You are either an investor or a speculator. If you are a speculator, you are depending upon the building to go up in value, and you place less credence on the operation of that building as a business. If you are an investor, the building must operate as a business and amortize the debt. The problem with being a speculator is that you do not control the direction of the appreciation of real estate. As I have said before, real estate in Southern California in the early 80s, dropped 15 to 30%. In the early 90s, the real estate dropped 30 to 40%. Based upon the current bubble theories and the current run up in real estate in 2006, there is a high probability that this drop could happen again in our greatly inflated real estate price areas.
People who buy a long term asset (real estate) with short term thoughts (violations of rules 1-6) might find that when appreciation stagnates or becomes depreciation, buying properties based upon speculation will quickly lose its charm. I have never gone wrong buying a building that makes sense as a business; in fact, they appreciated just the same way that buildings bought for speculation did, sometimes even more! Furthermore, they were able to weather all storms. The real estate speculator who has gone through a storm will long someday to be called a real estate investor.
My goal when I was young was always to own 400 free and clear units. I have reduced that goal to a lesser amount because of mistakes that I have made in my life; however, my substantial real estate portfolio that I acquire under my rules for success will be owned by me — free and clear. The complaint that I hear to this plan is, “Where does the investment money come from?” That is why it is so important that you are an “insider”! When you are a successful real estate broker and are using my systems or other mentors who have systems that work, you will find that you will actually make enough money in commissions to fund your down payments and your other dreams! For me, there had to be an over-riding reason as to why I worked hard as a real estate agent to make net proceeds in commissions. That reason for me was to buy the product that I sold, the product that I touched, felt, and evaluated every day. This product, when bought correctly with proceeds from your net cash flow of commissions and managed using the systems like you are currently using in-house to manage your business, will cause your tenants to pay that property off, someday allowing you to say – “I love this business of real estate brokerage, but I do not have to go to work today!”
Someday your rental income may replace your commission income. It will allow you the live the life that you have always dreamed about. You might like to see this happen a little faster than nine years. This is the current average amortization of my loans, based upon all my cash flow being applied to the payment. Cash flow will increase after implementing my successful real estate systems into your real estate commission business so go ahead and apply the positive cash flow that this book will help you earn on your buildings towards your underlying loan. By applying positive cash flow to your underlying loans, you will find that they amortize quickly. This is called the “snowball theory” of my real estate investment program.
By making principle pay downs funded by the positive cash flow on an intelligently-purchased property, you accelerate the amortization schedule to the point where the property becomes free and clear, and positive cash flow is the order of the day. The day when you get your first building free and clear is an indescribably magnificent event.
You now have a decision to make – to which of your current buildings do you apply all of the positive cash flow? The answer is the one that will create the most positive cash flow the fastest or the one that has the highest rate interest rate mortgage on it. Since you are still working hard in the real estate brokerage business and earning a great living, first move the positive cash flow from your free & clear building and then move the rest of the positive cash flow produces to the next one. You will find that the next buildings will snowball even faster with the additional positive cash flow that they create coupled with the positive cash flow from your other buildings. The second building will be paid off faster, thus facilitating the third, fourth, fifth, etc.
This is the third time that I have made a fortune in real estate investing. The first time, you already have read about. My “not having a life” caused me to lose most of my second round of smart real estate investments through divorce. This system has been fool-proof for me, and it will be for you also. I intend to run my life successfully now so that I do not have to build a portfolio a fourth time!
Many of my coaching clients have received financial independence in a short amount of time using this theory. Being an “insider” allows you to take your time to find the buildings that create positive cash flow, allow you to apply the positive cash flow to the underlying loans, and use real estate brokerage to fund your life and down payments. This puts you in a position to slowly and intelligently find properties that meet your “insider” parameters and allow the snowball theory to work.
Since I have retired from the speaking circuit, I have my systems (large books with software) that I was selling from the back of the room at about $1500.00. These are my newest products and this package includes everything that I have ever done. As a “pay it forward” opportunity I am now selling these same books and software at my cost, about 94% off. This is the start of your plan to get to the point where you are living the dream. This is not anything but selling you the best real estate training materials in the world for 94% less than they were selling for a couple of weeks ago. You will get 9 books, a whopping 45 pounds of checklists and information that is easy to use. These volumes have been used by agents in the US and Canada to be the best agent in their market place. Go here top pick up your foundation for the future.
