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real-estate

Money Summit and Wealth Expo Series: Real-Estate Investing

This is part 1 of a 3-part series on the money lessons I’ve learned from the recently held Money Summit and Wealth Expo seminar.  This series will cover the 3 ways to grow your money: real-estate investing, stock market investing and building a business.

  • Part 1 – Real-Estate Investing 
  • Part 2 – Stock Market Investing
  • Part 3 – Building a Business

Real-Estate Investing

 

During the Money Summit and Wealth Expo, I was lucky to learn from 3 very successful real-estate investors: Trace Trajano, Eden April Alemania-Dayrit and Noli Alleje.  Read on as I share to you those lessons so you too can start building your riches through real-estate investing.

 

Trace Trajano

Best-selling author of Think Rich Quick and Real-Estate Guru

 

Trace Trajano is widely regarded as the author of the best-selling book “Think Rich – Quick”, which he co-authored with Larry Gamboa.  He, along with Larry Gamboa share a dream to create 1 million Millionaires by year 2020.  This is a huge and audacious goal but with millions of dollars in successful real-estate investments and several students coached who are now millionaires, this is a dream not far from reality. 

According to Trace, real-estate is a good investment mainly for 4 reasons: income, equity, appreciation and leverage. 

  • Real-estate gives you income in terms of capital gains when you decide to sell the property or monthly rental from your tenant in case you rent it out. 
  • As you pay down the amortization, you build equity for the property.
  • Appreciation means as the price of goods increase due to inflation, the value of your property generally rises with it. 
  • Lastly, real-estate gives you the leverage to acquire a property even with only 10% down payment. 

Trace also warns about the risks in making money through real-estate.  He mentioned about the condo craze where everybody is buying pre-selling condos.  The reason he does not encourage buying a pre-selling condo is because it is subject to market fluctuations.  Real-estate markets can go from boom to bust in a few years.  Your money is also tied up for 3 to 5 years and therefore not working for you during this period.  He said, it is even more dangerous to use your life savings and securing a bank loan because you risk losing everything.  The bank can go after everything you own if the deal does not turn out to be as good as you’re hoping for.

Another risk you can encounter when you invest in real-estate is getting a bad tenant when you decide to rent your property out. Without effective screening of tenants and proper property management, you can risk getting a “tenant from hell”.  A tenant who is not only good at avoiding paying your monthly rentals but even better than your lawyer in taking advantage of every loophole in the law so you cannot evict him.

To mitigate these risks, Trace suggests  to learn the real-estate business first through Affiliate Real Estate Marketing.  When you do Affiliate Real Estate Marketing, you basically sell another person’s property first.  When you successfully sell the property, you get extra income through commissions.  When you are not able to sell the property, you would still end up building your buyer’s list without losing money since the property is not yours anyway.  When you go through the process, you will learn more about the real-estate market.  You will know what properties are selling hot in an area and what’s not. You get to work in the real-estate business without risking your own money in a property.

According to Trace, the goal of a real-estate investor is to make money from the property, NOT necessarily to acquire the property.  To achieve this goal, one simply has to find a qualified buyer, understand his needs and financial capabilities, and find the right property that fits his needs. 

This is where Trace’s eXtreme marketing comes in.  To do extreme marketing, you need to ask 3 things:

  1. Who is your target market?
  2. What is your compelling message?
  3. What is your medium?

Who is your target market?  What are their needs? Why will they pay you the price?  Landlords for example are mainly concerned with ROI and cash flow.  End buyers normally focus more on the down payment and the monthly amortization. 

What is your compelling message? How will your message stand out?  What will compel prospects to call or contact you? You need to consider your target market when you formulate your message.  Know what’s important to them and deliver that message.

What is your medium?  Will you do online marketing? Or will you do offline like handing out flyers, posting bandit signs and the like?  Are people in your target market even logging in to the internet? 

These are important questions you need to ask yourself when you decide to do extreme marketing to sell your property.

 

Eden April Alemania-Dayrit

Rent-To-Own Specialist

Eden is the fastest and youngest millionaire Think Rich Pinoy franchisee.  She specializes in rent-to-own deals.  To this date, she has already bought and sold more than a dozen houses in just 2 years.

