Friday, March 13, 2009
Friday, July 11, 2008
Entrpreneur or Employee?
I've just started to read Kiyosaki's Before You Quit Your Job (about three years overdue). He raises some interesting questions as to the mindset needed to strike out on your own. He also talks about his main reason for becoming an entrepreneur... wait for it... wait for it... Freedom!
Not making it up, I swear.
So, having dived off that cliff years ago, I found it kind of fun to look at the characteristics of folks like ourselves.
Ability to take calculated risks. That's a big one. None of that if you're trying to keep a job.
Willingness to make mistakes. Almost a prerequisite if we want to learn new skills.
Desire for great wealth vs. need for a steady paycheck. No brainer there.
Desire for creation, not rote fulfillment of daily tasks.
And of course, the desire for freedom, not security.
I also found a great definition of an entrepreneur- a management style that pursues an opportunity without regard to resources currently controlled.
Wow. That sums it up pretty nicely, don't you think?
Not making it up, I swear.
So, having dived off that cliff years ago, I found it kind of fun to look at the characteristics of folks like ourselves.
Ability to take calculated risks. That's a big one. None of that if you're trying to keep a job.
Willingness to make mistakes. Almost a prerequisite if we want to learn new skills.
Desire for great wealth vs. need for a steady paycheck. No brainer there.
Desire for creation, not rote fulfillment of daily tasks.
And of course, the desire for freedom, not security.
I also found a great definition of an entrepreneur- a management style that pursues an opportunity without regard to resources currently controlled.
Wow. That sums it up pretty nicely, don't you think?
Friday, July 04, 2008
Freedom. Who needs it?
Of course I had to write today. It is the entire premise of this blog and our site. Thought I'd take a moment and opine about what freedom really means.
If you have interest in this blog then I have to assume that you value freedom over security. Entrepeneurs crave freedom like they crave oxygen. The only true financial freedom, to my mind, is having income from multiple sources come in on a regular basis. Employees want the security of a paycheck, the security of a job. Which is really an oxymoron since jobs can disappear in an instant while a well established income stream (especially from investment property) will continue indefinitely.
I have a friend who made a very nice living selling software. His company was bought by another and within 3 months he was laid off. Fortunately, he had already started down the path of real estate and is looking to create enough income so he will not have to find another job. Ever.
Clearly freedom has as many meanings and nuances as there are people who cherish it. I just wanted to remind you that it is yours for the taking whenever you are ready.
If you have interest in this blog then I have to assume that you value freedom over security. Entrepeneurs crave freedom like they crave oxygen. The only true financial freedom, to my mind, is having income from multiple sources come in on a regular basis. Employees want the security of a paycheck, the security of a job. Which is really an oxymoron since jobs can disappear in an instant while a well established income stream (especially from investment property) will continue indefinitely.
I have a friend who made a very nice living selling software. His company was bought by another and within 3 months he was laid off. Fortunately, he had already started down the path of real estate and is looking to create enough income so he will not have to find another job. Ever.
Clearly freedom has as many meanings and nuances as there are people who cherish it. I just wanted to remind you that it is yours for the taking whenever you are ready.
Monday, February 04, 2008
What Will You Do With Your Freedom?
I have found that although striving for, and achieving, financial freedom is an extremely worthwhile goal, it pays to know why you are working to get there. All too often we hear of people who have worked their entire lives and finally retired to the good life, only to pass away shortly thereafter (average is 6.5 years).
I would contend, and I doubt many would argue, that this is more a result of boredom than anything else. It is imperative that we know where we are going and why we want to get there. If you suddenly find yourself with tons of free time on your hands, and this is new to you, it can be a little unsettling.
I suppose I could get into a whole goal-setting segment here, but that's not what I'm getting at. This should be more of a brain stretching exercise than anything else. I've heard from many people that they want more time to do things, then can't answer what those things are.
Don't be one of those people. Think about it before you get there.
I would contend, and I doubt many would argue, that this is more a result of boredom than anything else. It is imperative that we know where we are going and why we want to get there. If you suddenly find yourself with tons of free time on your hands, and this is new to you, it can be a little unsettling.
I suppose I could get into a whole goal-setting segment here, but that's not what I'm getting at. This should be more of a brain stretching exercise than anything else. I've heard from many people that they want more time to do things, then can't answer what those things are.
Don't be one of those people. Think about it before you get there.
Why Invest in Real Estate?
There has been much talk of late about the state of the real estate market. Sub-prime mortgage melt down. Record foreclosures. Government intervention. The tightening of the credit markets. A whole slew of gloom and doom, right?
Not so fast. Like any other investment vehicle, the best time to get in is while others are getting out. Deals abound from homeowners who need to sell, banks that have huge inventories of properties they have taken back through foreclosure, wholesalers who also have larger than normal inventories, frustrated landlords, HUD homes, VA homes, the list could keep going. The key to profitable investing is that the deal makes sense today. Any purchase made on future values is speculation, not investing. If you purchase a property with a positive cash flow, then everything else is just a bonus (increased rents, appreciation, depreciation, etc.).
