With 23 percent of today’s buyers purchasing for investment purposes, representing investors is an important niche for agents to consider adding to their business. If you want to make more money and help your family and your clients obtain financial independence, Gary Keller’s new book, “The Millionaire Real Estate Investor,” can show you how.
What would you do if you suddenly lost your job or were injured where you could no longer work? The large majority of Americans lack the financial wherewithal to withstand such a blow. With corporate and public pensions disappearing, many people are now facing the grim prospect on living on their $1,500-per-month Social Security Check and what little savings they can muster.
Keller’s book provides a strategy to circumvent this problematical situation. According to Keller, what blocks us from achieving true wealth is our lack of the investment mind set. We are stopped by our beliefs that investing is too complicated, that investing is risky, and that all good investments are taken.
A second block arises from lack of funds. The challenge is most Americans focus on consumption rather than investing. The typical consumer splits his/her income equally between taxes, required spending and discretionary spending. In contrast, the millionaire real estate investor makes investment a priority. They invest pre-tax, post-tax, as well as any surplus funds. By reducing discretionary spending, they create capital for investment.
To assist consumers in making the shift from consumption to investment, Keller provides a Personal Budget Worksheet that allows consumers to track their current spending patterns and identify areas where they can free up funds to invest. For example, the typical consumer spends 112 percent more if he/she uses a credit card versus using cash. Another way to create more money for investment is to shift your home mortgage from a 30-year to a 15-year loan. At the end of 15 years, the owner who has a 30-year loan still owes 75.2 percent of the mortgage amount. The owner who took a 15-year loan owns the property free and clear.
The goal of investing is to take the income you earn by working and convert it into passive income. Keller systematically takes his readers through the process of increasing their net worth through real estate investment. Building passive real estate income begins with establishing your purchasing criteria for your investments. Keller provides tips on how to purchase properties as well as how to create a network to assist you in locating and managing your purchases. He also outlines how to implement five different models correlated with successful real estate investment:
1. The net worth model, which identifies how to budget money, track assets and liabilities, and measure the investor’s progress toward financial wealth.
2. The financial model that addresses wealth building through cash flow, appreciation and debt payment.
3. The network model, which consists of people who can mentor, advise and assist investors in this process.
4. The lead generation model for determining investment criteria and then systematically searching for investments that match those criteria.
5. The acquisition model that minimizes risk and maximizes profits.
In addition, Keller provides guidelines in terms of what types of properties to purchase as well as how to evaluate liquidity, cash flow, appreciation and the interplay between them.
Once you have started to acquire property, Keller outlines the path from owning $1 million worth of real estate to having $1 million of passive income from real estate investments.
Keller’s book is a primer for agents who want to invest for themselves or who want to assist their clients in investing. Furthermore, developing a pool of investment clients guarantees a regular stream of sales and purchases, regardless of the market conditions. In fact, when market conditions are poor, that’s when the smartest investors are the most active. If you want to create an investment income that will allow you to retire from the real estate industry and be financially independent, real estate investments is a proven path to becoming a millionaire.
Bernice Ross, co-owner of Realestatecoach.com, has written a new book, “Waging War on Real Estate’s Discounters,” available online. She can be reached at bernice@realestatecoach.com.
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