Summary of multimillionaire real estate investor

MONEY LIVES ON THE OTHER SIDE OF FEAR

All of us can look at our lives and count the times when fear stepped in, prevented us from taking action, and cost us a precious financial opportunity. In this way fear becomes a building block of future regret. It blinds us to possibilities. It keeps us where we are, stuck in a financial box. Just like a river of water, fear can be bridged. Fear is only as big or as wide as you allow it to be. And as is often the case, once you’ve crossed that river of fear and experienced the wonders on the other side, you look back and question why you were ever afraid. It is my hope that just like the millionaires we interviewed, you will be among those who choose to cross

that river of investment fear and stand financially tall on the other side.

The Millionaire Real Estate Investor is really two

books in one. The first part is devoted to your thinking. In that part you’ll

confront some of your myths about money, real estate, and yourself.

You’ll also learn some timeless truths about the way money works. If you

can learn to think like a millionaire, you’ll have a much better chance to

become one. The second part of the book is about taking action. It’s the

“how-to” part and will outline a proven path to follow as well as tested

models to employ.

That process—think,

plan, produce—soon became the basis for my personal success formula:

Big Goals powered by Big Models lead to Big Success. Big Goals—Big

Models—Big Success.We all have personal ceilings of achievement that are based on our

current thoughts and habits. Implementing the lessons learned from your

own trial and error can raise that ceiling, but only so far and so fast.To move forward in life, everyone has to learn from mistakes. The

only question is whose: yours or those of the great achievers who lived

before you?That’s why,The models we’ll share with

you represent the “best practices” of some of the most successful real

estate investors today. In fact, all the real estate investors we interviewed

to build the models presented in this book owned at least $1 million

worth of real estate not including their personal residences, and over 60

percent had achieved in excess of $1 million in equity in their investment

portfolios. They averaged almost 50 rental units and over $100,000 in net

annual cash flow from their investments. These were career investors

who had purchased an average of around 150 properties and even a few

who had bought and sold over 1,500 properties in their investment

careers.

Proven models, in contrast, can help you raise your level of achievement

dramatically in a relatively short period of time.

One of the things I learned was the simple difference between financial riches and financial wealth. Being rich is about having money. You

can have a job and be very rich. The problem with this is that the money

stops coming to you when you stop working for it. Financial wealth, by

contrast, is about owning assets, such as businesses or real estate, that

generate money for you. I now know that I’m out to build financial

wealth. I’m an investor all the time. And I’m always looking for an

opportunity to make a deal!

What we discovered is that these investors focus on three simple but incredibly dynamic forces at the heart

of real estate investing. the core of all

investing: Criteria, Terms, and Network. We’ve come to refer to them simply as CTN. They are for us the “Dynamic Trio of Investing.” 55

point to remember 59

difference between

probability thinking and possibility thinking is revealed

Mythunderstanding 8 myth

5) investment is complicated

On a practical basis, what I know is that you never need to know

everything in order to do something. You just need to know the right things to do at any given moment.

timinng is important

The best deals come

from the best opportunities,

and the best opportunities go fast.There are two fundamental forces at work—economic ones and personal ones—and they are always present, always at

work, and always influencing the marketplace. Basic economic forces

show up in the form of things such as job growth, interest rates, population shifts, and area revitalization. These are the things most people

think of when they think of the forces that create investment opportunities. What is often overlooked, however, is a second set of human, or personal, forces that are always present and can create additional and

significant investment opportunities. Some arise from positive circumstances such as relocation, marriage, and family growth. Others arise

from negative conditions such as divorce, death, and debt. In my experience, those who declare that all the good deals are taken are almost

always overlooking this second set of human forces and the unique

opportunities they create.

THE LAW OF MOMENTUM: COMPOUNDING YOUR SUCCESS

Think of a ball rolling downhill that picks up mass and speed as it goes. It’s what we commonly call the snowball effect. Although it may start out small or slow, it ends up growing quite big and fast. In the same way, money, once invested, has its own momentum, and the technical name for that is “compounding.” What starts small and grows slowly builds in size and momentum over time.

THE SEVEN WAYS MILLIONAIRE REAL ESTATE INVESTORS THINK

The best way to prepare for a climb to the highest altitude is first to acquire the right mindset and attitude. It’s even been said that your attitude determines your altitude

1. THINK POWERED BY A BIG WHY

The primary characteristic I’ve found in the lives of high achievers is that they had a strong drive to succeed. They had a compelling, personal reason to achieve. It’s what I call a Big Why.The Millionaire Real Estate Investors we spoke to while researching this book shared with us the fact that their motivation arose from a desire to be free from their jobs, have more choices in their lives, achieve self actualization, and gain the security that comes with abundance.

