How To Build A Financial Moat With Real Estate

How To Build A Financial Moat With Real Estate

How to​ Build a​ Financial Moat With Real Estate
Ages ago, people lived in​ elaborate and​ magnificent castles that were often protected by moats .​
a​ moat is​ a​ wide, deep ditch dug around a​ castle to​ prevent enemies from overtaking the​ castle .​
By surrounding the​ castle with water, moats served as​ an​ effective deterrent and​ provided the​ castle with the​ security it​ needed to​ prosper.
Today, many of​ us live in​ our own plain and​ simple financial castles that are much more vulnerable than the​ castles of​ yesterday .​
Not only do our financial castles not have any sort of​ moat for​ financial security, many real estate investors do not know how to​ build a​ moat to​ accumulate wealth and​ retain it.
Why do most people today not have a​ financial moat? Why no financial security? Why are most people so financially vulnerable? We live in​ a​ culture that has brainwashed us into thinking that we should be paid per hour of​ work.

If you are like most people, you have to​ work for​ a​ living .​
If you don't work, you don't get paid .​
You see, most people have linear income .​
So while linear income may be the​ way most people earn their paychecks, it​ is​ also the​ reason many of​ us cannot afford to​ retire .​
This type of​ income continues only as​ long as​ you continue to​ work.

1 .​
If you are an​ attorney, you get paid whenever you represent a​ client .​
If you don't provide legal services, you don't get paid.
2 .​
If you are a​ teacher, you get paid when you teach our children .​
If you decide not to​ teach, you don’t get paid.
3 .​
If you wholesale or​ retail houses, you get paid when you flip a​ house to​ another investor or​ sell it​ to​ an​ owner occupant .​
if​ you quit wholesaling or​ retailing houses, you don't get paid.
The real test is​ that if​ you are let go by your employer as​ I​ was in​ June 2002, your income definitely stops .​
After almost 30 years of​ working for​ security for​ different companies, I​ was left out in​ the​ cold in​ the​ middle of​ summer .​
I​ discovered I​ was not secure; I​ only had the​ illusion of​ security .​
Working for​ a​ company is​ fine, but you must understand it​ will never give you security.
That's how linear income works .​
You receive income when you work .​
Usually you earn just enough income to​ pay your bills .​
When your income stops, you’re on the​ brink of​ disaster .​
In fact, if​ you’re like most folks, you’re no more than two or​ three paydays away from a​ serious financial catastrophe.
OK, so how do we start to​ build the​ moat that will provide us with financial security?

You start digging a​ ditch around your financial castle with residual’ income .​
a​ complete change happens when you start earning residual income .​
Residual income means you continue to​ earn money for​ a​ long time .​
When you do something right just one time, you get paid over and​ over again for​ what you did.
a .​
If you write a​ hit song, you get a​ small royalty every time the​ song plays on the​ radio.
b .​
If you write a​ book that becomes a​ best seller, you receive a​ regular royalty check from your book sales.
c .​
If you’re already a​ multi-millionaire and​ had a​ few million to​ invest in​ quality stocks and​ bonds, you now get a​ regular dividend check.
Residual income sounds nice, doesn't it? Unfortunately, most people have trouble developing a​ residual income.

We can't sing or​ write music .​
We don't know the​ first thing about writing a​ book, much less how to​ go about having it​ published .​
and​ I​ really can’t remember the​ last time someone came up to​ me and​ told me they had a​ few million dollars sitting in​ their checking account waiting to​ be invested.

However, there is​ hope.

There is​ another way to​ develop residual income .​
There’s a​ way to​ get monthly checks so that we can do the​ things we want in​ life .​
So that we can achieve our dreams .​
and​ best of​ all, almost anyone can develop this residual income that will give you the​ financial moat you need to​ accumulate and​ retain your wealth.
It was only after my wife asked me how many properties I​ had kept for​ ourselves at​ the​ end of​ 2004 that I​ realized that my buy and​ sell plan was making us very good money, but it​ would not make us wealthy .​
I​ realized I​ had to​ keep buying and​ selling properties to​ keep making the​ money .​
So I​ launched a​ strategy that complemented our buy and​ sell strategy .​
the​ approach is​ to​ buy properties at​ substantial discounts, rehab the​ properties, and​ then rent them out .​
and​ the​ best part is​ that the​ tenants pay for​ my properties .​
Once the​ properties are paid for, I​ will continue to​ have rental income for​ the​ rest of​ my life .​

But what about tenants and​ toilets, you ask .​
Well, everything has a​ price and​ you’ll have problems with your tenants .​
But you have options .​
You can (a) develop a​ system to​ minimize your problems with tenants, (b) retain a​ realty management company to​ deal with the​ tenants or, (c) offer seller financing to​ your tenants so they become owners and​ they no longer call you.

Personally, I​ like the​ buy and​ hold strategy for​ two principal reasons .​
First, I​ continue to​ accumulate assets or​ rental properties .​
Second, I​ will continue to​ receive residual income for​ the​ rest of​ my life whether I​ continue to​ rent the​ properties or​ elect to​ use a​ seller financing approach so I​ deal with a​ buyer/owner and​ not a​ tenant.

The more properties you accumulate, the​ more residual income you receive .​
and​ the​ more residual income you get, the​ wider and​ deeper the​ financial moat you will build for​ yourself .​
the​ wider and​ deeper your financial moat, the​ more difficult it​ will be for​ circumstances to​ penetrate your financial castle .​
You will have the​ security you need to​ truly prosper.

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