Live Large, Take Risks
June 16, 2024 by MarkHaroldsen
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Back in 2015, Mitt Romney, former GOP candidate for President made some memorable and powerful comments to the graduating class at Utah Valley University. He advised the students “to experience a fulfilling, purposeful life.” But then he took it a step further and went on to say, “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 think about and pay attention to. We need to go out and live large and do it our entire lives. So many times, we hesitate to “Live Large” in meaningful and fulfilling ways. Why? Because most of the time we fear that we will fail.
“Failures don’t have to define who you are,” Romney said in that same 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? Do you think the frequency of your failures compared to your successes has motivated to try harder and go bigger or has it held you back?
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 I’ve also had some really huge successes. And I think I had those big successes because of all that I learned from my failures.
I remember one huge loss that I learned a valuable lesson from which led me to some of those very, very large successes. I had decided to lend a large amount of money with a restaurant as collateral. This turned out to be a huge mistake on my part! Why? Because I don’t know much about that kind of business so if it failed, I had little knowledge or skills to save it or run it. And guess what? It did fail and I lost almost all of what I had loaned.
What did I learn? Well, first of all, 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 sticking to 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 by real estate and I was very successful there. 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. The thing was, those were risks I was willing to take because I knew the business.
Had the restaurant been successful, I might have gone on to make bigger mistakes in that and other businesses that I knew nothing about. So, yes, I would say that much, if not most, of my success with real estate backed loans came from lessons learned from that one particular failure and, confident that I’d learned a valuable lesson, I went on to “Live Large”.
So, don’t be afraid to take those risks and make mistakes but just be sure you are paying attention to the really valuable lessons you’ll find in living large.
2022: A Year of Action
January 2, 2022 by MarkHaroldsen
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Here we are again. We have a whole new year in front of us and many of us are making plans, renewing commitments, and generally trying to figure out what we want to accomplish this year. I know I have more than a few things that I’m ready to get to work on!
Regardless of what any of us plan to do, there is one thing we all have in common. We MUST take action, real solid action, for any plan, goal, or dream to become reality.
That first step, the one that shows true action and commitment, is more important than any other step you take because it will be the impetus and motivation for every step afterwards. But don’t fool yourself about what a first step is.
Reading a book, looking stuff up on the internet, or asking your friends’ opinions may feel like first steps, but they are really just part of the planning, and planning is not what actually makes things happen. The first real step occurs when you invest something valuable or take a real risk with your money, time, or ego.
For example:
- Throwing out all the junk food in your house is a true first step to a better diet.
- Paying a lawyer to draw up your business organization papers shows a real commitment to starting on your entrepreneurial path.
- Joining a writer’s group that requires you to write 10 pages a week makes you accountable and shows yourself and other how serious you are about writing that novel.
So, what is that first important, substantial, and invested step you need to take to get your plans rolling? If you’re not sure, take the time to write out what your first steps are. Then ask yourself which of those steps require so kind of personal, time, or financial investment. The ones that do are your first real steps, the ones that will get you truly get you on your way. So, make those your priority.
If you feel like you might still need a little push to take those first substantial steps, or you need some additional inspiration, try reading my book again, How to Ignite Your Passion for Living. If you haven’t read it, then definitely get a copy and read it. Then get to work.
Let’s see what wonderful things we can make happen in 2022 by taking action now!
Smart Money Hedges Bets In Tough Times
February 15, 2019 by MarkHaroldsen
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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:
- European expansion will slow down.
- Japan’s recovery will remain weak.
- China’s economy will keep decelerating.
- The rate of inflation will stay around 3%.
- 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.
Blink Moments
June 22, 2018 by MarkHaroldsen
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To continue last week’s subject on what we can do in the blink of an eye, I’d like to tell you a story about what the great Getty Museum learned from the “blink†that unconsciously happens in our brains.
An art dealer approached the J. Paul Getty Museum in California years ago to sell a rare 7 foot, a statue that was claimed to be thousands of years old. They were asking for $10 million. It was certainly worth that much money, if indeed it was a genuine piece. Getty took the statue on loan and began a thorough investigation. After 14 months of study by experts, Getty was satisfied so they agreed to buy it.
But then, before they closed the deal, two people had their own “blink†moment, feeling something was very wrong. As Malcolm Gladwell writes in his book, Blink, an Italian art historian, who served on the Getty board of trustees, “found himself staring at the sculpture’s fingernails. In a way, he couldn’t immediately articulate why they seemed wrong to him.”
