Discover the Absolute Fastest, Easiest Way to Make Money for the Average Man or Woman


by Gary Simpson - Date: 2006-12-30 - Word Count: 871 Share This!

They say that it takes money to make money. In some respects, that is true. However, when you are able to borrow 95% of what you need (and sometimes even more) to "buy" a money making asset that you control then it doesn't take too much money to make a LOT of money.

I know that doesn't make too much sense at the moment but follow along with me. It will become crystal clear soon. And I will use a real-life example that will explain it all.

I am talking about the wealth principle known in financial circles as "leveraging." That is, using a relatively small amount of money to control a large amount of money or, in the case I am about to show you, a large asset.

Let's say that you were able to purchase a relatively cheap property - a small apartment by using a 5% deposit. Don't worry too much about the exact details at the moment just follow my line of thinking. Let's say that the apartment was purchased for $140,000. That would mean that you need a deposit of $7,000.

Let's also say that the apartment was well located but that it was a bit "run down." You buy it, clean it, paint it, do a few minor repairs and maybe put new carpet in it. You add value by doing these inexpensive things. They are mostly "cosmetic" improvements. These quick improvements can easily add $10,000 worth (often more) of value very quickly.

To do these things might cost another $3,000. So, all up, your investment is $10,000. Now, like I said, don't get caught up in the details. What I want to do is explain the principle of how it works. Along the way I'll show you the basic mathematics.

Summarizing this so far: (a) Initial purchase price = $140,000 (b) Your deposit = $7,000 (c) Mortgage to the bank = $133,000 (a minus b) (d) Minor improvements = $3,000 (e) Your total investment = $10,000 (b plus d) Now, if you decide to live in this apartment then you will not have to pay rent to anybody else. That would be an immediate saving to you - no DEAD money. You will pay a monthly mortgage repayment on a property that is yours (and the banks!). Depending on interest rates the mortgage payments could amount to, say, $800 per month.

If you rent the apartment out to somebody else then whatever rent you get will offset most of the mortgage. Let's say you receive $600 rent per month. That means that you only need to come up with $200 per month (plus taxes and utility costs) to "hold" the property in your name.

Now, here is where it gets interesting and highly profitable. Let's say that 12 months pass. Let's say that you decide to sell the property. You accept a $200,000 offer. You sell. You don't have to but you decide to sell.

After the mortgage is discharged to the bank, you receive most of the balance. That is $67,000. Out of that amount will probably be a real estate agent's selling commission. Let's say $7,000. That leaves you with $60,000.

Now remember that you only invested $10,000. Your profit is therefore $50,000. Naturally, the government will want to tax you on this amount (only if you sell). Perhaps they will take $15,000 off you. You are left with $35,000.

The result is that you have used just $10,000 to make an extra $35,000. That is a 350% return on your investment (ROI). Where else could you make such a proportionately large amount so fast and so easy? Let's face it, apart from the initial tidy up, pretty much you did nothing more.

You think this can't be done? It can. I did it. These are roughly the figures that were mine on a little place I bought and sold for a quick profit. Yes, there were a few more variables but, essentially, that was the deal.

Oh, I can almost hear you say "I don't have $10,000 to do this!" Well, find a good partner then you will only need $5,000. The ROI will be the same - 350% (profit $17,500 on $5,000 investment). After you have done it once in partnership you will have the money and the experience to do it again.

You should seek professional advice on this. However, knowing how conservative such "professional" advice is you will probably be advised against it. Like I said, I did it. I have shown colleagues how to do it. I showed my adult children how to do it. We all made money.

This is the fastest and easiest way to make money because not only are you leveraging money, you are also leveraging time. You may decide to keep the property rather than sell it. That is also a good strategy because the bank will allow you to borrow more money against your equity (the percentage that you own) Also, if you do not sell you do not have to pay income tax so you get to "use" all of the equity. (in the case above $200,000 minus $133,000 = $67,000)

Investigate this money-making method more fully for yourself. Knowledge will give you power. Boldness will let you make money. You never get anywhere by doing nothing. Never stop learning. That is the real key.


Related Tags: money, wealth, finance, investment, profit, motivation, cash, rich, action, self esteem, wealthy, fast money

Gary Simpson has written nine books on various subjects including "How to Save $1000's and Increase Your Net Wealth." If you are looking for a better financial future then go to Turn Debt Into Wealth.

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