No business? No property? No money? You can be a Millionaire! In his very frst book Tink book Tink Rich — Quick! , U.S.-based Pinoy millionaire race rajano shares his expertise in the “no money down, quick turn” turn” real estate business to help you achieve fnancial success. Let race teach you the ollowing million-building techniques he has mastered: • Starting out in the real estate business with nothing • Wholesaling in real estate • Te retailing ormula ogether with Tink Rich, Pinoy! series Pinoy! series author, Larry Gamboa, race embarks on a mission o creating one million Pinoy Pinoy millionaires. millionaires. You can be one o them. race invites you to ride his “jeepney” that will take you on an exciting journey to fnancial reedom. Sakay na and travel the road to a million possibilities.
T H I N K R I C H –
Q U I C K !
T r a c e T r a j a n o • L a r r y G a m b o a , P h D
ISBN978-971-93671-5-4
www.shepherdsvoice.com.ph
With a Foreword by Bo Sanchez, Best-selling Author of 8 Secrets of the Truly Rich
Tink Rich – Quick!
THINK RICH
— QUICK! A THINK RICH PINOY BOOK
How to Become a Pinoy Real Estate Millionaire
Tink Rich – Quick!
THINK RICH
— QUICK! A THINK RICH PINOY BOOK
How to Become a Pinoy Real Estate Millionaire
By Trace Trajano and Larry Gamboa, P.hD. EDITED BY RISSA SINGSON-KAWPENG With a Foreword by Bo Sanchez, Best-selling Author of 8 Secrets of the Truly Rich
Tink Rich – Quick!
THINK RICH
— QUICK! A THINK RICH PINOY BOOK
How to Become a Pinoy Real Estate Millionaire
By Trace Trajano and Larry Gamboa, P.hD. EDITED BY RISSA SINGSON-KAWPENG With a Foreword by Bo Sanchez, Best-selling Author of 8 Secrets of the Truly Rich
Think Rich – QUick! How to Become Pinoy Rel Estte Millionire
ISBN 978-971-93671-5-4 Philippine Copyright © 2007 by rce rjno nd Lrry Gmbo, P.hD. Pblished by Shepherd’s Shepherd’s Voice Voice Pblictions, Pblictions , Inc. 1st Re-printing, Jnry 2008 Reqests or inormtion shold be ddressed to: SHEPHERD’S VOICE PuBLICaIONS, INC. #60 Chicgo St., Cbo, Qezon City, Philippines 1109 el. No. (632) 411-7874 to 77 e-mil: s
[email protected] s
[email protected] all rights reserved. No prt o this pbliction my be reprodced, except except or brie qottions, withot the prior permission o the pblisher. Cover Design nd Lyot by Rey de Gzmn Illstrtions by Isrel Nevorlnd Nevorlnd
Tink Rich – Quick!
Table of conTenTs Foreword 1:
are Yo Big?
5
Foreword 2:
Wht Millionires are Mde O
7
Preface
Entrepreners: Lern to Sell (or Perish)
Introduction
7
Chapter 1:
Rel Estte s Vehicle to Millions
Chapter 2:
Te art o Wholesling
Chapter 3:
Strting Ot with Nothing
4
Chapter 4:
Te antomy o another Wholesle Del
Chapter 5:
47
Te Story o First-ime Rel Estte Entreprener
6
Chapter 6:
Retiling
69
Chapter 7:
Te Retiling “Forml”
8
Chapter 8:
Rent to Own
95
Chapter 9:
Glitches nd Stitches
07
Chapter 10:
Privte Lending
Chapter 11:
Now Wht?
5
abot the athors
4
Ddt
I dedicte this book to my lovely wie who loved me even when I ws broke nd who hs remined loyl to me throgh the yers. Tnk yo, bbes. I lso dedicte this book to my son, Nthn, who mzes me every dy. Yo re s smrt s yo re chrming nd loving. Tnk yo, my son. Lstly, I dedicte this book to my ther. His lie s semn ws hrd nd ll o scrices. Tnk yo, Dd.