Next to look at it was Evelyn Harrison who was one of the world’s foremost experts on Greek sculpture. In the very first moment when the cloth was taken off the sculpture, what did Harrison see? Gladwell writes, “She didn’t know, but she had a hunch, an instinctive sense that something was amiss. Several others that saw the kouros felt an ‘intuitive repulsion’, and they were absolutely right. In the first two seconds of looking at the work –in a single glance or blink of the eye–they were able to understand more about the essence of the statue than the team at the Getty was to understand after fourteen months.†The statue was proved to be a fake and those people who paid attention to the blink of their “adaptive unconscious” were proved to be totally correct.
We all need to give more credibility and pay attention to those “blinks of our brains” because it can lead us to great success and do it much faster than we can understand. Gladwell writes, “I think we are innately suspicious of this kind of rapid cognition. We live in a world that assumes that the quality of a decision is directly related to the time and effort that went into making it … We really only trust conscious decision making. But there are moments, particularly in times of stress, when haste does not make waste, when our snap judgments and first impression can offer a much better means of making sense of the worth. The first task of Blink is to convince you of a simple fact: decisions made very quickly can be every bit as good as decisions made cautiously and deliberately.”
This is not to say that we shouldn’t do our due diligence or research on an investment or in other parts of our lives, but if your gut reaction is telling you something different, you should pay a lot of attention to that “blink” in your brain.
How to Double Your Financial Leverage
August 13, 2016 by MarkHaroldsen
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Leverage is a great tool you can use to grow very, very wealthy and do it fairly quickly, but there is another faster way to make the financial returns even bigger! I like to call this bigger and better way “Super Duper Leverage” because it really can magnify your return on investments and at a more rapid pace. The method involves bringing a partner or partners in on your deals.
In my early years of investing in real estate, I didn’t have any partners. All the money that was needed on a deal was mine and, of course, there would be the loan from the bank or from the seller of the property. But then I came across a super bargain on a 100 unit apartment building that I just had to have because I knew that it was going to be a huge money maker. The only problem was that I didn’t have enough money for the down payment.
However, as luck would have it, the real estate agent told me she had a friend that could put up a huge part of the down payment. To make a long story short, I put up what I had and this guy, who I’d never met before, living up in Idaho, put up the majority of the down payment.
Fast forward a few years … I sold the property giving the investor/partner hundreds of thousands of dollars’ in profit. The great part about this though, is that I also made the same profit but on my much smaller investment. The return was several times the amount I put in so I was thrilled and not only that, my new partner was happy as a clam, seeing he had put his money into a great deal with a partner that didn’t let him down.
Bottom line is that, with this partner putting up most of the money I was able to achieve a huge return on my investment–a much, much bigger return than I could ever have gotten on my own—and my partner had a big win as well! That’s what I call “Super Duper Leverage”.
If I’d been more aggressive after learning and profiting from the lesson I learned from that great deal, I probably could have kept up with my most successful student and follower, Dell Loy Hansen, who bought my book when he was in college. He eventually found a gold mine of very wealthy partners who, over time, joined him in multimillion dollar deals to the point that Dell now has over a billion dollars’ worth of property. Wow. Talk about “Super Duper Leverage”!
I want to elaborate on this subject more next week and give you some methods and ways to find and keep partners so as to be able to leverage your investments to the max. I’ll also talk about the legal aspects and the caution you need to use so as to do it the right way without legal troubles. You can certainly make a great deal of money with a partner but you also need to do it smart so you keep what you make and can go on to make even bigger and better investments with partners who trust you and keep coming back for more.
Control Your Wealth
March 18, 2016 by MarkHaroldsen
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Last week I ended my blog by talking about the huge importance of saving a minimum of 10% of your income as the first step to achieving total financial freedom and making that savings plan an absolute habit so you do it automatically every time.
But now what to do with that money? Where do you invest it for the best possible return with a reasonable low risk?
One rule that I’ve kept for life in investing is to never turn over total control of my money to someone else. As a stockbroker many years ago, I played in the market and usually lost money or just broke even. Part of the reason was that not only did I have no say or control over the company I bought into but I also had absolutely no control over the stock market and the direction it went.
But then I met a guy who became my wonderful and brilliant coach, Larry Rosenberg. He convinced me that improved rental real estate was the safest and most consistent way to build a fortune. Why? Because if you buy right and buy a property that needs improvement, you can reap huge returns and much of what happens with your investment is in your control.
First of all, you have the power of leverage you can apply when you have the right assets. In other words, if you fix up a property and raise its value by, say, 15% then that 15% improvement in value can turn your investment into a fat 60% on your money! That huge return is based on your choices. In this case, you would put a 20% down payment on it and keep fix up costs at about 5%. These are your decisions to make and therefore you have some control over how well you make out on the investment.
