Beginners guide to becoming WEALTHY

[STR8UP]

Yes, 5% is probably a high number. The thing is, in order to "get it" you have to "experience it" firsthand. You don't read books and listen to tapes and all of a sudden you're a financial genius....it doesn't work that way. The ONLY way to truly learn is to get kicked in the nuts a few times and pull yourself through.

People erroneously assume that just because you're driving an expensive car it means you're with the in crowd. The truth is MOST people out there are driving more car than they can truly afford. They want to APPEAR to be well off when in all actuality by purchasing the trappings of wealth before they can afford them all they are doing is sinking themselves deeper into debt. Sad, really.

I know very few people who think on my level. Most of my friends (and even family) wouldn't dream of never paying off their real estate, most of them send in extra payments to try to pay it down despite my advice. I get the excuse "I know where you are coming from, I just don't have time to go out and find other investments like you do". What are they REALLY saying? They are saying, "I'm not willing to risk a penny to get ahead". They are in the comfort zone of paying down their mortgage as a "safe" investment. I can show them on paper all day long how they will come out ahead by NOT paying it off and they still won't listen.

The few that I do know that have a similar mindset to my own I can STILL pick out flaws in their reasoning. Like one associate of mine. He thinks that I should try to sell my business without a broker even though I know nothing about it. He doesn't see the reasoning behind paying a commission to someone that knows what they are doing to facilitate a quick and smooth transaction. He is still too focused on SAVING money to the detriment of MAKING money.

Don't get me wrong, this guy understands the importance of building credit and is planning a commercial real estate project as we speak...he's no dummy.

In order to ever reach your full potential you must realize that you can't do everything yourself.

 

[Mr. Fancy Pants]

I just spent the last 90 minutes reading this thread. It deserves a BUMP!

GREAT information!

 

[Solomon79]

Str8up is so, so right.

I know people who have borrowed money secured on their first house, and started making £800 a day trading the Nasdaq on a direct access platform.

Also, can you get interest-only mortgages in the States, like you can now here in the UK? That cuts the monthly outlay back by quite a margin as well. It's so simple, it's sick. There are terrible people out who are rich, because they had the balls to take a risk. Good people have a duty to take the plunge, to get rid of this idea that making money is something to be ashamed of. We need to get rid of that stereotype. Let me tell you, it's even worse in the UK than it is the US of A.

I'm glad a thread like this has made an appearance.

I'm surprised wealth creation hasn't made more thread titles on a board like this. Having money is a positive thing. It's empowering. Other people have done it, they aren't intrinsically 'better' than anyone else, and their techniques can be observed and put into action. Nothing is worse than having to commit your future to a 'company' that doesn't ultimately give a s.hit about you. It feels so GOOD to say good riddance to all that, and truly take life by the balls in the here and now. Being in control is a great feeling.

 

[Celadus]

I have been following this thread for months, and it is one of my favorites. It opened my eyes. Alittle sad though, credit card company screwed up and charged me for past due and it shouldn't have, and they won't fix it.

But, who cares if only 5 percent or less "get it". It means more for those of us who do.

I've never met you STR8, but for some reason I look up to your financial knowledge.

I've read most of the books in this thread, anyone know of any other good business books? Working on "Barbarians at the Gate" now.

Anyone know much about getting real estate licenses? I think it would be cool to get one, and I don't think it would be too hard.

 

[STR8UP]

Originally posted by Solomon79
Also, can you get interest-only mortgages in the States, like you can now here in the UK? That cuts the monthly outlay back by quite a margin as well. It's so simple, it's sick.

Unfortunately they do not, that I am aware of.


It's too bad. I would borrow ALL of my money interest only if I could. Or better yet, borrow with a balloon payment, so there is NO monthly payment. If I could borrow $500,000 unsecured with a 5 yr. balloon, I could easily turn it into a million over that period of time. They should at least offer this type of program on bread and butter housing that rarely depreciates.

Originally posted by Celadus
Anyone know much about getting real estate licenses? I think it would be cool to get one, and I don't think it would be too hard.

Don't waste your time.

I've had my license for years now. Every couple of years I send in the $60 bucks or so to renew and take the online test, but it does NOTHING for me. If anything it holds you back, because you are required to disclose the fact that you are a licensee when buying property, and it can make a seller skittish for whatever reason.

If you want to become licensed to actually sell real estate, that's another story. I personally hated working in a real estate office, but if you are one of those who can pull off the plastic smile you might do better than I did. It is a very tough business to become established in though, don't kid yourself.


Anyways, I'm glad to see people still getting something from this discussion.

 

[DrMetallica]

How do I buy any piece of property with no money down?

 

[Silquee Smoove]

This thread has been buried for a while it's good that it is getting the light of day..

 

[Helter Skelter]

I know I'm going against conventional wisdom but this past January I paid off my house after 7 1/2 years.
I have a business so I have a lot of tax benefits with that.