According to Eden, one can earn from real-estate in 3 ways: wholesaling, retailing and rent-to-own. 

  • Wholesaling is when you buy a property at way below (e.g. 60%) market price.
  • Retailing is when you do some renovations, flip the property and sell it for a higher price. 
  • Rent-to-own, also known as lease with option to purchase offers the tenant the option to own the property once fully paid. 

You can also earn through real-estate by becoming either a passive investor or an equity partner.  When you’re a passive investor, you earn a guaranteed 8 – 12% annual return.  You basically lend money to acquire the property.  As a return, they give your money back along with the interest after a few months.  When you decide to become an equity partner, you share in the profit like splitting it 50-50, but you also share in the risk in case the property is not sold or you get a bad tenant. 

The basic formula for investing in real-estate is Find – Fund – Fix – Sell – Profit. 

  1. Find a great property that’s below market price. 
  2. Fund it by using other people’s money through passive investors or equity partners. 
  3. Fix it by doing renovations to make it ready for occupancy. 
  4. Sell the property to your target market. 
  5. Profit from the property when you’re able to sell the property at a price higher than what you originally paid for it even after factoring in renovation expenses, paying back your investor’s money including interests, marketing expenses and taxes.

As you can see, the formula is very simple, but going through the process is definitely not easy. 

 

Noli Alleje

The Property Forum Founder

 

Noli is the master auctioneer who was once successfully auctioned properties worth around 3 Billion pesos.  Yes, that’s capital “B” as in billions. 

According to Noli, the auctioning of foreclosed assets started in the early ‘90s during the boom of the property sector.  When the Asian financial crisis hit, people suddenly could no longer pay their monthly amortization, thereby causing those properties to be foreclosed through “Dacion en Pago” (a.k.a. good foreclosures).  

In 2009, the Philippines had about 184 Billion worth of foreclo
sed assets.  The past due loans for the same year amounted to around 115 Billion pesos.  This means, there’s a big opportunity out there in foreclosed assets.

Why is it a good idea to invest in foreclosed assets?  According to Noli, the papers are generally (but not always) in order primarily because banks have a reputation to protect.   Because of this, banks normally would have to do some asset inspection, appraisals, etc.

Noli warns though that this business is not for the weak of heart.  The fact that it is foreclosed means there’s a problem.  When you invest in a foreclosed property, you need to do your due diligence.  You need to inspect the property in the morning and afternoon, at night and dawn, weekdays and weekends.  Take pictures.  Look for defects on the water line.  You can also ask the neighbors to find out more about the property.

In the end, you make money when you buy so you need to make sure you’re getting a great property for a great price before going into a deal.

 

That’s all I have on my notes about real-estate from the Money Summit and Wealth Expo Seminar. I hope you learned something to give you a head start in building your riches through real-estate investing.

 

P.S.  If you have a great property about to be foreclosed or you just need to sell your property fast, we can help!  Just go to https://akosiallan.com/sell-your-property/.

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Business Investing Life Updates Money Mindset Passive Income Personal Finance Personal Growth real-estate Stocks

Financial Goals 2010 Mid-Year Update

It’s now July! The first half of the year has already passed.  Time does fly so fast, doesn’t it?  So many things have happened and I am still amazed at how this blog has grown steadily over the past 6 months.  Before we welcome the next half of the year, I’d like to take this time to reflect and give you an update on my 3 financial goals for this year 2010. 

Financial Goal #1 – Buy a House!

My first goal for 2010 is to Buy a House.  The short update is…NO we have NOT bought a house yet.  But maybe soon. 🙂

My wife and I actually invested in a house…but only for a private lending deal.  Besides, we won’t actually own the house, so that doesn’t count.  That deal, however, introduced us to great friends doing business in real-estate whom I am learning a lot from.  In the next months I will also be spending some time to learn investing in real-estate myself. 

