Thanks a Billion!

I’ve been talking about the great success of the young university student that started with nothing and ended up with billions of dollars worth of income producing properties but this time,  I thought I would try to tease you into reading,  or re-reading, The Next Step to Waking up the Financial Genius Inside You by posting the thank you letter that Dell Loy Hansen sent me years after reading my book and which now prefaces the Pre-forward of the revised edition. This is just one of many thank you letters I have received and shows you how putting my principles to work really can change your life. :

Dear Mr. Haroldsen:

I have wanted to thank you for many years, but like most people I have not until now. When a friend told me you were going to republish your wonderful book, How to Wake Up the Financial Genius Inside You, I saw my chance to return a favor.

You woke up my “genius” over 25 years ago when I had a $200 VW and a ten-speed bike to my name. I wanted to own real estate to gain cash flow and future value as the mortgage loans paid off, but how? Your simple, straightforward plan allowed me, at 23 years of age, with no credit history or capital beyond a 2 week paycheck, to buy my first two homes for $200 down. I owned those homesf for 12 years them sold them for a $72,000 profit plus the years of cash flow I lived on.

When people ask, “can I still do this?” I smile. I truly believe it is actually easier today with better information, computers, more cash in the economy, and obviously, a great deal more real estate to choose from. I sincerely think I could do “better” today with an average intelligence and above average desire than 25 years ago.

For 25 years, I have pursued your principles and continued to grow in economic strength and knowledge. Today, the group of friends and family that I lead as chief operating partner own over one billion in real estate in Utah, Nevada, and California. The cash flows now exceed my dreams and my friends and family are economically secure and grateful. Life is so fulfilling as my options to travel and do charitable work are part of my every day life.

Thank you a million –or more appropriately, “Thanks a Billion!”

Your grateful student,

Dell Loy Hansen

CEO Wasatch Property Management, Inc.

Okay … did I tease you enough for you to read the book?  You could also do someone a huge favor by giving or sharing the book with them–it could change their life and yours too! Get yourself or a friend a copy here.

 

The Story of a Millionaire Goal

Last week I posted the front page story that was written about me and my plight when I was a poor 21 year old and how that wonderful couple Phil and Addie DiBenedetto took me into their house and let me sleep in their basement even though they had just met me.  This all happened when I was working construction in Rockford Illinois back in 1965.  I was very lucky to meet the DiBenedettos not only because they gave me a place to stay and feed me for free as well but maybe even more importantly, they seemed to really believe in me.
Re-reading that article reminded me that even as a very young man I had set my sights on becoming a millionaire.  I must admit that I had a tough time staying focused on that huge million dollar number when I was physically working myself to the bone at a measly $4.50 an hour. I do remember that I tried very hard to make every single day count by continuing to search, in what little spare time I had, for the “million dollar secret”.

I don’t think the DiBenedettos, even though they believed in me, ever really thought I could reach the “millionaire status or level”.  In fact years later as quoted in the newspaper story when they visited me in Denver, Phil and Addie said they “still remember Haroldsen and his wife lived in a broken down house. Finally, the young man ended up in Salt Lake City, where he was eventually fired from his job and on his way to making his first million.”

I loved the next part of the newspaper story. “When Addie and Phil visited Haroldsen for the first time in Salt Lake City, they had no idea he had fulfilled his dream of becoming a wealthy man.” In fact they were even worried that I couldn’t afford the long distance calls that I had been making to them prior to their arrival.  The best part was how blown away they both were when I drove them through the gate and into the long driveway of my home. It wasn’t a huge mansion but it was close, with over three tree-lined acres surrounding it.  They were so very proud of me and I had always been so very grateful to them for their willingness to reach out and help a young man who needed a place to stay but even more so for their very kind, loving and friendly support of his dream.

Those 5,840 days (16 years) between my meeting the DiBenedettos and the publishing of that article, were used to search out and discover the financial formula that can lift an ordinary person from being a meager wage earner to being a millionaire and, yes, even a multi-millionaire.  What is the secret?

