We’ll start putting some of this knowledge into the “nuts and bolts” of investing tomorrow, but let’s continue with the rest of the foundation for your down payment machine system.
It is important to understand that you have chosen a business that requires you to be available to your clients frequently. In fact, your clients do require your jumping through hoops all the time. Sometimes it is difficult to take vacations to avoid the guilt of missing “that big deal.”
The burnout ratio for real estate agents, especially top producers, seems to happen somewhere between the 10 and 20 year mark of a career. At the time when you wake up and realize that you are not as excited about the brokerage business as you once were, it is nice to be able to fall back on savings and equity in real estate that produces a positive cash flow.
Every aspect of this system has been thought out and proven from years of experience and hundreds of interviews with agents who enjoy living off their investments! The story is always the same – they ran an outstanding real estate business that produced them huge amounts of net income. They have invested in the asset that they knew best – real estate.
In the later years, they were able to pick and choose aspects of the business that they enjoyed better than others, leaving the more energy-zapping aspects of real estate to the younger and more enthusiastic agents.
Soon, real estate rental income will replace commission income. Some of these agents will open management companies that come from managing their own properties. Some will become speakers. All can retire while being financially independent real estate agents/brokers who have positive cash flow!
For me, I started transitioning from comfortable entry level, residential real estate to larger priced transactions in residential property, therefore working the same amount of time while netting larger commissions. As my client base continued to grow, I then transitioned into the investment-oriented and commercial aspects of real estate, which accelerated by exposure to investment real estate.
I obtained the status of being a mentor to other top agents because the systems that I developed actually worked. While working toward my professional career goals, I slowly built my real estate investments (a second time!). This was not to say that I did not make thousands of mistakes in accumulating those real estate investments, but it was a constant goal with the end gain of having my money work for me so I did not have to work so hard for it. This time, I was doing it safely, too!
At this point, I would like for you to complete an exercise that will allow you to start determining how much real estate brokerage business you have to do to accomplish your goals while obtaining down payments to buy real estate. It might be too soon for you to determine how much money you will need for your investment program. Because you might have to make improvements to your brokerage business, there are some items you may want to consider before you actually earn money for your down payment and “our” investment program.
There are investments that I would consider before real estate…can you believe I said that? You must make certain that your tax-leveraged investment accounts are fully vested and that your non-secured debt is minimized.
Tomorrow, we’ll include a worksheet to give you some idea of the minimum goals that you should try to achieve. The philosophies used in this worksheet are based upon age-old laws and rules for financial success. If you follow them, you will win. If you do not follow them, you have a very good chance of not maximizing your input to family, faith, fun, friends, and of course – personal finances!
My goal is to make certain that you have an end date of your “have to” working life and to help you create a time to retire while living off the fruits of your labor from properties you have purchased with your “insider” advantage. It is an exciting exercise. Please seriously consider the outcome.
Finding a down payment is sometimes one of hardest parts of your investment program. For me, as my real estate brokerage career took off, I started making more money. I found that my taxes went up so I was consistently looking for everything that I could add to my schedule C as an expense.
Many of my early years showed extremely small net income because of my search to find the keys to the kingdom of real estate sales. I used those expenses to mitigate the net income, therefore reducing my taxes. Sometimes, this made the banks not consider my loan application seriously.
My real estate income did not take off for a couple of years! I was forced to make some compromises to my edicts of 10% down and no partners. I can understand if you bring in a client to financially assist you or if you use notes and trust deeds that you had previously taken back as part of your commission. I understand using your commission dollars toward a down payment.
In rare cases, where the deal is just an amazing opportunity, I can certainly understand borrowing money from family, friends, or even institutional/hard sources. Sometimes, getting started is the hardest part, especially when your real estate net profit income has not kicked in. In the past, I have even written a no-money down deal or two where I did not compromise the other important factors of a real estate investment.
The important thing is to get started in your investment career! I know that it could look like an insurmountable task. I understand that you have to generate leads for sellers and handle buyers while making enough profit to handle your personal living expenses, but if you make investing part of your goal, you will find that some of the properties you struggle to get into will be the crown jewels of your investment portfolio in a few years.
The magic of equity pay downs through fully amortized loans, coupled with the appreciation of real estate and the cash flow of that property, can substantially increase your net worth. Whatever your goals are — make them bright and shiny enough for you to go through this initial pain of the acquisition of a down payment.
Many of the hot buttons in my life created the motivation and desire for me to get started in my investment program. My motivation and desire changed over the years, but at one time or another my goals were any of the following:
- The search for financial independence and material comfort
- A waterfront home
- Proof of self-worth
- Vacation properties and automobiles
- Proving others wrong about my abilities
- Being a local celebrity
- Proving my self-worth…to myself
- Fear of failure
- Being able to be a mentor with enough money to help others
- Prestige and freedom
I felt that to be successful — I needed to have the light at the end of tunnel be very visible. Many times you will run into road blocks. As long as you can anticipate the feeling that you will have when you achieve any of your goals — you will find that breaking through that barrier is much easier.
Invest in your business, invest in your future, invest in real estate! Insider Trading for Real Estate Agents is a thick manual full of Walter’s personal investing strategies, forms, checklists, and letters with the data CD (digital copy for easier implementation). It also includes audio CDs for you as a real estate investor and audio CDs for your investor clients.
Check out the details: http://www.waltersanford.com/shop/insider-trading-for-real-estate/. Call 800.792.5837 and ask for the $50 blog special on this system!