We’ve also been looking at buying a nice 2-bedroom unit on a pre-selling mid-rise condo.  But this one will NOT be ready for occupancy until April 2012.  We actually paid the reservation already so hopefully, if everything is in order, my first goal for the year could actually be within reach (at least technically). :) 

Financial Goal #2 – Invest 20% of my money

The second goal I have is to invest 20% of my money.  I’ve started investing in the Philippine Stock Market.  I’ve tried the cost-averaging method via CitisecOnline’s EIP and even Bo Sanchez’ SUPER EIP way! The experience has been an eye opener for me. 

Apart from that, I also got into a private lending deal on real-estate.  While I haven’t gotten my money back yet, I’m confident this will lead into more investing opportunities in the future. 

Just last week, one of my friends also asked me to invest in her Travel Agency business.   Normally, I don’t lend money unless I’m very sure I will get my money back.  However, since I know her and the money (including interest) will be returned in just 7 days, I thought it was worth a try.  If this deal goes well, I might be encouraged to invest again in the future and probably open it up also to dear readers of this site.

I’ve also been investing heavily on my personal development these past months.  I’ve just attended the Money Summit and Wealth Expo last weekend to learn more about money, business and investing.  The 2-day seminar was a blast!  The energy from the speakers as well as the attendees was simply amazing!  Up to now, I’m still digesting everything.  I’m really excited to share the lessons I’ve learned from that seminar to our dear readers.  So, watch out for that in the coming weeks.

Financial Goal #3 – Be Consciously Alive

The 3rd and last goal I have is to be consciously alive.  This goal has more to do about my desire to live a healthier lifestyle than anything else.  This is the reason why I think your health is more important than your money. 

While I’m not sick at the moment, my health has not been ideal the past few months.  It is not where it is supposed to be.  My lifestyle is not very good.  I still drink coffee a lot.  I am also having a hard time getting enough sleep.  As a result, I’ve easily gotten a cold every now and then.

I’m always in a hurry. Most of the time, I go for fast food.  My weight has increased so much that my pants now hardly fit.  Oh well, it’s a good thing fitted pants are the “in” thing these days.  I don’t have to feel so out of place. 🙂

One good news is that I finally used our condo’s gym.  Finally.  Just today.  And I liked it.  I’ll probably go to the gym more often now.

Quite honestly, this goal is a little bit vague to measure and be actually effective.  So, to make this goal more specific, measurable and make me accountable :-), I’m revising it to say “my goal is to weigh 80 kilograms by December 31, 2010”.  I only have less than 6 months to go so I better get started right away!  Wish me luck!

 

P.S.  Dear Readers, what financial goals do you have for the year?  How have you made progress on your goals now that the first half of the year has passed?

Categories
Investing Personal Finance Truly Rich Club

How To Profit From Real-Estate Investing Thru Private Lending

One of the main financial concerns I have been facing lately is the need to learn to invest and grow my money.  To solve that problem, I’ve tried investing through stocks, RTBs, and also started exploring internet marketing.  While all three have been a great learning experience so far, one investment vehicle I’ve never had the chance to explore is investing through Real-Estate.

That changed about 2 weeks ago.

My Very First Real Estate Investment Thru Private Lending

As I was browsing through the popular real-estate investing site foreclosurephilippines.com by Jay Castillo, I came across an article about the Trace Trajano’s Apprentice Challenge.  In that article, Jay and his partners in RYP Realty Team shared some of their experiences in the Apprentice Challenge as well as their need for investor partners to help them out in one of the challenges.  I signed-up right that instant and I’m glad I did since it’s been an exciting experience ever since.

A few days after I filled up the investor’s form, I received a message from Ebb Magtuba, the CEO of RYP Realty Team, one of Jay’s partners in the Trace Trajano’s Apprentice Challenge.  I met up with Ebb over a cup of coffee, and he shared his story on how he got involved on real-estate.  I also learned that RYP Realty team was the leading contender in the Apprentice Challenge.  To someone who has limited experience when it comes to real-estate, I felt a whole new world was opening before my eyes.

The following week, my wife and I met up with Ebb again.  This time, Ebb was with Eden Alemania-Dayrit, the very successful real-estate investor who was the one structuring the whole deal.  Both Ebb and Eden went with us to checkout the property that we would be investing in.