Well, first it’s setting your mind firmly on your goal and never giving up on your objective and then working your tail off–or I should say, working your brain off since physical work and an hourly wage will never get you to the big numbers.  Hitting millions and multi millions is done by using financial leverage and people leverage. If you are not sure what that is, you should go back and read some of my earlier blogs that address that specifically and in detail. The secrets are all here:

http://ignitemylifenow.com/2013/01/11/the-power-of-leverage-and-compounding/

http://ignitemylifenow.com/2014/06/14/the-final-step-to-wealth/

http://ignitemylifenow.com/2014/07/25/the-simple-wealth-formula/

http://ignitemylifenow.com/2014/11/07/leverage-to-lift-your-profits/

 

The Rug Merchant of Tangiers

Today I’d like to add a footnote to last week’s blog on the theme of negotiation.  Many years ago I took a group of investors to Tangiers in Northern Africa, both for fun and for a seminar I was to put on for them. And what a seminar it was! The best part, however, was a lesson that was learned from a rug merchant in Tangier’s.

While on this trip we all took a tour. The talkative guides took us through the narrow, winding back streets, through the open markets with their pungent odors and all kinds of interesting and colorful people.  Then, after half an hour’s stop at the Kasbah, we finally ended up at a rug merchant’s large second-floor shop.

Even though I was paying for this tour, no one had bothered to tell me where we’d end up. It was there in the next hour or so that the big lesson was learned by all of us, a lesson in the art of negotiating.  We were all hot and tired but sitting comfortably on mounds of beautiful Oriental rugs. Our gracious host began telling the group about the uniqueness of his rugs then his troupe of articulate salespeople went on to sell their captive audience on the quality of the rugs.

Interestingly enough, they also explained the custom of haggling over price.  They would be offended if we were to accept their first price without some sporty bargaining. Priming the crowed into a jovial joking mood, the merchant asked someone to make an offer on a rug he said was for sale at $4500 dollars. One of the guys in my group offered $500 dollars. After a lot of back and forth the rug was sold for $1200 dollars. The buyer had been assured that its value was over $2000 dollars. I found out later that the buyer had it appraised in the USA for a mere $600 dollars.  Oops! There was lesson learned there for certain, a lesson that happens to be about one of the oldest tricks in the old negotiating handbook. That is, you start with a very high price to give the illusion of a bargain when the price is dramatically cut.

I’ve used this method many times on both the buyer’s side and when selling a property and you probably have too. You can read more about the rug merchant and related negotiation techniques in my book How to Wake Up the Financial Genius Inside You.

 

 

Leverage to Lift Your Profits

Today I’m going to continue talking about making those huge returns that I touched on last week. Remember, with only a $30k salary and saving just 10% for only 5 years, you can bring in as much as $21 million dollars by age 70! How is it done?  It’s done by using two different types of leverage.

No. 1: Financial leverage. This is Other People’s Money (OPM) as in mortgage loans, personal loans, signature loans, loans from family or friends, or even through having family and friends as partners.

No. 2: Labor Leverage. This is Other People’s Efforts (OPE). You bring on other people, including employees, part time contract labor, day laborers, contractors and the like, to do the fix up work that will create added value in an asset.

Basically what these two types of leverage can do for you is help lift something that is bigger than you can take on yourself. To paraphrase what Archimedes said, give me a long enough lever and a place to stand and I could by myself lift the earth.

Using these two levers is exactly how it is very possible to receive a return of 15% or 20% or even more, turning a meager income of $30,000 into $21 million! The math is pretty simple. As I said in my July 25th blog, if you go out and buy a $500,000 dirt bag type property, one that needs some fixing up, and do this with a $100,000 down payment (a down payment that itself may be borrowed) and then go out and use some OPE and improve the value by $50,000, that gives you a 50% return on your money,

But of course it will have cost you something to fix it up. Let’s say it cost $30,000 in material and labor to fix it up. That puts you at a 20% return. Now keep doing that on additional properties and you’re looking at a cool 21 million by the time you hit 70 years old. Let me emphasis that you can only do this if you control your own money and do the work or have others do the heavy physical work.