4
Tink Rich – Quick!
foRewoRD
Are You Big? By Bo Snchez
Friends, yor serch is over. I yo’re looking or ctl, rel-lie, Pinoy millionires who cn tech yo how yo cn become one, then this is it. My terric mentors in rel estte, Lrry Gmbo nd rce rjno, hve temed p or this lie-chnging book to chieve one hge mission: o help crete one million Pinoy millionires. Lrry cretes his millions in the Philippines. rce cretes his millions in the uS. Both se the sme cretive rel estte strtegy, proving tht it cn be done lmost nywhere in the world. Bt million Pinoy millionires? Isn’t tht h… impossible? I dmit, it’s one o those clssic big, hiry, dcios drems. Bt rom my experience, the bigger the dream, the better. Why? Smll drems ttrct smll people. Big drems ttrct big people. Are you big? Are you big enough to become one o those millionaires? Smll drems don’t excite people. Smll drems don’t crete enogh pssion necessry to chieve them. Smll 5
FOREWORD: Are You Big?
drems remin smll. Ts, the grveyrds o smll drems re mny nd overcrowded. as I write this pge, Lrry nd rce re presently bilding the Tink Rich Pinoy Network o Millionaires, nd they’re ttrcting big-herted people. Big on pssion. Big on hrd work. Big on selessness. Yes, Lrry nd rce wnt to ttrct Pinoys who wnt to be millionires not or themselves. Like them, they wnt to ttrct Pinoys who wnt to be millionires so tht they cn crete other millionires. Trogh my book, 8 Secrets o the ruly Rich, I correct yor distorted theology o welth nd enlrge yor psychology o money. Bt once tht’s done, where will yo get the prcticl, hnds-on, step-by-step strtegies to crete yor welth? Ts, the book in yor hnds. Red on, millionires!
Bo Snchez
6
Tink Rich – Quick!
foRewoRD
What Millionaires Are Made Of By Deb McMilln
Investing in rel estte is the wy most millionires were creted. Hving the corge nd mking the time to lern how to mke money t investing while working ll-time job, lerning new lngge nd dpting to new cltre… well tht’s rce! He hs ll the mkings o millionire. Sometimes yo do it right the rst time. I yo’re relly good, yo lern rom yor mistkes nd jst know yo’re going to mke them. Te best don’t give p, don’t lose too mch money, nd then they try something dierent the next time. Ten they scceed. Tt’s the rce I know. rce nd I met ew yers go while I ws president o the Ohio Rel Estte Investors assocition. We hit it o becse I hd jst qit Procter & Gmble (P&G) ter being there or 20 yers, nd rce ws jst strting his creer with them in the uS. P&G is mlti-billion dollr worldwide consmer prodcts compny. I’d been bying nd selling residentil properties while t P&G, most recently throgh sing the short sle method o cqiring properties — sking the lender or discont rom wht the seller ctlly owes. So my nnces were growing, too. 7
FOREWORD : What Millionaires Are Made O
We both knew tht even good job t P&G wsn’t going to be the only thing we’d need to provide nncil stbility or or milies nd orselves or the rest o or lives. Tt’s how we met t the Cincinnti Rel Estte Investment assocition (Cincinnti REIa). Tere, we met cople o times monthly nd shred inormtion on how to by/sell/rent residentil homes, mltimily homes nd more. using inormtion cqired rom the REIa grop, rce hd lredy sccesslly prchsed two hoses. Te rst hose he sked me to help him by ws jst rond the corner rom these two hoses nd ws pre-oreclosre or short sle. I ws mzed to see he hd ccomplished so mch in rel estte even thogh he hd ll-time job tht kept him ot o town lot. We worked this short sle together bt weren’t ble to get the lender to discont enogh to mke it worthwhile to prchse. rce ws qick stdy thogh, nd ws soon completing short sles on his own. Sbseqently, he boght severl more hoses, ws mentoring other stdents who cme to the rel estte investor ssocition nd still contined to work t P&G. He ws not wsting ny time to get his eet nd his hed rmly plnted in the rel estte mrket: Lese-optioning hoses to tennts, bying hoses on short sles nd wholesling residentil nd mlti-mily homes too. Every sccessl investor hs gols — written ones, not jst objectives boncing rond in his hed. rce’s gols re written nd he works towrd them every dy. With this book, he is on his wy to llling nother one o his gols: 8
Tink Rich – Quick!
