – real estate is an answer to a basic need. People always need a place to live, a place to work, a place to shop, a place to stay when on a vacation, and even a place to farm. Improved real estate is especially in demand and it is in demand most of the time. These include apartment units, single family houses, duplexes, etc. And, of course, one of the huge benefits of this kind of real estate is that even if the market softens and price come down, you still have someone else increasing your net worth since their rent payments are paying down your mortgage. Is that a great deal or what?

Even when the market softens a bit, eventually, these properties regain their value as the supply of units shrink and rents begin to climb again. I’ve seen this happen many, many times but investing in small rental houses, duplexes and apartment buildings, through all kinds of market conditions, was how I made my first million. I would keep buying as the market softened and prices and rents began to drop, but I was pretty darn sure the drop would eventually be over and, sure enough, the slump would end and put more millions in my pocket.

Bottom line here is yes, the economy will probably pull back a bit in the next year or so, but this can open up many opportunities for you and can bring you big profits in the long run. So, keep an eye out for good income properties and make offers to buy, whether the economy softens or it keeps on growing.

 

A Billionaire and a Popstar

August 31, 2018 by  
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I’m sure you’ve taken note of certain people whose lives seem packed full of many marvelous activities, adventures, and experiences. Have you ever wondered how they do it all? Well, a big part of their success is that they are good at making, keeping, and working off of lists.

A good example is British billionaire Sir Richard Branson, who credits his lists of things he wants to accomplish as the key to his getting so much done. He takes the time to go down that list often, adding to it and checking off each item as it is completed.

Here’s a guy who, at the tender age of 25, had the nerve to make a $100,000 offer to buy the Caribbean island of Necker that was listed for sale at $6 million dollars. No, the seller didn’t accept that low ball offer but, later, Branson did buy the entire island for a mere $180,000 which ended up being one of his favorite paradise getaways. And get this … his super luxury cabin rents out for $65,000 a night! Wow. That’s my kind of real estate investment – a place you can rent out, when not using it for yourself, that provides a super great cash flow.

Today, his Virgin group of businesses owns more than 200 different companies. Among these companies are businesses that specialize in air travel, finance, retail sales, music, cell phones, internet, hotels, and even a railroad. In 1999, Branson attempted, and broke, world records in hot air balloon travel and in a transatlantic small boat crossing.

Pop star, Madonna, also has a reputation as a big list maker. Although her accomplishments are in different areas than Branson’s, she attributes her list-making to keeping track of her priorities and getting so much done.

Lists are one of the secrets used by the rich and famous every day of their lives. They help them to run their businesses and to expand their ventures. List making is a common trait of millions of successful people regardless of race, sex, nationality, or occupation. Lists are used to lift their lives and propel them toward fulfillment. And lists can do the same for you and me!

Once again, as I write about this, it truly motivates me to make more lists and be more consistent in doing just that. But here’s a good question to end on: How important is it to “Prioritize” your lists?  We’ll talk about that next week.

In the meantime, how about you or your son or granddaughter become the next Branson? Hey, it could happen, and then maybe you will invite me to a hot air balloon ride across the Atlantic!

Money Can Buy You Novelty

August 17, 2018 by  
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If you Google “Ignite My Life Now”, you will see “Investing in Real Estate” as part of the headline, so some people might wonder if this blog is about investing in real estate or igniting your life. I certainly believe that investing in real estate and making lots of money does not necessarily  ignite a person’s life, even if real estate investing yields millions and millions of dollars for that person. I clearly remember thinking, when I was young and didn’t have much money, that once I made a million dollars, my world would be perfect and I would be totally satisfied, content, and happy. I imagined that my life would be totally ignited.

However, when I arrived at my first million-dollar net worth goal, I was surprised and disappointed that I didn’t feel much better, so I figured I had to make another million or two, then I would be totally set in the departments of contentment, happiness and fulfillment. I was certain that my world would be pretty much ignited and perfect then. But surprise, surprise … when I arrived at my new goal my life still didn’t seem to be ignited.

I looked deeper and deeper to try to discover what the real key to fulfillment, contentment, and happiness in a person’s life was and whether money could play a part. As it turns out, there is a lot that goes into having a content, fulfilled, and happy life and, yes, money can be a part of that.

We all know that love and loving relationships with other people – a spouse, friends, children and others – lifts the happiness factor as does setting goals and reaching them. It also has been proven that unique and novel experiences can revitalize a person’s mind by boosting a brain chemical called dopamine, which makes you feel so very happy. But, what about money? What part can it play in lifting our contentment and happiness factors?

What I have found is that money by itself does not make a person much happier than when they did not have it. It can, however, buy more possibilities in a person’s world. You see, our brains want novelty and money can give you more time and resources to carefully and creatively design and go after these novel experiences. This is one of the best uses of your money.

I’ll never forget all the totally unique and novel experiences I had when my wife and I went around the world in 28 days, visiting dozens of new and different countries with so many totally different life styles, houses, huge castles, small villages and fascinating people of different cultures, religions and habits. On a smaller scale but also quite stimulating for the mind, is being in places like I am now.

As I write this blog I am sitting in a marvelous,  multi-story “cabin” in beautiful Big Sky, Montana, totally enjoying this very unique and novel place with most of my kids and grandkids. Ok, yes, I’m working, writing this blog as the some of the kids are running about, visiting Yellowstone, looking to go tubing, or taking the chairlift to the top of the mountain. But none of this would be happening if I hadn’t invested in the good ole real estate stuff and make some good money at it.

The big bonus to making money on my investments was that I really did enjoy the work and I got a ton of contentment along the way as I worked through each deal. I even broke a sweat back in the days when I did much of the hard labor to repair and fix houses and apartment buildings in order to increase their value. I’m not saying that I’ve always been perfectly happy and content, but I am saying that money has opened a much wider world for novel and unique experiences that have greatly enhanced and lifted my world.

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