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I
Used to Be Ashamed of What My Wife Was Doing
for a Living...
But
everything changed after she started her own
"microbusiness". Microbusinesses
can give you immediate income -- not a fortune,
but a solid, extra cash stream -- plus, they
can be accumulated, one after the other, so
that one day they may be worth more than everything
else you have put together.
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WEALTH
Having
Good Credit Means More Than Just Paying Your Bills on Time
The
best way to make sure your credit is always in good shape is
to manage your credit responsibly. Here, according to Fair Isaac
Corporation (which developed the scoring system that most of
the consumer credit industry uses), are some suggestions on
how to do it:
1.
Keep your balances low on credit cards and other "revolving
credit." High outstanding debt can affect your score.
2.
Pay off debt rather than moving it around. The most
effective way to improve your score is by paying down revolving
debt.
3.
Don't close unused credit cards as a short-term strategy to
raise your score. Owing the same amount but having fewer open
accounts may lower your score.
4.
Don't open new credit cards you don't need, just
to increase your available credit. This approach could backfire
and lower your score.
5.
Make the most of the length of your credit history.
If you've been managing credit for a short time, don't open
a lot of new accounts too rapidly. New accounts will lower
your average account age, which will have a larger effect
on your score if you don't have a lot of other credit information.
Also, rapid account buildup can look risky if you are a new
credit user.
(Source:
www.wellsfargo.com)
HEALTH
Why Weight-Bearing Exercise Is Good for Your Bones
There
are a number of vitamins and minerals that are essential for
strong and healthy bones. One of these, of course, is vitamin
D, produced by your skin when it's exposed to sunlight. However
none of these co-factors will result in optimal bone density
unless you also engage in a regimen of weight-bearing exercise.
You
might have heard that when astronauts return to earth, they
often experience bone problems. Problem is, bones are living
tissues, and the materials that make them up are constantly
being broken down and then replaced. Without weight or stress
on the astronauts' bones, there is no stimulation to replace
the material being broken down.
This
is why weight-bearing exercise - weightlifting, jumping, running,
and even walking - is so important. Applying force along the
axis of a bone stimulates its growth.
- Jon Herring
WISDOM
What
Do You Think My Next Book Should Be About?
I'm
trying to figure out what book to write next. And it would help
me out if you could tell me which one of the following you'd
most like to read (or, better yet, be most likely to buy):
1.
Natural Wealth, Natural Health
Don't
listen to the major media about wealth and health. Their job
is to amuse you with new theories. If they keep you reading,
they succeed. Getting wealthy and staying healthy in the real
world is all about following the time-tested principles of
nature. In this book, Dr. Sears and I team up to explain how
easy it is to achieve wealth and health by following Mother
Nature's oldest and most commonly ignored rules.
2.
Retire This Year!
How
to quit your job and make $100,000 a year doing something
you love. I've explained the basic mechanics of this process
in "Automatic
Wealth". Now, in "Retire This Year!"
I'll show you how a dozen of my friends and proteges have
done it. You'll get all the details you need to make this
year the last year you work for the man.
3.
From Peace Corps Professor to Multimillionaire Marketer: How
I Took Advantage of the System
Stories
from my ignominious (see "Word to the Wise," below)
past. The 12 key events that changed me and enriched my life.
And how you can do much better than I did by avoiding my mistakes
and copying my successes.
4.
How to Think Like a Marketing Genius
In
ETR, I spend a lot of time talking about success and wealth
building - but the thing I know best of all is how to market.
This book will be a collection of 15 or 20 of my most powerful
marketing secrets - direct-sales techniques that have been
instrumental in making more than a billion dollars' worth
of sales.
5.
The Seven Most Powerful Success Secrets
In
preparing for an essay I wrote for John Mauldin's next book,"
Just One Thing," I thought about everything I've learned
about success - from my mentors, proteges, colleagues, and
from my personal experience. Here, I talk about the seven
most effective things you can do to truly transform yourself
into a powerful, positive, completely successful person.
That's
what I've got on the drawing board. So please help me out by
letting me know which title you like best - or if there's something
you'd rather have me write about. And thanks very much.
-
Michael Masterson
TODAY'S
ACTION PLAN
Please
let me know which one of the above book ideas you like best
by posting your comments on Speak
Out. If you have any suggestions on how to
make the book more useful to you, include those too. We'll report
the results in ETR - and I'll get to work on the one that most
of my readers like best. Thanks again for your help.
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How
To Get People To Send You Their Money!
I
know this seems crazy but it's not. It's not
a scheme that you'd be ashamed to be involved
in. And I'm not misleading you in any way. The
claims I'm making are factual. They are all
based on experience.
