In Search of the Right Income Property

Don’t let the title mislead you—there is no such thing as the perfect property, just as there no such thing as the perfect spouse, car, child or job.  But there are certainly “good” properties and even some “great” properties as well as “good” financing and “great” financing.  By the same token there are some real bad properties around, waiting to snare you. I want to steer you in the right direction towards the right property for what you are after and keep you from ever giving the bad ones a home in your portfolio.

First, decide exactly what it is you want out of your investment. Why are you buying a piece of income property?  Be specific.  Are you after a lucrative cash flow? Or do you want a profitable overall return? Is it for the cash flow in addition to the tax savings and what you might get after you do some “fix up” work?

In addition, a novice investor must understand the alternative types of real estate investments available to him or her.  Of course, there are the residential types of investments including houses, duplexes, apartment, rehabs and others but there is a myriad of other income-producing properties which fall in the category of “beyond residential”.  A few examples would include gas stations, small strip malls, mini storage, motels, and retail shops.

This second category is too often overlooked by beginning and even experienced investors.  If you’re looking only at the residential properties in your area, you’re missing the entire menu.  There are commercial properties that fall into the lower ranges but because commercial is often thought of as being for the big time investor, the smaller guys don’t look there. But think about it … why would there not be smaller commercial investments just as there are smaller residential investments? It doesn’t matter what kind of property is it, just that it’ll get you the best return for your investment dollar.

Also consider that property that might have been residential or commercial when you bought it can be converted to take advantage of better income producing options for the area. Vacant gas stations have been leased to counties as libraries; motels have been converted to office buildings or housing for the elderly; mini-warehouses have been built out of other commercial spaces behind sub divisions or trailer parks where storage space is scare and small warehouses have been converted into loft type apartments or duplexes.  There are many potential gold mines in commercial or “beyond residential” property.

I’m certainly not saying that commercial or “beyond residential” property makes a better investment than residential. I’m merely trying to point out that when you go looking for the perfect income producing real estate, don’t limit yourself to the residential category alone. Look at the full menu.

And lastly, don’t forget now is a particularly great time to be buying income real estate because prices are near historical lows relative to income and interest rates, even though they have moved up a bit in the last month, are still at very low! So doesn’t hesitate. Get out there, look at all the options and put your money to work!

 

Your Own Financial Genius

Years ago after writing my first book How to Wake Up the Financial Genius Inside You people started calling me a “financial genius”. My typical response was “Thanks, but I am no genius or a financial genius! I am just an ordinary guy who got through high school with a “C” grade average.” I would then explain that the millions of dollars I made were due to following a simple formula that my multi-million dollar mentor, Larry Rosenberg, shared with me–the same formula that I have shared with you in my book.

Fast forward many, many years and many more millions of dollars. I was recently shocked when, just for fun, I Googled the words “financial genius” and saw my name come up just above Warren Buffett and Albert Einstein (since I first looked at this Google page, I moved from top of the list into second slot and Warren Buffett was replaced by Alan Greenspan.) My name was there as part of Amazon’s website and shows my original 1976 edition of How to Wake Up the Financial Genius Inside You, available for $12 dollars and the revised edition called The Next Step In Waking up the Financial Genius inside You, available for $24.50.

Seeing my name and book listed so predominately on the Google search has motivated me to offer all of my blog readers a REAL DEAL! The timing of this is particularly, serendipitously and financially very, very important. Why? Because right now with today’s much reduced prices combined with the incredibly low interest rates, you would have a tough time finding a better period in modern history to apply my simple but highly effective “million dollar strategy” ,which really is the strategy that wakes up anyone’s financial genius.

Right now is the best opportunity for buying properties you can fix up and flip or just rent with huge rates of return. Go ahead and Google “financial genius” right now and see for yourself the comments on the old book like the one Jason from Colorado sent saying “The numbers are from 1976, so add a zero to most of them and it translates well into modern day.” Or from Dallas, Texas W.E. Wyatt’s comment “Change the numbers and this book could have been written this year. The principals remain the same.” And folks, that’s comments about the 1976 book!

Let me tell you about the revised book The Next Step in Waking up the Financial Genius inside You. It’s bigger and better and if you or someone you know wants help with making a fortune, I will help you out right now.  Email me at moh@reincome.com or call the office at 801-307-2787 and ask for Malinda and I will send you the new edition for only $9.95 with no shipping or handling charges—if you want both the old edition and the new—add 5 bucks.  You need to get started right away since interest rates are beginning to slowly climb as are prices of properties!

 

Mentor for Success

Well, did you start doing it? Did you start looking for a house to buy as an investment or a place to live and profit from today’s super low interest rates? If you don’t know what I’m talking about go read my blog post from last week entitled “Money Money Money”. Maybe I should have called it “Low Rates Low Rates Low Rates”.