2. THINK BIG GOALS, BIG MODELS, AND BIG HABITS

Without Big Goals, Big Models, and Big Habits, big thinking may be wishful thinking, and by itself wishful thinking isn’t that useful. The Big Models and Big Habits they discovered on the path to their Big Goals have been left for us to learn from. Not learning from their methods—reinventing the wheel—is a monumental waste of time. Life is too short to move slowly. If your Big Why is to achieve financial independence, you’ll have to take that abstract concept and quantify it. Then, faced with a specific financial goal related to your Big Why, the question becomes, “How do I achieve that?” The answer is found in proven Big Models.

3. THINK MONEY MATTERS

ject and illuminate the way wealthy people think about money. The most powerful model for understanding the use of money and the building of financial wealth is the Money Matrix. It tells the story of how the rich get richer and the poor get poorer

.■ Capital—money invested in anything expected to grow in value

■ Cash Flow—money generated from those investments

■ Cash—money held in reserve for security or future investments

■ Consumption—money spent on anything not expected to grow in value

goal of wealth building is to create a big enough foundation of Capital and Cash Flow that your Consumption needs are met without your having to work. Consumption needs are met without your having to work. Consumption has two distinct forms. On the one hand you spend money on yourself to satisfy your needs and wants, but on the other hand you can spend money for the benefit of others. I’m talking about taking care of your loved ones and, of course, making contributions to charity, which in my mind is the highest and best use of money. Charity is a kind of capital investment for the soul that pays real dividends in your life and in the quality of all life

4. THINK NET WORTH

Forbes believe the best and most definitive measure of financial wealth is net worth: the sum total of an individual’s assets and liabilities. In personal terms, your financial wealth is your net worth, which is what you own minus what you owe. In fact, like most people, I probably placed too much importance on my earned income when I should have been tracking my assets—Capital—and my unearned income—Cash Flow.“If you’re going to be an investor, you’d better know your assets. There are depreciating assets and appreciating assets and some people don’t know the difference.”

THE FIVE MODELS OF THE MILLIONAIRE REAL ESTATE INVESTOR

THE NET WORTH MODEL

BUDGET YOUR EXPENSES

Instead of investing to finance their future, more and more people are spending on credit to finance their lifestyle. The hard truth is this: If you have to finance your lifestyle—you can’t afford it. So Personal budgeting works. It’s the priceless ability to distinguish between wants and needs.

charity, security, and investing always come first. Taxes, of course, also come first because it’s the law. What’s left is your Net Spendable Income

TRACK YOUR WORTH

2)THE FINANCIAL MODEL

The two ways to make money in real estate in-vesting, the two drivers of financial wealth, are Equity Buildup and Cash Flow Growth.Equity Buildup increases your net worth in your real estate assets, while Cash Flow Growth provides a stream of unearned income. Your $14,400 investment in 1988 turned into equity of more than $128,506 in just 15 years. This would be like putting your $14,400 in a bank account paying an annual compounded interest rate of 15.7 percent. If you had used a 15-year mortgage instead of a 30-year mortgage, your equity would have grown to more than $171,840. That’s like an annual compounded interest rate of 17.9 percent. In either case this is a significant return on investment and not one you will find at a bank. And, those remarkable returns don’t reflect what happens when you factor for Cash Flow Growth.

CASH FLOW GROWTH

YOUR FINANCIAL JOURNEY

Not bad: 25 years, 15 properties, $2.4 million net worth, and $90,000 annual cash flow. if you make real estate investments, if you buy them right, if you consistently repeat the process over time, you inevitably will become a net worth millionaire. May this journey of the Financial Model—the story we took the liberty to put you in—become your real life journey. Perhaps it already is!

BUY IT RIGHT—PAY IT DOWN—PAY IT OFF

THE NETWORK MODEL

While the term self-made is used commonly, the unspoken fact is that no one is self-made, whether biologically, spiritually, physically, personally, professionally, or financially.

THE THREE CIRCLES OF YOUR WORK NETWORK

Learning real estate is accelerated by finding a role model. Learn from someone who knows the business. Invest with someone who is willing to teach you. It’s all been done before, so profit from the knowledge and mistakes of others.”

THE LEAD GENERATION MODEL

The Millionaire Real Estate Investor’s Lead Generation Model is built around four core questions: 1. What am I looking for? 2. Who can help me find it? 3. How will I find the property or the people connected to it? 4. Which properties are the real opportunities?

There are seven major categories you must make decisions about to define your investment property Criteria: Location, Type, Economic, Condition, Construction, Features, and Amenities. The first three—Location, Type, and Economic—are foundational.

Economics

Your Economic Criteria break down into four distinct parts: 1. The price range in which you want to buy 2. The discount you will require 3. The cash flow you expect to receive 4. The appreciation you hope to make.

The process of converting these contacts from Resources to Allied Resources and then to Advocates and Core Advocates is about your reputation. That’s the simplest way to put it. Because you touch them regularly and systematically (by meeting face to face, by telephone, and by e-mail and mail) and are always reminding them that you’re an investor, they think of you when they come across real estate investment opportunities. You’re building a reputation as an investor, and because you consistently share your Criteria, they know what kind of properties you’re looking for.