Click
here to learn more:
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TODAY'S
MESSAGE
Phat
City: How to Roll Up a $10,000 Investment into a 7-Figure Portfolio
and 6 Figures in Income and Equity Every Year
by
Justin Ford
In
Message
#1399 and Message
#1411, I talked about Royce Gracie, a Jiu Jitsu
master, and Dan Severin, a wrestler. Both are champions in the
sport of mixed martial arts fighting. I told their stories to
make a couple of points about real estate.
First,
with the right technique, a small man can conquer mountains
- just as the 180-pound Gracie defeated the 270-pound Severin
in their first match. So it is with real estate. Your first
task is to become a master at recognizing value and opportunity.
Then, like a Jiu Jitsu expert - you can use leverage when you
see the opportunity.
Second,
once you've developed solid skills, it can pay to put on weight.
Dan Severin came back from his defeat at the hands of the smaller
Royce Gracie with new skills. He then went on to capture the
championship crown.
The
first fight between Gracie and Severin showed that skill and
determination matter first and foremost. But when both fighters
are matched in those two aspects, size begins to matter once
again. That was proven when the bigger fighters, like Severin,
began to learn the skills of the smaller fighters - and soon
weight classes had to develop in the mixed martial arts tournament.
Today,
we'll see how you can move up from an expert investor at the
residential level up to a top-ranked competitor in the heavyweight
division. It's not something you have to do. You can make a
lot of money investing in single-family homes and residential
multi-unit properties (1 to 4 units). But it's something you
may want to do ... because, just as in the fight game, the purses
in the heavyweight division tend to be the largest.
After
all, if you're averaging a 10% total annual return on a $100,000
property, you're making $10,000 in the first year, $11,000 in
the second year (because of compounding), $12,100 in the third
year, and so on…
Now,
if you invested $10,000 to start with, you made 100% on your
initial investment in your first year. And if your returns continue
to average 10%, your percentage returns increase in relation
to your initial out-of-pocket investment. It's 111% in the second
year, 121% in the third, and so on ...
And
if you invested less to get control of that $100,000 property,
your returns are even greater. At an initial investment of $5,000,
you start off with a total return of 200% and go on and up from
there.
But
if you get the same percentages working for you on a million-dollar
property, your dollar gains are much bigger. The purses tend
to be larger in the heavyweight division. We don't have to do
a lot of compounding to see that. In the first year alone, a
10% return on a $1,000,000 property is $100,000. A lot more
money in the same period of time.
But
where do you get the $100,000 to put down on a million-dollar
property? Or, more realistically, where do you get the $250,000
plus closing costs and reserves to buy the million-dollar property
(since commercial properties of 5 units or more usually require
a minimum down payment of 25%)?
The
answer: You can start small and get leverage working for you
on the $100,000 property. Then you can "roll up" to
a larger property, followed by a still-larger property ... until
you're in the heavyweight division where you're generating six
figures a year in income and appreciation from a single investment.
So
how do you roll up? How do you "put on that weight"
as a real estate investor?
First,
learn how to buy right so you can use the maximum amount of
leverage while still getting ample cash flow to cover all your
carrying costs.
Then
use a special tax loophole to quickly move up the real estate
weight divisions. That loophole is called the 1031 Like-Kind
Exchange.
How
to Go From a Single $10,000 Investment to a Million-Dollar Property,
Increasing Your Wealth by 6 Figures a Year
When
you buy right in real estate, a 10% return on your property
isn't unusual. Even in an average market, you may average 6%
in appreciation, 3% in net rents, and 1% in amortization - for
a total return of 10%. Again, that may be equal to a triple-digit
return on your initial investment depending on how much you
put down - and how long you've owned the property. In a rapidly
appreciating market, you could get 10% from appreciation alone.
What's
more, when you develop the ability to buy properties at substantial
discounts to market value in rapidly improving areas, you can
get appreciation of 20% to 40% or more on your property in the
first few years of holding it. And, again, this could represent
hundreds of percent on your initial investment.
Buy
a $100,000 property for $80,000 and you've got $20,000 in instant
equity to start. Get another $10,000 in appreciation during
the first year in a rapidly improving neighborhood and you're
up $30,000 after 12 months. At the end of two years, you could
be up $40,000 or more. If you put just $8,000 down to buy the
property in the first place (10%), you've multiplied the worth
of that investment six-fold in a couple of years.
Combine
this kind of sharp buying with a 1031 Exchange and you can build
equity and passive income at an accelerated pace. Here's what
I mean ...