o help crete 1,000,000 millionires by 2020. He’s doing tht by shring his experience, knowledge nd his sccesses with yo, the reder, so yo cn benet, too. It’s mzing wht we cn do when we jst sy “we will do it.” rce is n extrordinry individl nd with work, yo cn be too! Deb McMillan is called the “Shortsale Queen” and is also the past president o Ohio Real Estate Investor Association and Cincinnati Real Estate Investor Association. www.shortsalequeen.com
9
FOREWORD : What Millionaires Are Made O
0
Tink Rich – Quick!
PReface
Entrepreneurs: Learn to Sell (or Perish) By Lrry Gmbo
Do yo remember times in yor lie when yo “got it?” For exmple, when Brother Benedict, my lgebr techer, wold explin polynomils, I jst cold not get it. “Di ko ma-gets.” No mtter how I try. Bt or yers go, when Robert Kiyoski wrote the ollowing on ip chrt t his two-nd--hl dy Bsiness School in Singpore, I got it! SaLES = INCOME When I sw Robert Kiyoski o Rich Dad, Poor Dad write tht on the esel pd nd explin it in his blnt wy, it seemed like crtin opened nd light blb shed, illminting my mind nd hert. Getting Doctorte in Bsiness administtion rom the university o Michign didn’t do it. Being proessor t the asin Institte o Mngement didn’t do it. Bt Robert’s ip chrt nd the words he wrote did. Tere mst be some trth to the sying tht when the stdent is redy, the techer will pper.
Preace
Yes, Sales=Income. “Pare, naintindihan ko ito (Tis I nderstnd),” I told mysel. Tt dy, nwittingly, Tink Rich, Pinoy ws born. No sles. No income. a nd it does not mtter who, bt ny sccessl entreprener — pst, present and tre — hs to lern how to sell. Henry Sy. John Gokongwei. Donld rmp. Bill Gtes… No sles, no sccess. “Bill Gtes,” sys Blir Singer o Sales Dogs, mst hve been “qking t his boots when he ced gint IBM nd sold them the DOS operting system (which he lter trnsormed into Windows).” Why? Becse Mr. Gtes did not even own DOS t tht time! Don’t yo think he mst hve been teeny-weeny scred? Mr. Gtes ctlly sold IBM the prodct DOS nd terwrds went ot to nd nd by the system. Now tht’s selling! and yo now know the INCOME tht ollowed rom tht sle. Tey were enogh to mke Bill Gtes the richest mn in the world tody. SaLES = INCOME. It’s powerl eqtion. Now grnted there re other things tht mke or sccessl bsiness, like n efcient system, legl nd decent prodct or service, not to mention binding mission, n inspiring ledership nd good tem, bt nless yo hve sles bringing in income, the bsiness will collpse. Nada. Bokya. Zero. “Prot,” sys Mr. Sixto Roxs, my rst bsiness boss nd mentor, “is condition o vibility.” In short, no money, no honey. and where does prot come rom? SaLES! So here is wht I lerned rom the asin Institte o Mngement nd the university o Michign:
Tink Rich – Quick!
INCOME (rom Sles) -EXPENSE PROFI (Svings)
Tis is wht is tght in every bsiness school: Te Income Sttement. Yo wnt to improve prot? Either ct down expense or increse yor income. Bt wht i yo do not hve income? Yo get the dot-com sco where compnies tht were being vled wildly hd no rel income or revene strem. and wht ollows is the dot-com collpse. So beore ny income sttement comes the bsic insight.