Even today, after 40 years of experience, I still say the best investment that allows you the most control, especially in today’s market with these very low interest rates, is real estate. I started with a small house on the wrong side of town and after I fixed if it didn’t sell right away I usually could rent it out so I had a tenant whose rent I was able to set so that it was paying off the mortgage, usually with a little left over for me. Then I moved on to larger and larger properties which I was able to work pretty much the same way and I still use this strategy today.
The other thing I do to keep control besides investing in the right property and making smart decisions to keep money flowing in, is to be careful with how I set up any partnerships. When I do deals and have a partner or two they always have their name on the deed showing the percentage interest they have in the property with everything spelled out clearly. If all investors insisted on doing it this way, it certainly would cut down dramatically on all the scams and Ponzi schemes. But it also means all the partners know what to expect and there are no out of control surprises later on.
So if you are smart and want to make those big bucks you’ll get out there, take and keep control of your investments, and keep focused on the great power of compounding and leveraging. Next week we’ll go into those subjects a bit more to keep you focused on your goal!
The Discipline Hurdle
April 24, 2015 by MarkHaroldsen
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If you truly want to be wealthy then it’s virtually a must for us average humans to do it through wise investing. But you might say, “Hey, what about the person who doesn’t have any money to invest, even in the smallest property?â€Â So the question becomes, how can you begin without a dime to your name? Well, you build a nest egg. Of course, that begs the question, how do you get that beginning nest egg to start your investment program?
Most of us know that the traditional way to build a nest egg is through savings. For many people that’s a big fat “ouch!” When you take a close look at the average American family, you see that the rate of savings has been in a steady downtrend the last few years. When someone is asked why they don’t have any savings they usually respond with something like “I can’t afford to put any money aside. I barely break even. By the end of the month, nothing is left over.â€
The people that say this are usually the same ones that, even after they get a raise, nothing changes. They are forever stuck at breaking even at the end of the month or, worse, going into debt.
So what’s the real problem here? In a word it’s usually discipline, or more accurately, the lack of discipline. When you are saying to yourself, “I just had to buy that new coat (or dress, suit, latest and greatest cell phone, computer, new car, etc.)”, or “We’ve been scrimping so long we deserve to treat ourselves to a very nice night out on the town or a vacation,” you are also saying that you’ll never be wealthy and are likely to be a ‘wage slave’ your entire life.
In order to be able to start an investment program, you must be tough on yourself and fully realize there is a huge difference in what you ‘need’ verses what you ‘want’. Once you have arrived at the point of understanding that, then you may well be on your way to great riches and maybe even wealth beyond your wildest dreams. That is what happened to me. Unfortunately I can’t remember who or what book taught me the big difference between need and want, but once I learned that lesson and applied the needed discipline, I was able to save thousands of dollars in one year and that launched my investment program.
Of course, once you’ve built up that “nest egg” you must be wise and put it to work with great care. When I began my investments, I was in a big hurry so I used a lot of OPM (Other People’s Money) as well as sweat equity which propelled my return on investment by leaps and bounds. I’ll talk more about just what worked for me in next week’s blog but in the meantime, consider the fact that your biggest hurdle to the wealth and financial security you are craving is one less vacation a year, one less shopping spree a month, one less night eating out each week and one less fancy coffee each day. When you think about it, that really isn’t too much to ask of yourself. Not for the chance to make a fortune.
Using a little Jaw Jaw
December 5, 2014 by MarkHaroldsen
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I am in the process of updating 4 of the 8 books I’ve written, which has been a fascinating and mind opening task. First of all, it’s quite a stunning experience to read your own words that were written many years ago and then to come across something that you find to be very profound. I found myself saying “Wow, this is a pretty good money making method and is quite inspiring stuff. Did I write this?” then I’m thinking,  “I can’t believe I wrote this. Where did this come from?†However, I must admit some of what I wrote also brings on thoughts like “Ugh! This is kind of simple minded and even stupid. I’ve got to change this!”
While updating and re-writing some of my book The Courage to be Rich, I was struck particularly hard by what I wrote about the huge power of negotiating and the incredible financial rewards that come just from smart and calculated discussions. Yes, just by using your head and your words you can make huge financial returns on your money! Winston Churchill said “Jaw Jaw is better than war war” and I will add that, Jaw Jaw alone can make you 100% in returns on an investment too!
With good negotiations you can take a mere 5% discount combined with another 5% in earnings and come up with a 100% return on your money. Sound impossible? Not at all. I have done it myself a few times and others I know have done it. It’s in the numbers.
For example let’s say you found a very attractive piece of real estate and the seller was very motivated to sell it. With good negotiating skills you could convince him to sell the property for just 5% lower than its fair market value and maybe even a little beyond that and then you buy it with just 10% down. Now, using another round of skilled negotiations, you convince a buyer to pay 5% more than the property’s fair market value by making the property sound better than it may appear to be. Of course, fixing it nicely helps too. Then, guess what? You’ve just scored a 100% return on your money; you invested 10% then saved 5% on the buy and made 5% on the sale of it for a 10% profit, or 100% of what you put down on it!