As investor, the opportunity was to get into a private lending deal that could potentially earn us a little bit of “passive” money, without us having to do any of the hard work of doing renovations, processing legal papers, as well as marketing and selling the property.

The 3 Questions You Should Ask Before You Lend Your Money

Before investing our money though, there were 3 things we were concerned about.  First, how soon can we get the money we lent back?  Second, what is the worst case scenario?  Lastly, what’s the track record of the other party we’re dealing with?

For the first question, Eden confirmed that we can expect to receive our money back plus interests in not more than 4 months, regardless if the property is sold or not.  After we get our money back, Eden’s plan is to use her earnings from her other successful real-estate deals to continue to market the property.  At that point, we would now be risk-free since we already made our money.

For the second question, the absolute worst case scenario would be us ending up with the property.  When you think about it, it would not be that bad at all since we would have gotten a great property at below market price.  Since we were able to visit the actual property, we already know its exact condition, how much renovation it probably needs, and how conducive the neighborhood is for home owners.

While going around the area, we also managed to find out how much other similar houses were being sold for.  So at least, we got some idea whether the price of the house we were investing in was within reasonable range. Add it to the fact that Eden was also able to sell a similar property in the same neighborhood for a higher price.  So in the point of view of the end-buyer/home owner, it would come out as a great deal.

For the last question, it was interesting that even at a young age, Eden has already done more than a dozen similar deals, some even in the same area where the property we were investing in was located.  She’s definitely not a beginner.  Even with her success, she still manages to stay humble and seek out the support of other successful real-estate investors like Trace Trajano and Larry Gamboa who continue to mentor and help her out in case an unexpected scenario happens.

Out of curiosity, I also asked her what was the worst thing she experienced so far as a real-estate investor and she willingly shared a problem about a tenant who encountered financial difficulty and was not able to pay up on time.  The good news was that even with that problem, she was still able to get her money back.

Ready, Fire, Aim

In the end, even though there’s a certain amount of risk involved, the answers to these 3 questions and the legal papers that support the “worst case” scenario as well as the integrity of the people we’re dealing with was more than enough to calm my nerves.  But as with anything related to money, only time will tell whether it is really a good deal or not.

At this point in my life, however, I would like to believe this is a very good opportunity to learn the world of real-estate investing first hand.  It matters not whether my decision will result into success or failure.  What matters more to me is the realization that I can be courageous enough to take action in spite of my fears and be willing to fail and learn to gain actual real-estate investing experience.

In all honesty, the whole experience made me anxious and excited at the same time.  With the experience, I have more reason to continue learning about real-estate investing so that I can manage the risks better in my next deals.

As always, whatever I learn from the whole real-estate investing experience, I will gladly share them to you through this blog.

How about you?  How’s your experience investing in real-estate so far?

P.S. Do you want (or know anyone who wants) to make 10-15% return on their money per year with little or no risk?  Fill-up the investor form to find out more about this opportunity.

Categories
Business Life Lessons Money Mindset Passive Income Personal Finance

Passive Income Opportunity Myths & Realities: How to Spot a Scam

The idea of a passive income attracts a lot of people mainly because it promises to earn you money while doing little or no work at all.  Some even think of having a passive income stream as an opportunity of a lifetime.  Who wouldn’t want to earn money while you sleep?  Who wouldn’t want to make money the easy way?  Who wouldn’t want to sit comfortably on the beach, drinking a glass of your favorite drink while your “passive stream of income” works hard to make money for you.

That is the dream, right?

 

What is passive income?

Passive income is the residual income you receive from rental properties, royalties from your books, licensing income from your businesses, etc.  This income is passive because it supposed to be earned with little or no work required from you at all.

While passive income promises a lot of things, it is NOT without a price.  Identifying the myths & realities of a passive income opportunity allows you to spot if it’s an opportunity of a lifetime or a total scam.

 

Myth: Little or no work at all

Reality: A lot of upfront work

 

The most common myth about a passive income opportunity is the allure of not having to work at all while money keeps coming to you.  While this may be true at some point, it is NOT the complete picture.  In most cases, the reality is that setting up these passive streams of income requires a LOT of hard work especially in the beginning.