SaLES = INCOME and tht is not lerned in bsiness school. It is lerned in the school o hrd knocks. Te school o the mily. StreetSmrt university they cll it. Te gol is simply to generte csh ow by lerning the rt nd discipline o selling. Only when prodct or service is sold does bsiness begin. Sles brethe lie into bsiness. “Nothing hppens ntil something moves,” sys albert Einstein. How do yo move with the eqtion sles=income? By becoming n entreprener. Sccessl entrepreners hve mstered the rt tht SaLES=INCOME. Te relity o this is injected into their DNa. Trogh the ct o entreprenership, bsiness is conceived. Bt only when SaLES=INCOME does the bsiness grow strong, srvive nd thrive.
Preace
Tt’s why I estblished my bsiness: Te Tink Rich Pinoy Millionire Network (Tink Rich Network). Te Tink Rich Network is rnchise system tht cretes rel estte millionires who, in trn re committed to creting other rel estte millionires, ech cting nd knowing in their gt tht SaLES=INCOME. Trogh this bsiness, yo become millionire-mker in the Philippines while linked t the sme time to Filipino mentor in the united Sttes. Enter rce rjno, Pinoy millionire rom Cincinnti. His story speks loder thn words. It’s similr to mine lived ot in the united Sttes. When yo listen to rce, yo listen to Lrry. Trogh synchronicity nd the Lw o attrction triggered by my book, Tink Rich, Pinoy, yo now hve this book in yor hnds. Tere is sying, “When the stdent is redy, the mentor ppers.” Know tht becoming Pinoy Rel Estte millionire is tem sport. Tere is no sch thing s sel-mde millionire. Even Lone Rnger hd onto. Btmn hd Robin. Dolphy hd Pnchito. Tink Rich Pinoy Millionires re temmde, individlly crted throgh the Tink Rich Pinoy Millionire Network (or detils on the rnchise, emil me t
[email protected]). Bt most o ll, eel the energy nd the pssion o Pinoy committed to “giving bck” to his kababayans. a nd, in the process, llow yorsel to be inected by the virs o rel estte entreprenership in Tink Rich Pinoy style. So be wrned. Ech pge is inectios nd highly contgios. Red t yor own peril. 4
Tink Rich – Quick!
Once yo “get it,” yor lie will be chnged orever. Becse not only is becoming welthy OK; it cn be done — by Pinoys who hve the love, pssion nd dediction to scceed. It hppened to me. It hppened to rce. It cn hppen to yo: be yo n employee, n OFW, hosewie, smll bsiness owner, doctor, nrse, techer, ccontnt or lwyer. Jim Rohm sys it so well: “Te gretest vle in lie is not wht yo get. Te gretest vle in lie is wht yo become.” Yo cn become Pinoy millionire. Let rce show yo how. and yo too will “get it.”
5
Preace
6
Tink Rich – Quick!
inTRoDUcTion
I ws wide wke even thogh it ws 1 .m. I knew I hd to wke p erly the next dy or work bt I coldn’t pt the book down. I ipped throgh the pges qickly nd I cold her my hert ponding in the silence o the night. Te book I ws reding ws no thriller or mystery novel. It ws book written by Filipino thor nmed Lrry Gmbo entitled Tink Rich, Pinoy. It ws book I ws destined to red. Why? Becse Lrry hd converted into relity wht I hve envisioned. He hd done wht I ws sying ll long. I m Pinoy working ll-time in Fortne 500 compny in the united Sttes. On the side, I invest in rel estte. My eld o expertise is “no money down, qick trn” rel estte. It’s investing tht cn be done with no money, virtlly no risks nd yo get yor prot in ew weeks, sometimes in ew dys. Hence the nme “qick trn.” I’ve been telling my reltives nd riends bck in the Philippines tht this cold be done there. Bt no one believed me. Insted, everyone hd excses s to why it coldn’t be done. “Walang pera sa Pilipinas.” “Masyadong corrupt dito.” “Iba dito, bawal ‘yan.” 7
Introduction
Bt Lrry Gmbo hs proven them ll wrong. I nished the book t 3 .m. Toghts kept swirling in my hed nd I ws torn between sending the thor n emil or sleeping nd witing or the next dy. Logic eventlly won over my excitement s I ly down nd ell st sleep. Te next morning, I st in ront o my lptop nd strted ponding wy t the keys. I cold brely contin my excitement s I wrote him long emil. Send. Wold Lrry respond to me? Maybe not. He’s probably too busy, I thoght. a week pssed nd I ws plesntly srprised to receive reply rom him. He ws excited bot my emil 8
Tink Rich – Quick!