Anytime someone comes along and offers you a 20% or 30% return on your money without you doing a thing, grab your wallet and check book and run away as fast as you can.  These very high returns are possible but, for the most part, only with your efforts or the efforts of other people that you control.

Think of it this way … if you are making 30% or more on most every deal you do, why would you go tell others about it? Wouldn’t you just borrow more money at 5% or 6% and take home the difference? You certainly wouldn’t give someone else a big fat return of 20% or 30% in passive income for not doing a thing to help.

I’m not saying these returns are easy and take no effort and there are other details such as income tax that will eat into that profit (although there is a way–see the IRS 1031 section of the tax code to help delay some taxes) so these numbers aren’t exact. But what I am saying is that it doesn’t take as much savings capital as most people think.  In fact it takes relatively little savings to reach some very big financial levels.

By the way, I’ve had more than a few deals that have topped the 100% return level. Compound that for a few years and your eyes will pop out! That’s the potential. Now, doesn’t that get you motivated?

 

Money, Money, Money–How To Get It, Keep It, and Grow It

You know it’s all well and good to talk about living in the now (which we did last week), relaxing, taking mountain or beach walks, and playing tennis and other games to keep your mind and body in good shape, but without a good financial situation or with little or big money worries, life can feel quite miserable.

Lately, a number of people have asked me what I’m doing about investing and income now that I’m nearing the big 70 year old mark. Well, here is my answer:

First, things are a lot different now than when I was young, as many of you know, I made a ton of money back then, though the simple process of buying so called “dirt bag properties”, fixing them up and renting them out or selling them. Yes, it was a lot of work but it had huge payoffs.  Then I bought bigger and bigger properties including duplexes and larger apartment buildings and, again, made a lot of money fixing them up then renting them out or selling them.

But those days are over. Now it’s all about “passive income” and it needs to be safe and steady.  I mean face it, I just don’t have the same drive or need or energy to do all the work that is necessary in finding, fixing and flipping properties.  If you are near my age and situation, you will want to know where to get a good, safe and steady passive income in today’s markets with savings accounts paying but a fraction of one percent and even 10 year US government bonds paying only about 3.6%.

I will tell you how I am getting a safe, steady passive return of around 7% to 8.5% with little management or worries—I’ve been buying retail stores that have good, solid, long-term leases with national companies–and often public companies–as tenants. Companies like Family Dollar and Dollar General or Office Depot.  You see these companies usually do not choose to own their stores as they would rather lease their space and put all their efforts into running the business because their business is what they know best.  These leases are usually done on what is called a “triple net” basis, which means that most of the increases of costs, like taxes and insurance and many of the repairs are reimbursed by the retail tenant, which makes the 7% plus return on investment pretty steady and safe.

If you can you might think about doing the same thing.  If you don’t have enough money for the down payment, you might consider bringing in your family or friends as partners. One note about partners though–thoroughly check out the security laws in your state to make sure you are in compliance or ask a lawyer. You don’t want a great investment opportunity to turn into a legal and financial nightmare. And the same basic rule goes for any investment. Be informed, don’t make assumptions, and ask a lot of questions before you dive in!

 

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!

 

Develop Your System, Delegate the Details

Last week I wrote about the mafia guy Sam “Mooney” Giancana and how he used systems to build and manage a huge, albeit illegal and vicious, financial empire. I’m not encouraging you to use his particular systems but it is a wild example of just what can be done when you have good systems in place. So the question now is, what kind of systems will work for you to allow you to dramatically increase your income and at the same time give you more free time to do whatever you like and enhances your life?

Before we can go over what a system is and how you develop it, you must understand this:

Grand Strategies Pay Huge Dollars and Details Drain Your Time.

Look at most people’s lives and you’ll find that they spend the majority of time wrapped up in the details. No, that’s not the way they planned it, but it’s so easy to get sucked into that habit. One big footnote here is you must realize that some people thrive on detail. And that’s okay, it’s just that if you really like the detail then you probably need to accept the fact that your road to huge automatic streams of income will be much harder for you. On the other hand, it’s these kinds of super detail loving people you need to hire to do the details for you.