If you get tripped up at the point where I say you are only investing 10% on the property, that’s not hard to do either. Further negotiations can convince the seller to carry the mortgage or you can use a bank for the mortgage and a signature loan so in total you have 90% financing.
Go ahead and run your own numbers on any size property with those percentages and you’ll always come out with that huge fat return of 100% on your money by just using your brain and your words to convince people of what great deal you make them. These are just some of the gems you can find in my books which are available online on places like Amazon and on my website.
The Simple Wealth Formula
July 25, 2014 by MarkHaroldsen
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As promised, here is the simple formula for building Great Wealth!
When I was 27 years old I was lucky to meet a guy who knew and had applied this “Simple Wealth Formula” (SWF). My mentor was Larry Rosenberg of Denver, Colorado. He practiced SWF which made him a multi-multi-multi-millionaire. The best part is, at least for me, he was so very generous with his time and taught me just how I could do what he had done. And yes, this SWF still works wonders today, especially with our super low interest rates.
The first thing a person needs to do to begin their own road to a fortune is to save, save, save! It’s sad that Americans save so much less than they did in even just the 1980s when the average American saved over 11% of their after tax earnings. Now it is down around 2%. The key to savings is simple–pay yourself first! Take a certain amount of your earnings right off the top–let’s say just 10%–and put it away every time you get paid and then force yourself to live on what’s left over. You won’t be sorry because what you can do with that money is nothing short of a financial miracle.
That financial miracle can and will happen by using a lever, a financial lever.  Using a lever on the right assets will make millions of dollars for you. We all know what a lever is and how a person can lift many times their weight by using a lever—it’s a very simple but very powerful tool that multiplies the strength you have, or in terms of the SWF, the power of your investment. Here’s a simple example of how “financial leverage” works:
Let’s say that you bought a $500,000 asset putting up $100,000 of your own money and borrowing $400,000 from a bank or the seller. 6 months later you sell that asset for $550,000 dollars. (I’ll talk about how that happens in next week’s blog.) If you did that, you would have just turned that 10% increase in the value of that asset into a whopping 50% return to you on your $100,000 dollars. If we are talking about your return on an annualized basis it would be 100%–but more on that later.
I remember when my mentor showed me this on paper. My eyes just about popped out of my head. I was even more shocked when he showed me the next key to the SWF method–compounding. Just $1,000 dollars compounded at 100% per year turns into over a MILLION DOLLARS in just 10 years. And yes, that means $10,000 dollars compounded at 100% annually is more than ten million dollars in 10 years!
Amazing, isn’t it? But like you and most people the next big question is how in the world can you find an asset that will move up in value by 50% in 6 months or even in one year? The answer is where the real work comes into play. It can be done by just about anyone and you don’t have to be a genius to do it. I’ve done it over and over and over again over the span of many years. In the next few weeks I will talk about what the best assets are to buy, how to find them, how to purchase them and how to push their value up by 10% and even more.
Compounding Generosity
If you’ve read either of my books, How to wake up the-Financial Genius Inside You or How to Ignite Your Passion for Living, you know how big I am on the concept of compounding. Compounding your investments has to do with keeping the income you make off your investment in the game so that you make new income off the previously created income allowing your revenue to grow exponentially. This concept can actually be applied to many things. If you saw the movie, Pay it Forward, you saw a good deed and the gratitude that came from it compounded. Instead of the one good act being the only good act and the thanks only being returned once, the idea was passed onto multiple people who passed the generosity onto several people each and soon the world was “paying it forward”.
This is the concept behind viral and word of mouth marketing. Tell someone or a group of people and encourage them to share their enthusiasm for your product or service and hopefully the news will continue to spread and grow your market. We’ve all seen this happen with viral videos. A few people see it, pass it onto a group of friend who pass it onto a group of friends and next thing you know a million people have seen it!
When you give of yourself this season–be it money, time, knowledge or just a kind word–ask yourself if there is any way to compound the gesture. If you give money, it will compound if you give it to a charity that helps poor communities build commerce which will increase the community’s wealth and ability to financially sustain it. If you teach a young person a new skill, like how to invest (see the wonderful email I received and shared in the post last week), encourage them to share what they learned and ask those they teach to share it as well. Then your time with this one person will end up helping maybe dozens or hundreds of people or more.
Of course, if all you can do is give a few more people encouragement and a kind word, the good intentions and good cheer will usually get spread simply because you made someone feel better and that feeling tends to make others want to do the same. Generosity is self-perpetuating. And that, in a nutshell, is true compounding!