I think having a mortage is overrated especially with the low returns from stocks and money markets the last few years.

God this is boring, back to the girl threads now.

 

[STR8UP]

Originally posted by DrMetallica
How do I buy any piece of property with no money down?

You read books that teach you the different methods for doing so. Then when you have a good basic knowledge you can also develop your own methods. It is often NECESSARY to develop new methods to counteract changes in laws, regulations, etc.

I know I'm going against conventional wisdom but this past January I paid off my house after 7 1/2 years.
I have a business so I have a lot of tax benefits with that.

I think having a mortage is overrated especially with the low returns from stocks and money markets the last few years.

No, you are going WITH conventional wisdom. The same "wisdom" that keeps most people from using their money to its fullest potential.

I show people all the time why mortgage payoff is a terrible financial decision, but I talk till I'm blue in the face and they still won't listen. Even when I show them on paper why it isn't a good idea, they still don't comprende.

What kind of tax benefits could you possibly see from not having a mortgage? With todays rates you are only actually paying probably less than 5% to borrow on real estate.

What you SHOULD have done was sunk that payoff money into a few bread and butter residential properties (even if you let a management company run them). Over the course of 10,20, or 30 years you will end up with WAY, WAY, WAY more net worth than letting that money sit in USELESS equity.

I know it feels good to think that you actually own the house (you don't...you still have to pay taxes and if you don't Uncle Sam will be more that happy to take it from you), but would you rather be worth $100,000 or $500,000 in a few years?

 

[Helter Skelter]

Originally posted by STR8UP

No, you are going WITH conventional wisdom. The same "wisdom" that keeps most people from using their money to its fullest potential.

I show people all the time why mortgage payoff is a terrible financial decision, but I talk till I'm blue in the face and they still won't listen. Even when I show them on paper why it isn't a good idea, they still don't comprende.

What kind of tax benefits could you possibly see from not having a mortgage? With todays rates you are only actually paying probably less than 5% to borrow on real estate.

What you SHOULD have done was sunk that payoff money into a few bread and butter residential properties (even if you let a management company run them). Over the course of 10,20, or 30 years you will end up with WAY, WAY, WAY more net worth than letting that money sit in USELESS equity.

I know it feels good to think that you actually own the house (you don't...you still have to pay taxes and if you don't Uncle Sam will be more that happy to take it from you), but would you rather be worth $100,000 or $500,000 in a few years?

Hi STR8up

Thanks for the input.

As far as net worth, I'm well over that. I know were your coming from however.
I have an uncle who made millions in real estate most of it in the 1970's before all these informercials and books on the value of real estate investing. He has since sold everything except for his summer and winter homes.
I asked him if I should pay off the mortgage and he said no.
I asked him if he had a mortgage on his homes and he said no, he paid cash.

I said, well why don't you have a mortgage? And he said, peace of mind. I did it for peace of mind as well, even though he said I shouldn't. Maybe you can't put a price on that.
But I am planning to buy property in the next couple of years for a new location for my company.

One question,
people recommend mortgages for the write off of interest correct? So if that's the case why are people always refinancing thereby having less of a write off with the lower interest rate.
I found with all the money I had laying around, I wasn't getting much of a return and felt it would be more productive to pay off the mortgage. In fact my accountant just did the same thing. He's a certified financial planner as well as CPA.

In my area, I feel real estate is currently severely over priced which is why I'm sitting on the fence at the moment. I think a correction will happen in the near future.

I don't have any regrets but I also see your point of view.

 

[Fillmore Slim]

On My Way to Becomin Wealthy

Well Real Estate sounds good, but I myself am using the "Commodities Market", I got a course from Ken Roberts - The Rich Man's Secret

People downtalk him though, cuz they say he is all hype, but he knows exactly what he is talkin about. Mix up his ideas and secrets using the weekly charts, and add a bit of my intelligence, and I might ass well be a pot of gold.

I am not wealthy, YET, but by the looks of it, I will be a millionaire in 2 years, no joke.

I have read books and Audio tapes by Anthony Robbins, that really got me thinking about becomin wealthy and setting goals for myself, well I want to become filthy rich.

For those of you that want to become rich, which I hope all of you do, You have to understand that you will have losses, no matter what you do, whether it is real estate, stock, commodities , or whatever. Just dont let it phase you, YOU HAVE TO TAKE RISKS.

"The Reason Why 95% of people fail to increase their wealth, is becuz at the first sign of trouble, or a money loss, or something bad, they pull out of their investments, in fear of losing more money" - Anthony Robbins, not exact quote tho.

If you think about it, thats very true.

Sorry to go off topic, but I just wanted to add my personal way on how i am gonna be a millionaire.