If you are already in a very comfortable place financially and either don’t need to or don’t want to make some easy money (I probably shouldn’t call it “easy money” it’s more like “simple money” because it does take work!), then may I suggest you talk to your kids or friends that may not be so comfortable but have the drive, desire and energy. You can be a major financial mentor for them and they will love you for doing it and you will get a ton of satisfaction knowing that you directed them and helped them.

I receive so many messages from people coast to coast and even from foreign countries, thanking me for my financial advice, for giving them the motivation to get up and get moving and for making good financial things happen in their lives. There are not many things in the world that give a person more satisfaction and contentment than knowing you’ve helped someone make major improvements in their lives.

And I’m not talking just about money. Just helping people believe in themselves and motivating them to be proactive in any and every part of their lives is what it is really about. Having a solid financial situation is certainly a good thing and can help in a myriad of ways but there is more to life than money. Bottom line … help others to reach their goals with encouragement and constant support. You will get your reward in the happiness it brings you to see them bring about what is important to them into their lives.

MONEY MONEY MONEY

We all want it and we all need it—and some people will do most anything to get it. Right now there are a few things you can do to really cash in big time. I don’t mean to say that money is the most important thing in the world but if you don’t have any, or not very much, it certainly makes life pretty darn rough!

What many, if not most people, don’t fully realize is that there are some critical choices and critical timing of those choices that can make all the difference in the world. It should be obvious that the “choice” of making the most income that you can and at the same time keeping spending lower than your level of income is a very good thing. By doing that you create savings and with enough savings you can make investments that, if you do it right, can give you passive income that makes your life smoother, more pleasant and rather easy. But … what about those investment choices and, maybe even more important, that thing called “timing”.

My advice to most everyone, at least here in the USA, has to do with what you could and should be doing RIGHT NOW!! Recently I said to my adult children, “You know, if you are financially wise and want to make some huge strides in your financial situation right now is the time to act! And, acting right now will pay huge dividends in the near and distant future.” What are those actions that I encouraged them to take and they are doing even as I write this blog?

Ok, here’s the simple advice which could easily be called “Million Dollar Advice”! Go buy a house or maybe 2 houses or a duplex or even more. That’s pretty simple but it’s almost sure to make my children or you a ton of money. You may be saying “Wait a minute. Prices have already bottomed out and have moved up in the last year or so and more in the last few months. You’re right but that’s OK because the big if not the huge reason to buy now is not because the possible continuing rise in values (and it might well slow down a bit) but because of a thing called “Interest Rates” or should I say ”Super Duper Low Interest Rates!” Just take a look at where we are now and where we used to be and very likely will return.

Monthly Payment on a $400,000 Loan for 30 years

Today’s interest rates are:		Rates in past years & probable future years:
3.5%	4.0%	7.0%
Monthly payment
$1796.18	$1909.16	$2661.21

Now at first glance that may not seem like a huge difference but … over the life of the 30 year loan–the difference between the 7% loan and the 3.5% loan is almost a third of a million dollars ($958,035.60 on the 7% loan and $646,624.80 on the 3.5% loan.) The big bonus is that today’s rental rates are going up and up, so you can rent those houses or a duplex’s out for more and more. Just think … 3 properties could make you almost a million bucks over the life of the loan not counting the cash flow that is possible. And what if you had more than that? At the top of my “rental property career” I owned more than 1,000 units! How does that sound to you?

I hope I have inspired you to go out and take advantage of these super low interest rates. They won’t last more than maybe one or two years longer and maybe even shorter than that. In other words, this is not the time to hesitate. It is the time to buy!

Wise Words from Dr. Lustig

On Feb 21st of this year my son David, sent me an email with a link (see below) to a YouTube lecture by a Dr. Robert Lustig. Without a doubt this video has dramatically changed my physical and mental being! It honestly has lifted my life 2 or 3 levels … and my life was pretty damn good already. Watch it as soon as you can and see if you agree that his words have such tremendous value.

By now if you’ve read even a few of my blogs you know I am big on setting goals and strongly believe that goal setting and your journey toward those goals is a huge key to a happy, fulfilling and super productive life.  Dr. Lustig’s video lecture gives you a pretty straight-forward goal that, initially, you might think is just a health goal but it’s more than that. I’m tempted to summarize what he says but then you won’t really get the impact of the presentation or you might think “I’ve heard all that before.” Trust me, you haven’t heard all this. I’ll just say it’s well worth every minute of your time to watch and learn and follow.