So let’s explore why real estate still is, and always will be, a solid investment. This list is far from all-inclusive; I just want to hit a few key points.
People need a place to live - Very simple and very powerful. This means there will always be a demand for housing. And our population is growing every day.
Cash flow - If you buy a property with positive cash flow, the value of that property doesn’t matter until you sell it. You are still making money every month.
Control - You cannot control the value of your stocks, precious metals, oil wells, or whatever else you choose to invest in. With real estate, you can make improvements and/or add to an existing structure to increase its value. This is especially true if you buy properties that are in need of a rehab.
Leverage - While the credit markets are a little tight right now, you can still get an 80-90% loan, depending on your strength as a borrower. Better yet, buy a “fixer-upper”, make the improvements, and if you bought it right you can refinance it and have no money out of your pocket. Now that’s leverage. Your return on your investment is infinite, because you have no money in the deal. Find a bank that will lend you money to buy stocks, bonds, or precious metals.
Appreciation - It seems a little strange to talk about right now, but real estate, like all investments, is cyclical. Some markets, like mine here in Atlanta, are still appreciating, albeit at a lower rate than a few years ago. And there are some pockets where appreciation is still at 7-8%. You can’t paint the national real estate market with one brush. And here’s the best part. Combining leverage with appreciation is where millionaires are made. A $20,000 investment in the stock market will give you $20,000 worth of stock. The same amount could give you $200,000 worth of real estate. A conservative appreciation rate of 5% would yield $10,000, a 50% return on your money. Where else can you get that kind of return?
Depreciation - Investment property has tremendous tax benefits that I won’t even try to go in to here. Suffice it to say that the cash flow from a properly leveraged property should be tax free money. Talk to your CPA.
Safety - Oil wells run dry. Companies can go out of business or file for bankruptcy. Your entire investment can be lost. Properly insured real estate will always be safe from catastrophic loss.
All of these elements work in your favor no matter which way the market is moving (with the exception of appreciation during a downward trending market). Do your homework; knowledge is vital to any investment strategy. Applied knowledge is even more vital. But I’ve never found a more powerful tool than real estate to become wealthy.
Not so fast. Like any other investment vehicle, the best time to get in is while others are getting out. Deals abound from homeowners who need to sell, banks that have huge inventories of properties they have taken back through foreclosure, wholesalers who also have larger than normal inventories, frustrated landlords, HUD homes, VA homes, the list could keep going. The key to profitable investing is that the deal makes sense today. Any purchase made on future values is speculation, not investing. If you purchase a property with a positive cash flow, then everything else is just a bonus (increased rents, appreciation, depreciation, etc.).
So let’s explore why real estate still is, and always will be, a solid investment. This list is far from all-inclusive; I just want to hit a few key points.
People need a place to live - Very simple and very powerful. This means there will always be a demand for housing. And our population is growing every day.
Cash flow - If you buy a property with positive cash flow, the value of that property doesn’t matter until you sell it. You are still making money every month.
Control - You cannot control the value of your stocks, precious metals, oil wells, or whatever else you choose to invest in. With real estate, you can make improvements and/or add to an existing structure to increase its value. This is especially true if you buy properties that are in need of a rehab.
Leverage - While the credit markets are a little tight right now, you can still get an 80-90% loan, depending on your strength as a borrower. Better yet, buy a “fixer-upper”, make the improvements, and if you bought it right you can refinance it and have no money out of your pocket. Now that’s leverage. Your return on your investment is infinite, because you have no money in the deal. Find a bank that will lend you money to buy stocks, bonds, or precious metals.
Appreciation - It seems a little strange to talk about right now, but real estate, like all investments, is cyclical. Some markets, like mine here in Atlanta, are still appreciating, albeit at a lower rate than a few years ago. And there are some pockets where appreciation is still at 7-8%. You can’t paint the national real estate market with one brush. And here’s the best part. Combining leverage with appreciation is where millionaires are made. A $20,000 investment in the stock market will give you $20,000 worth of stock. The same amount could give you $200,000 worth of real estate. A conservative appreciation rate of 5% would yield $10,000, a 50% return on your money. Where else can you get that kind of return?
Depreciation - Investment property has tremendous tax benefits that I won’t even try to go in to here. Suffice it to say that the cash flow from a properly leveraged property should be tax free money. Talk to your CPA.
Safety - Oil wells run dry. Companies can go out of business or file for bankruptcy. Your entire investment can be lost. Properly insured real estate will always be safe from catastrophic loss.
All of these elements work in your favor no matter which way the market is moving (with the exception of appreciation during a downward trending market). Do your homework; knowledge is vital to any investment strategy. Applied knowledge is even more vital. But I’ve never found a more powerful tool than real estate to become wealthy.
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