And By the Way, you dont have to go to college to become wealthy or rich. Some of the Richest guys in the world dropped out of college , or didnt attend. Most self-made millionaires/billionaires made their money form investing/own business, and if you think about it, you dont really need a college degree to open up your business or invest some money.

 

[STR8UP]

Originally posted by Helter Skelter
As far as net worth, I'm well over that. I know were your coming from however.

It doesn't matter what your net worth at present is, if you are an active investor you should never be sitting on a bunch of real estate equity. ESPECIALLY at todays mortgage rates.

When you get ready to retire, that's a different story. Me, I am still very much in my wealth building stage as opposed someone older or with a higher net worth who might be more interested in wealth preservation.

You gotta look at the big picture when you are actively investing. It's all about getting the most from your resources. Equity in real estate is a big resource.

Lets say you buy a property for $100k, and in ten years it is worth $150k. Lets say interest rates are LOW, like they are today. Assume your effective after tax interest rate is 5% on your new mortgage when you refinance. If you take that $50k equity out and reinvest in ANYTHING that makes you more than 5%, you pocket the difference. If you can't get more than 5% on your investments (average) you shouldn't be investing.

I asked him if he had a mortgage on his homes and he said no, he paid cash.

Where did he get the money to buy these properties in the first place? Most people don't have huge amounts of cash to put down, that's why it is critical to learn how to buy with little or no down and let tenants pay the bills while you watch everything appreciate every year.

I said, well why don't you have a mortgage? And he said, peace of mind. I did it for peace of mind as well, even though he said I shouldn't. Maybe you can't put a price on that.

That is just his (and your) way of avoiding risk.

BELIEVE ME, when I refinanced all of my proerties recently the temptation to use the money to pay off one of them or buy another one for cash was tempting. It's just human nature. But when you look at it from a "where will I be in a few years" standpoint the figures don't lie. Use leverage (a small amount to control a larger amount) to spread that equity out over several properties and your net worth will increase exponentially.

But I am planning to buy property in the next couple of years for a new location for my company.

Send me a p/m...I'm curious what you are into.

One question,
people recommend mortgages for the write off of interest correct? So if that's the case why are people always refinancing thereby having less of a write off with the lower interest rate.

I don't look at it as a "tax write off" so much as an "interest discount". I see it as knocking down my rate by a certain percentage, so when I reinvest the money that I could have kept in the property or used to pay down the mortgage or whatever I look at whether or not I will be able to MAKE more than I would have SAVED. See what I mean?

I own a property with my sister. We recently refinanced it pulling out about $34,000 equity. She has $17,000 sitting in her account that she can use to reinvest in other things. The rents still cover the bills and then some. Then she turns around and tells me she is refinancing her primary residence down to a 15 year loan and not taking a penny out. WTF!!!!! She completely contradicted herself, reduced her tax savings, and robbed herself of the oportunty to make quite a bit more money.

I have no idea why people refi and wipe out their tax benefits. Actually I DO know why.....and part of it is what you call "piece of mind". It's a lot safer to pay off your mortgage (in effect saving themselves 5% interest) than to try to find an investment that pays more than that and incur a little or a lot of risk. They simply don't have the balls to part with their hard earned money in an attempt to make it grow.

I found with all the money I had laying around, I wasn't getting much of a return and felt it would be more productive to pay off the mortgage.

Paying off the loan is infinitely better than letting your cash sit in a bank, that's for sure. But if you are like me and hungry to make your net worth grow you would be much better off finding another investment to sink that capital into.

I don't know your situation. Some people have extenuating circumstances that might negate my advice. But for most people having a mortgage that you NEVER pay off is a wise move.

In fact my accountant just did the same thing. He's a certified financial planner as well as CPA.

Ah, one of those "book learned" financial scholars. Gotta love the bean counters!

If you are content to work most of your life to have a decent retirement, by all means listen to what he has to say. But if you are like me and aspire to cruise the world tokin' on cuban cigars and sipping kick ass rum several months of the year by the time you are 40 you better find someone else to teach you the ins and outs of money.

All the best.....

 

[diplomatic_lies]

Hows the property market in America right now?

In Australia its becoming some sort of hyperactive. People are paying enormous prices for crap properties and everyone seems to be buying one. I've heard some doomsday reports from a few active investors, so I'm going to avoid property and work on business for the next few years.

 

[Lt dan]

im reading rich dads guide to investing right now and in it he talks about how before 1986 in america people would buy real estate for the tax break even if they lost money overall. and in 1986 the laws changedand the tax break the people were getting did not exist anymore. he said that he told the people of australia this and they didnt beleive him. maybe thats about to happen. if your notgetting money on a property then why would you buy it?