By following, I mean for you to set some health goals based on what he is saying.  I certainly have done that and WOW what a superb and uplifting change it has made in both my physical and mental life—if you don’t believe me just ask my wife! So get yourself a nice cup of tea and sit down to listen. Then change your life. Now!

http://www.youtube.com/watch?v=dBnniua6-oM

 

Steps Towards Confidence

The last few weeks we’ve been focused on creating your fortune through real estate, leverage and compounding. You’ve seen the numbers. You know it could work. But have you taken your first steps?

I know the steps you have to take sound daunting at first but they aren’t that difficult at all. Things we’ve never tried before tend to seem huge and perhaps impossible but it’s only because they are unfamiliar. So try this … go ahead and go through the 2nd and 3rd step–start building capital and making low ball offers on property. Remember, during these steps, you aren’t committed to buying just yet. Putting away money is easy and it’s a great idea no matter what you do in the end. And making low ball offers … well that’s just chatting with someone. The thing is, once you’ve starting talking to property owners and realtors, you’ll realize it’s actually pretty easy. Then when someone does accept your offer, you have only one more step to take.

Just starting the process by putting money aside and making offers will do so much to boost your confidence. By the time you are ready to jump into step four–which is just an inspection and crunching numbers to find out if the property will get you the return you want–you’ll be feeling pretty good because of your successes with the previous steps.

And don’t worry if you go through Step 4 and don’t end up with a property. Just go back and repeat Steps 2 through 4 and do it over and over and over again—don’t stop. Each time you do this, you’ll have learned a lot just by going through the process. Pretty soon, the process will not seem daunting at all. It will be exciting and motivating! So go out there now and knock yourself out!!

The Power of Leverage and Compounding

So now that we’ve gone over the first 3 big steps to building your fortune, it’s time to get to the very important Big Step No. 4. But before I lay that out, I thought we ought to talk about the power behind what you are about to do, the power of leverage and compounding.

My first introduction to leverage and compounding was as a stockbroker in the 70’s. I wanted in the worst way to make a fortune and do it quickly. I knew that there were seemingly ordinary people making millions of dollars in a matter of a few short years. What I didn’t understand was how that was possible. My thinking was stuck in the mindset of trading my hours for dollars and with only 168 hours in a week even with a decent hourly rate of $25 it would take 20 years to hit a million and that’s with the ridiculous assumption that I would not spend a dime or pay taxes!

Then I was introduced to leverage and compounding by Larry Rosenberg, a new brokerage client of mine and soon to be mentor. At that point I was becoming quite adept at bond trading and was shocked early on when I figured out I could make 100% return in a matter of weeks. I could buy $100,000 worth of bonds with only $5,000 or my own money, borrowing the rest from the brokerage firm. That’s using leverage. So if the bond price moved up just 5% the bonds would be worth $105,000 turning my 5k to 10k! Eureka! I had just discovered a money machine! But the bad news is that I could just as easily lose all my money if the bonds dropped 5%.

Larry Rosenberg introduced me to a safer, more consistent and more controllable asset: improved real estate. With this you could make a 100% return in 6 months to a year and do it with consistency and very little risk. But what Larry made me see that got me super motivated was what a 100% return per year will do to even a very small amount of money. $1,000 dollars at 100% compounded return will grow to the incredible sum of more than a third of a billion dollars in just 35 years! Although a consistent 100% may be hard to sustain, I did it for a while and reached my first million net worth in 47 months with only a couple thousand dollars to start.

This may all just sound like numbers now but in the next few weeks I will go into more detail with specific examples of improved real estate deals you can make so you can put these powerful concepts to work.

Step Two to Making Your Fortune: Making Property Offers

Last week I gave you the first step you need to take towards making your fortune. I hope you’ve started that first step or at least put in place a savings plan you can get started with in the New Year!

Now onto your next step …

Step 2. Go out and make offers on dozens of potential bargain properties.

Remember last week how I told you that timing is so very important? Well, this is what I mean–right now we are at a 50 year low when it comes to mortgage interest rates and as everyone knows home prices have dropped by 30% to 50%. At the same time rental vacancies have dropped which has pushed rental rates up. All that adds up to perfect timing and great opportunities.

This step is key to taking advantage of that “Partners Capital” concept that I hope you are seriously considering as part of your first step. The key to getting good partners to join you is to have a property “tied up” before you pitch the deal to them. Why? Because it’s so much easier to ask someone “Would you join me and take on a 50% (or 75%) interest in this property I found?” if you are giving specifics on the property as well. If you can start a pitch by saying “I’ve found a great 4 unit apartment building” or “I’ve have a beautiful little rental house under contract” as well as being able to tell them you can buy the property for 30% under it’s real value or that it’s all rented up and will show a fat positive cash flow from day one, it will be hard for them not to consider joining in your little venture.