Real Estate

One of the most common examples of a passive income is rental income from tenants through real-estate properties.  To some degree, it is a passive income. But still not purely 100%. If you are the one managing the property, you have to worry about maintaining the property and possibly fixing toilets in the middle of the night. 🙂  If you do hire a real-estate managing company, then you would need to make sure they do  their job and worth more than you’re paying them.  Otherwise, you stand to lose more compared to running the business on your own.

Business

Ask any employee what they plan to do after retirement.  Most of them will answer that they want to go into business because “finally” they have enough capital to do so.  Unfortunately, it could be the riskiest move they will ever make.  The odds are against them.  Statistics say that 9 out of 10 businesses fail in the first 5 years.  Few do make it.  Others are forced to go back into employment.  The rest are content to live a “cheaper” lifestyle and forego their dreams.

Running a business needs your time and attention.  It demands your focus.  For that reason, it is not a passive income until you’re able to setup your business systems.  Setting up these systems will demand your hard work, your patience, not to mention your time and money.

If you’re able to set these systems up properly and hire a great CEO to run your business, only then can you let the system work for you and allow it to give you a steady stream of passive stream income.

However, if you setup the wrong system, especially if the system requires you to be the one managing the property, you will end up having a job instead of a sustainable business system.

 

Myth: You need a lot of money

Reality: Having money is not a guarantee

 

Some people think that building systems to create passive income requires a lot of money.  The reality is that successful entrepreneurs are not hindered by the lack of money in setting up their business systems.  They even use it as an inspiration to be more creative in selling their ideas to potential investors and partners.

While having money is an asset to a savvy entrepreneur, it is actually a liability for someone who doesn’t know what he is doing.  A lot of money in the beginning for an inexperienced businessman can be a hindrance to his success.  With money readily available, a frustrated and inexperienced entrepreneur can just throw away money at any problem that comes his way.

This is hardly the way to set up a business system.  It will only make the problem worse because the real problem is not identified and fixed, hence, the system does not improve.  All it does is throwing money down the drain.

In the end, money is an asset or a liability depending on how a person makes use of it.

 

Myth: Setting up a passive income stream is very hard

Reality: Setting up a passive income stream can be learned

 

While setting up a passive income requires a lot of work especially in the beginning, it certainly is not limited only to hardworking individuals.  Sometimes, not wanting to work hard can also be your asset as it forces you to think of ways to setup the business without you having to work for it.

You can choose to hire hardworking employees to do the work for you.  You can spend your time learning and figuring out how to set up efficient systems.  You can concentrate on the 20% of things you do that brings in 80% of your output and delegate all the rest.

Doing any of these things allows you to leverage your business system to complement your employees’ strengths and provide more high-value offerings without necessarily doing the work yourself.

Internet

In this day and age of living in the information superhighway, it is now easier for someone to be in business. With access to the internet, someone working at home can setup a blog or sell stuffs through ebay, amazon, or other online stores.  While this requires you to learn how internet businesses and marketing works, you can certainly hire someone to do it for you if you really don’t want to be involved in the technical details.

Making money online is such a popular dream for many of us.  The reality is, it is also NOT for everyone. It requires a lot of learning, patience and self-discipline to make the system work.  As with any brick-and-mortar business, it also needs your skills, time and attention.  It demands your focus and unrelenting desire to give more.  And with more and more clutter competing for your customers’ attention, there’s no other way to serve but to stand out and give your customer ALL you’ve got.

 

Demystifying the myths of building a passive income stream is only the first step of a lifelong journey.  The only way for you to learn how to build these systems, is to do it yourself, always remembering that something worth doing, is worth doing well.

In the same way that an overnight success is actually a culmination of a decade long history of working hard, building passive income streams is a journey laden with challenges and opportunities.

In the end even though creating passive income may be an opportunity of a lifetime, it is still up to YOU to make it happen.

 

P.S. CLICK HERE to email me if you would like to learn a legitimate, legal, low-capital investment with huge passive income potential.