 

[Fat Tony]

STR8TUP,

I applaud you for being willing to take the necessary risks to achieve your goals. Realestate isn't my thing, but you seem to have had great success with is thus far. This brings me to my question; how well are you prepared to deal with an inevitable loss on one of your properties? We all know that realestate is bigger than it's ever been, but all markets are cyclical, and eventually, this will effect the realestate market. Of course, know one knows when that will happen, so the key is being prepared to deal with a loss, so you can stick with it until the market turns around again. For example, if you bought one of your properites for $150000, and in 5 years, it declines to $100000, and people aren't willing to pay enough for rent to cover your expenses, do you have adequate funds to deal with this? I just want to point this out, because the best investors make it through bear markets, ready to take advantage of the next bull market.

 

[STR8UP]

Originally posted by Fat Tony
STR8TUP,

I applaud you for being willing to take the necessary risks to achieve your goals. Realestate isn't my thing, but you seem to have had great success with is thus far. This brings me to my question; how well are you prepared to deal with an inevitable loss on one of your properties?

We aren't talking about multi-million dollar boy band houses here.

Bread and butter housing isn't nearly as prone to having the bottom fall out. And as for rent....well lets just say that I have a hard time comprehending rents ever dropping around here. Only a MAJOR catastrophe would cause something like that.

I debated with one other guy on here awhile back who had started in real estate and lost some money the first time around, so he was pretty much against anything that would entail risk from that point on.

Truth of the matter is you never bat 1000 when you are an investor, and in the beginning you are likely to get trampled. Until you figure out what you are doing many of your projects will be losers. But if you stick with it long enough eventually your success-failure ratio will increse in your favor.

Remember, it doesn't matter if you lose your life savings, ruin your credit, and alienate some of your friends, if the end justifies the means thats ALL that matters.

 

[Guitar_Whizz]

I bought Russ Whitley's book, 'Building Wealth' about a week ago and have read most of it now. I live in the UK, so some things may have to be adapted to work here. My question for STR8UP is once you've opened an account and borrowed £1000 (dollars for you americans), then paid the loan back, how much should you ask to borrow next? And how will you get a higher amount than £1000 if you do not have more than £1000 in your account as collateral? Also, is it honestly realistic to expect to be able to borrow £100,000 or more unsecured within only a few months so you can buy your first house? Thanks for your help in advance because I'm keen to get started!

 

[Ryan]

One of the best threads I've ever read

Hey Str8UP

Your thread is incredible and I would even go so far as thanking you for being a member of the DJ Club. It is people like STR8Up and threads like this that makes this the best forum on the net!!!! Could you share more about yourself and your goals?

Anyway, I have listened to a fewof the RDPD tapes and he definitely helps you develop the correct kind of mindset, but the problem is he doesn't give you step by step instructions on how to make your first purchase and manage your property but real estate is still one of the fail proof ways of acquiring wealth.

Please could you explain the cashflow Quadrant in more detail. I know the 4 quadrants contain I, B, Self Employed and E and basically you want to be in the I quadrant..but teach more!




Also what do you think of running gas stations? I found it was way too hard work and leverage isn't too great.

What about Commodities/Futures?

Haven't tried it yet but I know that most people lose there shirt and everything they own when there contracts don' go as planned. I was also hooked by the Ken Roberts program ( in reference to the guy who posted he was going to make it rich in commodities) but I realised that KR only goes through the basics and that commodity trading requires lots of research, experience and learning.......


Anyway great post.

 

[Ryan]

Now I know who to talk to if I need an exotic car!!!! j/k

Originally posted by STR8UP
It's good to have an outside party confirm this.



Wanna talk about a GREAT business connection... This guy deals exotic cars (Porsches, Jags, BMWs) so I get WHOLESALE on any car I buy. His brother owns half of the county and his sister the real estate broker owns the other half.

I bet you he buys them from either police, government, federal or public auctions...

I know that the FBI confiscates cars from drug merchants and other members of organized crime and sells them cheap on auctions. In fact they have to get rid of these exotic beauties as quick as possible.

 

[Warlock]

I think that when baby boomers start retiring en-mass theres a good chance that real estate prices could take a dip. Why? As they get older they will want to sell their larger homes and move into smaller ones or retirement apartments. I'm not saying you won't be able to make money -- people will always need houses to live in.

What I do think is that this is worth looking in to. There is a developer here in my city who has built a retirement apartment complex and is in the middle of another building project right now. Alot of people are pissed because of the location (is this anything new?) Either way I think the guy is pretty smart. The demand for this type of housing is not going to go down any time soon -- especially here. When you get old you really aren't going to want to worry about lawn upkeep and getting up and down stairs all day.

One trick seems to be get involved in city or town government. I'm not sure if that will help you if your just pushing real estate, but if your developing, it definately will pay off. At bare minimum it will supply you with a reputation and good contacts.

Either way, great advice in this thread. Theres alot that can be said about all the different ways to invest your money. Whats important is that your money is making money for you, not the other way around. The amount of risk you take and work you put in is just the details.