nd greed to meet me ve months lter dring my two week vction in the Philippines in agst 2006. A MILLION PINOY MILLIONAIRES Or meeting plce ws t the lobby o 6750 on ayl avene, Mkti. I rrived ve mintes hed o or schedled meeting, hving shed the “Filipino time” ter living in the uS or six yers. I sw mn wlk in nd didn’t think it ws Lrry. “oo yong,” I told mysel, s I wited some more. Bt the mn, wering netly pressed shirt nd glsses pproched me with energetic strides to greet me. “I’m Lrry Gmbo,” he sid s he shook my hnds, dding, “Yo’re very pnctl.” Beore I cold sy nother word, he told me to get into his cr becse he needed to drop by the bnk. On the rod, I told Lrry bot my brning mission. “I wnt to help Pinoys scceed nncilly nd yor book is right in line with this mission,” I sid. I ws stttering s my lips tried to ctch p with the thoghts rshing throgh my mind. I took deep breth nd told Lrry to brce himsel or long converstion. “Don’t worry,” Lrry sid, “we hve time.” I orgot I ws in Mnil nd the trfc “gives yo time.” “So wht’s yor bckgrond,” Lrry sked s we wited t the bnk. “I’m chemicl engineer t Procter & Gmble,” I replied. “Relly? I sed to work there, too,” he sid with enthsism. We tlked bot how gret the compny ws, how he liked the wy we were trined to write one-pge 9
Introduction
memos nd convincing, logic-bsed recommendtions. Bck in the cr, we tlked bot rel estte gin nd the mission o teching others to become nncilly ree. “Tis is big mission,” I enthsed. “I wnt to help ‘crete’ or trin — directly or indirectly — one million Pinoy millionires.” I went on to enmerte the enormos benets million millionires wold hve on or society. Te nmber o jobs these rich people wold crete wold be tremendos. I they wold donte jst one percent o their income to help the poor, tht’s P10 billion yer! Tt wold be lot o schools, hospitls, ood nd medicine or the destitte. Tese one million Pinoy millionires wold ndo the dmge tht or politicins hve csed. In one yer, they cold contribte more to the Philippines thn ll the presidents o the contry combined throghot or 100 yers o independence. I psed to ctch my breth nd thoght to mysel, “Lrry might think I m ke. One million Pinoy millionires? Who m I kidding?” Bt, I ws wrong. “Let’s do it!” Lrry replied, mtching my excitement. WHAT GIVES ME THE RIGHT? Now, yo might sy, “Who re yo, rce, to propose sch n mbitios drem?” Let’s jst sy tht, like Lrry, I like to drw rom my experience nd tech people bot rel estte. I hve boght over $3 million (roghly P150 million) o rel estte in the united Sttes, mostly with no money down. 0
Tink Rich – Quick!
In ct, the ltest del tht I did ws 36-nit prtment bilding with only $1 down. Tt’s jst P50! I know this is hrd to believe bt or now, hold yor breth, sspend yor disbelie nd open yor minds. By the time yo’ve nished reding this book, I ssre yo, yo will sy, “Ganun lang kasimple yun?” and it is! Bt I’m getting hed o the story. For now, sfce it to sy tht it’s possible to by properties in ny contry even when yo hve no money. Lrry hs proven it s I did nd this book will tech yo no-moneydown bsiness in rel estte tht I’ve sed s vehicle in my jorney towrds nncil reedom. Tis is my jeep nd Lrry helped convert it into jeepney — para sa Pinoy. Sakay na nd let’s go on this jorney together!
