March 25, 2016 by  
Filed under blog

Ever wonder why many smart, hard working people end up making only $40,000, $50,000 or $60,000 a year while others who don’t seem to be any smarter or work any harder, make millions and even billions?  Years ago when I was advertising my first book, How to Wake Up the Financial Genius Inside You, I used as a tag line, “Millionaires are not 100 times smarter than you, they just know the wealth formula.” So, if you are making $50,000 dollars a year, that very rich person, who is no smarter and is not working any harder than you, could be making $5 million.

On last week’s blog, I just touched on the basics of this formula. So if you read it, you may remember that I told you if you go out and buy a property that needs fixing up with a 20% down payment, putting another 5% into the fix up, you could improve the value of that property by 15%. That 15% would equal a 60% return on your actual invested dollars. But just how does that happen?

The million-dollar miracle part of that simple example, which I and others have done may times over, is a matter of leverage. You see, you leveraged your 25% (your 20% down plus that 5% to fix the place up) which allowed you to borrow 75% of the money so you could acquire the property. But your return is on the total value of the house. In other words the 15% increase in value of the property would equal a 60% return on your down plus fix up cost. Then by doing basically the same thing again on another property, you would be doing what is known as ‘compounding your return’.

Now here is the shocking and exciting part of this thing called compounding. Are you sitting down? If you keep getting a leveraged return of 60% on your investments, you can start with just $4,000 and build that into $48 million dollars in just 20 years! Now that’s what I believe is a super money miracle.

It really is that simple. Mind you, I didn’t say easy, I said “simple”. You really have to work your buns off to first find the deals and then fix them up to a point that increases their value. I’ve made a 60% return on many, many properties. I have also received thousands of letters, emails and phone calls from people who have told me that by following what I have been doing for years, they have seen, not just 60% returns, but even 100%, 200% and more.

However, you will no doubt find, as I did, that it usually is easier to get those fat returns on smaller properties.  As you move into larger and larger properties it does become more difficult but it is not impossible to get high returns on your dollar there either. I had one $2 million deal that made me more than a 100% return and even a new $27 million deal that returned more that 60% on my invested dollar.

I hope that this kind of huge potential will motivate you to keep working on deals, even the small ones you’ll have in the beginning. Remember those baby steps are necessary and very important. They show you what you can do. Those huge numbers I spoke of don’t happen overnight and that can be discouraging. Just focus on your success and build on it as you go and just like compounded money, your compounded efforts will also build into huge returns for you!