If you’re a big ideas person, the struggle may be keeping focused. Ever notice how, when you’re away from home and business, usually on vacation, you can come up with some darn good strategies and systems for success? But then, when you get home, the details of your life and business pull you away and you lose focus of those great ideas you came up with when you were away from it all. So the number one strategy needs to be a plan to back away from it all, to get a clear mountaintop view of your business and your investments or potential investments. You must be able to see your own financial big picture.

Once you have that mountain top view and you figured out what your grand strategy is going to be then you need to start getting systems into place. When I started out to dramatically increase my income and net worth, my grand strategy was to build my fortune with income producing properties. To speed up the process I decided to find “dirt bag” properties that I could fix up and sell for a good profit. I found out very quickly how the details can just suck up your time so my first “grand system” was to start delegating these details to other people. Everything from using dozens of real estate agents to look for properties that fit my criteria to very inexpensive workers to do the hard labor required for the face lifts the properties needed.

I clearly remember the first apartment building I bought. It was twelve super dumpy, dirty, rundown units. That’s where I learned my big lesson about systems, especially about details and delegation. In the beginning I thought it would be smart to save a few bucks since I was way short of cash and take over as the resident manager even though I didn’t live on the property. Wow, was that ever stupid! Fortunately, within a few months I realized that the details were not only driving me crazy but, more importantly, they were sucking my time and energy which was destroying my outlook on buying more properties.

So you see, right here is the biggest rub. If you’re handling all the details and you hate it, why would you ever want to buy more properties which will only bring you more frustration and problems? Of course the answer is that you wouldn’t. Always remember, if you want to double or triple or even gather 5 times your income, you will always need to delegate the details!!

It’s all in the System

Ridiculous! Most people won’t believe the next sentence, but it can be absolutely true if you want it to be: The average person can increase their income by 5 times and spend less time working than they do now.

Yes, that’s true, and I can prove it in just a few minutes. Then you can go out and do it.

A few years ago as I lay basking on the beautiful Poipu Beach in the South Pacific, I was reading, Double Cross, the story of Sam “Mooney” Giancana. Sam ran the Chicago Mob for years, involving “the outfit”, as they called it, in prostitution, numbers, vending and protection (a nice word for extortion) of legitimate businesses ranging from garbage collection to barber shops. They also were involved in running drugs, money laundering, motels, restaurants, night clubs and hijacking, to name just a few more.

How did Sam find the time to manage, direct and control such a vast cash generating empire? Sam was not even what you would call an educated man, so how did he do it? He saw the big picture and knew the key to his own personal success was in the “systems”. Nobody has more than 168 hours in a week to get things done–so to expand or clone yourself you must devise “systems” that work automatically, whether you are awake, asleep, working in Washington or playing tennis in Tangiers. And Sam had developed just such systems, systems that, once set up, would run on auto pilot most of the time. When the system slowed down or broke, he would fix it. Granted, his methods to fix the system were more than a little harsh. For us non-criminals when our tenant, broker or employee makes a mistake we might want to put them on some kind of probation or fire them rather than break their leg or rub them out.

Can you see the vision here? If you organize your life and business to run automatically without you–with income constantly coming in, especially from one source, then that gives you free time to work on other ideas, dreams and develop more income sources. Then you can literally increase your income by 2 or 3 times and even by 5 times and work less than you do now!

Personally, one of my initial driving forces was the thought or question of how my family would get along if I died the next day. So I went to work with that somewhat negative motivation and in a very few years I had arranged more than 95% of my income to flow in on auto pilot which gave me lots of time to work on more income streams. How was that done? In a word, Systems.

This week I just wanted you to take away the idea that you can make more money and work less by simply developing systems that can bring in automatic income. Next week I will tell you what kind of systems I used and that you can use to increase your income or just to give you more time to do other fun things.

 

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!

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