Introduction
Tink Rich – Quick!
chaPTeR
Real Estate as a Vehicle to Millions Mom’s ters glistened in her eyes even s she tried to hide it. It ws lwys like this whenever we were t the irport to drop o Dd, semn who ws o to nother trip. “How long will yo be gone this time, Dd?” I sked. I mst hve been only eight or nine bt even t tht yong ge, I hd lost cont o how mny times I’d sid goodbye to him. “arond 10 months,” he replied. “and ll tht time yo’re jst on the bot?” I sked. “Don’t yo get bored?” “No, hijo, we hve big ship nd there re lot o things going on there,” he sid. My dd hd probbly done everything on ship. He told me he ws cook, oremn nd he ws even close to becoming cptin bt he didn’t hve the right edction. “Where will yo go this time?” I sked. He sid they were o to Jpn to hl crs nd ship them to the uS.
Real Estate as a Vehicle to Millions
Dd hd trveled the world becse o his job. I think the only plce he hdn’t been to is antrctic. and ll those months nd yers he ws wy rom his mily ws rewrded with severl million pesos in the corse o his 30-yer creer. It wold hve been nice ending i he lived the good lie in retirement. Bt, sdly, he did not. In ct, he cn brely mke ends meet. ater working so hrd or decdes, he hs nothing to show or it. Little did I know tht I ws ollowing in his ootsteps. A FINANCIAL LOSER When I rst worked s mngement trinee in big mltintionl compny, I ws ecsttic. I mde lot o money. My rst pycheck ws P10,000 month — lot or college grdte bck in 1994. I elt rich. I mde more money thn I ever dremed o nd the work ws exciting. I got promoted one level ter the other nd I got rises — big ones — nd they becme bigger nd bigger s the yers progressed. My slry dobled every other yer. Bt yo know wht? Despite mking lot o money, I ws nncil loser. I spent more thn I erned. I te ot lot with riends nd drnk lot, too. I plyed bowling lmost every dy nd the only prphernli I didn’t own ws bowling lley. My credit crd bills piled one on top o the other. Beore long, I cold brely keep p with the minimm 4
Tink Rich – Quick!
pyments. I ws slowly drowning in debt. I ws living the sme “progrm” tht rn the lie o my dd. Te progrm red, “WORK HaRD — EaRN-SPEND-WORK HaRDEaRN-SPEND. REPEa.” Tt progrm chnged when I red the book Rich Dad, Poor Dad by Robert Kiyoski. Like Lrry’s book, I coldn’t pt it down. I “devored” it nd I red it cover to cover in one sitting becse it ws s i Kiyoski ws writing bot me. “Poor Dd” ws like my dd — he mde lot o money bt he never sved nor invested on nything. It mde me relize tht I, too, hd “Rich Dd.” It ws my nt, my dd’s sister. She worked s bnk clerk bt strted prt-time bsiness with “no money down.” She boght chickens on consignment then she btchered nd resold them. She then pid o her spplier, kept the prot nd reinvested it to by more chickens. Ech time people sked her how lie ws, she’d jst sy, ‘”It’s hrd to ern money.” She lived simple lie nd none o s sspected tht she ws bilding n empire. Fst-orwrd to 30 yers lter. My nt now owns two prtment bildings, resort, sari-sari store nd big rice rm — ll in Btn. and to think she ws jst bnk clerk! How did she cqire ll tht welth when she didn’t ern mch? Te nswer: a “no money down” bsiness. Laway lang ang puhunan. Te dierence between my ther nd his sister ws s wide s the ocen tht Dd siled on. 5
Real Estate as a Vehicle to Millions
THE BENEFITS OF REAL ESTATE I believe tht lot o the lck o welth o Pinoys is de to lck o the right ttitde nd ptitde bot money. Notice tht the Chinoys becme rich in this sme poor contry s the poor Pinoys . Yet, the Pinoys hve to y or sil otside the contry to bring bck dollrs so tht their milies cold live better lie. Tt’s why I’m writing this book bot rel estte s vehicle to millions. Why rel estte? First, it’s commodity tht people everywhere need. It will lwys hve mrket. In the united Sttes, everybody wnts to own piece o lnd — tht’s why it’s clled the americn Drem. In the Philippines, the need is low-cost hosing. Since lnd cnnot be mnctred — nless it’s reclimed like the site where the SM Mll o asi now stnds — pls the ct tht prices o bilding mterils like cement nd wood tend to go p over time, prices o rel estte goes p over time. Tt’s why yo her o people who sid they, too boght piece o lnd or P500 per sqre meter nd they sold it 10 yers lter or P4,000 per sqre meter. as med rel estte gr Robert allen sid, “Don’t wit to by rel estte. By rel estte nd wit.” Tis second benet o rel estte is clled appreciation, nd i yo hve deep pockets like Henry Sy, yo cn ord to speclte nd prk yor billions in 4,000-hectre lnd in Cvite hoping somedy it will pprecite. Tird, rel estte genertes cshow. Tis is the dierence 6
Tink Rich – Quick!