Now back to making offers. How do you find those great deals?

Finding the great deals is largely a numbers games.  What I mean by that is if you make dozens and dozens of low ball offers you will eventually have some of them accepted. What I have done in most cases is to make those offers before I even take time to visit the property. This gives you the opportunity to write up the offer but make it “subject to” or conditional on your full inspection of the property and on the condition of the approval of your partner, even when you don’t have a partner yet. By using the “subject to” clause you are not obligating yourself and by using the internet and several brokers or agents it’s possible to make hundreds of offers without a huge expenditure of your time.

So get going on Step 2. Remember, you won’t be obligated to buy a property just because you’re making an offer but you do have to get out there and start looking and eventually there will be a property that you’ll want to jump on. It’s easier than you might think.

Make it your New Year’s resolution … take those first steps. Make this your year of success!

 

First Step to Making Your Fortune

Last week I promised that I would show you an almost fool proof path to your own financial fortune.  I said that I would lay out a step by step formula that you could follow, so that’s what I am going to do now.

First a few comments about timing as it is very important that you understand how your timing can impact your success. In Malcolm Gladwell’s book Outliers he talks about research done on young hockey players and how the timing of their birth dates made all the difference as to who went on to play at a professional level. This might sound a bit odd but if you read the book you’ll see why their birth dates were so important to their success. The timing issue is about being at the right place at the right time but it’s not just about luck. Right now the timing for someone who wants to make a fortune in the USA is near perfect but it won’t matter one bit if you don’t take advantage of it.

So let’s talk about step number 1, that first step you need to take on your way to building a fortune.

Step 1: Work on accumulating some beginning capital.

Okay, you may rightfully be thinking “Easier said than done!” But it’s not about easy; it’s about what is possible. Just about anyone can do this and there is more than one way to get the job done.

The slow but sure way is to consistently set aside at least 10% of your income. 20% is even better if you can do it. That’s the way I started and yes it took years before I had enough capital to begin to get started on amassing my fortune. However, if you want to jump start you growth of capital there is a way to dramatically speed up the process. It’s called “Partners Capital”.

In my book How to Wake Up the Financial Genius Inside You I tell the story of a guy that now has over a half a billion dollars of income producing property and he did it quickly because he did it primarily with “Partners Capital”. When he was in college he came across my book, followed the formulas I had outlined in it but also added the “Partners Capital” thing to the mix. With this combination he passed my success level by a huge margin, which of course makes me very proud.

If you choose to go the “partner” path there is a way to do it that can bring in not just one or two partners but multiple partners to join you. This is really is part of step number two which we will get to next week. But as part of your first step, I suggest you read my updated book now called  The Next Step to Waking up the Financial Genius Inside You. I very much want you to succeed so I am giving the first 50 people who email me a free copy of the book. Just cover the $5 cost of shipping to show you are serious about amassing your fortune and I’ll get the book right out to you. Email me at freebook@reincome.com  to get started.

The Rewards of Sharing Success

One of the most wonderful things about what I do—sharing and getting out the information about my success—is that I get to see how my actions affect other people and their lives in a big way. It makes me feel so good to help other people. I certainly don’t need money now and to give a little bit back gives me the best feeling in the world! Here is a recent note I received from a young man who read How to wake up the-Financial Genius Inside You for the first time when he was 18. Now he’s 28 (I was 27 when I started investing in real estate) and ready to take on the world:

Mark, I’m very appreciative to you. You have literally set me on the right path to purchasing property & securing my families economic future for generations. I have a lot of gratitude for that. Since talking to you I have met the right people that have also set me on the right path. I now know what I have to do to start investing right here in Melbourne, Australia. There is a way…there are cheaper run down ‘dirt bag’ houses and apartments out of the city which you could still pick up for 150k-300k and all of your techniques are sure winners to increase value from the get-go. Australia’s population is going to nearly double by 2030 and I’m certain that pricing will naturally have to rise. I would definitely love to purchase property in the US but I think to start nothing’s better than in your own backyard.

I can’t be more expressive of my gratitude to you than to say that you gave me the time, were willing to meet & coach me all at no cost and that is absolute gold. It’s pure.

When I accumulate my wealth I promise to be generous with my time to others wishing to accumulate wealth. I will repay this debt as such and with all of the above said, I think that there is a lot I can do by myself at the beginning to really lay down the foundation of financial success. I’ve started creating a map. So again, thank you and I will keep you updated on my progress.

Mark, I wish you the best. You truly are blessed. Have a wonderful Christmas & New Years. You will be hearing news from me and it will be positive 🙂

 

Best—Sam Barry

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