The
1031 Exchange: A Shortcut for Going From a $10,000 Down Payment
to a Million-Dollar Cash-Pumping Property Portfolio in Five
Years
I
won't go into the details of the 1031 Exchange here, because
my Main Street Millionaire colleague and 1031 expert Thomas
Phelan has covered it brilliantly before. But here's the gist:
You can't use it with stocks or bonds. But you can use it with
investment real estate and a few other things. And it can help
you build wealth far more quickly.
For
instance, if you sell a property and have a $100,000 capital
gain, Uncle Sam might come in and grab $15,000 for his long-term
capital gains tax. Then your state might grab a few grand more.
Depending on how long you've owned the property and what depreciation
you've claimed during that time, Sammy might come back and snatch
yet a few more thousand from you in a tax called "depreciation
recapture."
All
told, you might get to keep $75,000 while the state and national
governments keep $25,000. But if you used the $75,000 as a 25%
down payment on a commercial property, it means you could buy
a $375,000 property. If you're getting 10% total annual gains,
you're now gaining about $37,500 a year, and climbing.
But
the 1031 lets you invest the whole $100,000 into another property.
If you're buying a commercial property and the lender requires
25% down again, you now can buy a $500,000 property. That may
now kick off $50,000 a year in total return and climb from there.
So,
you can start in the residential market (less than four units)
where low-down-payment financing and even no-down financing
is far more available. And you can use, say, a $10,000 investment
as a 10% down payment and move up in weight class from there
in a fairly short period of time.
Here's
how it might work ...
Buy
a property under market value for $100,000, using a $10,000
down payment. Sell it two years later for $140,000. So far,
very good. But Uncle Sam wants to sit down at the closing table
with you and take a chunk of your gains. Instead, you stiff-arm
him and say "Paws off!" You use a 1031 Exchange to
defer the taxes on your capital gains.
Now
you take your $50,000 (your original $10,000 down payment plus
$40,000 in gains) and you use it as a 10% down payment on a
$500,000 4-unit property generating $50,000 a year in gross
rental income. You're buying under market again and at such
a price that the property more than pays for itself - even at
90% financing.
Three
years later, you sell for $700,000. Now you take your $250,000
($50,000 down payment plus $200,000 in tax-deferred cap gains)
and you use it as a 25% down payment this time for a $1 million
apartment complex.
At
this point, if it generates a 10% total return for you every
year, you're now picking up six figures in income and equity
every year. All while the property pays for itself. And you
started with just a $10,000 down payment five years earlier.
A
final note: If these numbers seem unrealistic, let me assure
you they're not - if you're a sharp buyer. A house I bought
for $90,000 under market value last year, appraised for $158,000
just one year later. And I didn't even use 10% down, I bought
it with 100% financing and it still pays for itself.
A
duplex I bought under-market at around the same time for $149,000
rose by $97,000, and a triplex I bought at a deep discount of
$149,000 came in at $302,000. This was followed by another house
I bought in pre-foreclosure that gave me a $42,000 gain in less
than six months. All these properties pay for themselves and
generate a net cash flow.
All
it takes is one of these kinds of deals to get you on your way.
Then, sell, use a 1031 Exchange and do one just like it every
two or three years, steadily moving up in price category.
The
result? You can end up "rolling up" a single $10,000
investment into a 7-figure property portfolio generating six
figures in equity and income every year.
[Ed.
Note: Justin Ford is the editor of Main Street Millionaire,
ETR's Real Estate Investment Success Program. For
information, click here.]
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What
Separates The Top Big-Money People From Everyone
Else?
You
may think it’s hard work. But it’s
NOT – it’s better IDEAS...
David
Deutsch is one of the best and most sought
after creative minds in the country—routinely
generating breakthrough ideas for Boardroom
and other top publishers. Click
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weapon he credits with lighting a fire under
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IT'S
GOOD TO KNOW
The
Difference Between a Computer Virus and Spyware
A
computer virus is designed to replicate itself and spread from
one computer to any other computers that are connected to it.
Its purpose is to do damage - to your personal files or even
your operating system.
Spyware
(also known as adware), on the other hand, is not (usually)
designed to do any damage. Its mission is to get into your computer,
secretly gather information about your Internet browsing habits,
and provide marketers with data that can help them target their
ads to you.
-
Charlie Byrne
WORD
TO THE WISE
Something
that is "ignominious" (ig-nuh-MIN-ee-us)
is deserving of disgrace or shame.
Example
(as I used it in today's Wisdom brief): "Stories from my
ignominious past. The 12 key events that changed me and enriched
my life."