between the rent yo’re getting rom the tennt nd the expenses yo incr like mortgge pyments, rel estte txes (amilyar), insrnce, etc. LOLO VICTOR’S
STORY My lte grndther, Lolo Victor, ws conservtive mn by ntre. He rented n prtment in Mnil or 35 yers becse he wold rther sve the money he ws erning rom the Bre o Internl Revene in the bnk. He did own hose in Btn, which he visited dring vctions, bt he never owned the hose where he lived, together with my lola, my mom nd my nts. Lolo pid his rent like clockwork. His lndlord ws qite hppy becse o the consistent cshow tht my grndther generted or him ll those yers. Once in while, the prtment needed some repirs, bt his lndlord wold send his mintennce mn. He didn’t hve to do nything personlly. Except collect Lolo’s checks. Tt’s why Kiyoski clls cshow rom rel estte pssive income. It comes in every single month nd ll tht Lolo’s lndlord hd to do ws open the mil nd csh in the checks! Te other thing tht Lolo did nknowingly ws tht he pid or his lndlord’s lon on the prtment he ws renting. Tis is clled eqity. Eqity is the dierence between wht the 7
Real Estate as a Vehicle to Millions
property is worth nd the lon blnce. In 35 yers, the lndlord’s lon went down to zero nd now the prtment is ree and clear o ny lons. THE POWER OF LEVERAGE Te lst benet o rel estte is clled leverage. Tt is, yo cn by rel estte with only 20 to 30% down pyment nd sometimes 10 or even 5% down. Even i stocks generlly pprecite ster thn rel estte over the long hl, leverge mltiplies the eect o pprecition o rel estte. Let me show yo wht I men. Let’s sy yo hve P100,000 csh nd there re two investment opportnities. Yor riend tells yo tht ble chip stock, sy Jollibee, normlly pprecites by 10% yer. Bt there’s lso one-bedroom hose ner niversity tht’s being oered to yo or P1,000,000 with down o only 10%. Yo cn rent ot this hose with brek-even cshow. Te hose pprecites by mere 5% yer. Which one is better investment? Let’s see. Yor stocks next yer wold hve grown to P110,000 — with its 10% pprecition. Broken down it looks like this:
Stock originl vle
P100,000
apprecition Stock pprecition
x 10%__ P10,000 + P100,000 P110,000
Stock originl vle New stock vle 8
Tink Rich – Quick!
Now let’s look t the one-bedroom hose. ater yer, with 5% pprecition, it’s worth P1,050,000. Bt since yo only invested P100,000 in it nd the one-bedroom hose pprecited by P50,000, yo hve whopping retrn o 50%! Broken down it looks like this:
Hose, originl vle
P1,000,000
apprecition Hose pprecition
x 5%___ P50,000
Investment Retrn on investment
÷ P100,000 50%
Tis is the power o leverge. It mkes yo become welthy in very short spn o time. Now think: Wht i yo hve nothing invested in the property by doing no-money dels? Ten yor retrn is infnity! It’s innity becse i yo divide yor cshow by yor investment which is zero, mthemticlly, tht’s innity. Tis is my type o rel estte investing. MY TYPE OF REAL ESTATE INVESTING Yes, it is possible to by hoses nd bildings with no money down. Donld rmp, probbly one o the most sccessl rel estte investors o ll time, boght his rst three dels with no money down. He boght n prtment complex with 1,200 nits with no csh o his own. No 9
