To Become Wealthy: Contract Details Part IV

Feasibility Period: This is a very important section. This is where it simply states that we can terminate the contact for any reason within 28 days of signing. Our realtor is currently extending this date by an extra 14 days due to the holidays holding things up. This will probably also extend our closing date, but I am not entirely sure about that. If we do decide to back out of the contract within this time frame, we will have to pay the seller $360 and we will get back our earnest money deposit.I was very pleased when I learned about this part of the contact. No such thing was included in the contract when we purchased our current home. I believe that it is reserved for commercial properties only and I do not know if that is true in all states.

Inspections, Studies or Assessments: This part simply states that we need to have an inspection done within this feasibility period, and that we are required to pay for it. The seller just needs to make sure that we have access to the property and that all of the utilities are turned on. There is also a nice point about the buyer being responsible for any damages cause by the inspection process.

To Become Wealthy: Contract Details Part III

UCC Search: This stands for the Uniform Commercial Code. I was not familiar with this and had to look it up on my own. All that the contract says is that the seller has 10 days to provide documents that are on file with the state and county to show where the property is located that relates to all the personal property on the property, and to list all the owners of the personal property in the last 5 years. Then it further states that we would then have 7 days to object if there is something that may encumber the title or if any portion of the property is in a flood zone.

This is one definition that I was able to find. “In plain language, the Uniform Commercial Code allows a creditor to notify other creditors about a debtor’s assets used as collateral for a secured transaction by filing a public notice (financing statement) with a particular filing office.” This really does not tell me too much more. Basically I am going to double check with my realtor that this was done and review all documents that are involved to see if anything looks questionable.

To Become Wealthy: Details of the Contract Part II

Title Policy: “Seller, at Seller’s expense, will furbish Buyer an Owner’s Policy of Title Insurance from state company, in the amount of the sales price, dated at or after closing, insuring Buyer against loss under the title policy, subject to:” blah, blah, blah

This sounds to me like the seller is responsible for getting title insurance for us. However, I do not believe that this is correct because when we purchased our current residence we were responsible as buyers to have out own title insurance. I believe that this section means that they seller must prove that he had title insurance from the initial purchase of the property to prove that he has legal rights to the title, and if something occurs the title is insured. I am going to check this out with my lawyer just in case.


Survey: This is simply stated also. Within 10 days the seller needs to provide us with a survey of the property, that was done after the date of the contract, by professional surveyors.

To Become Wealthy: Details About the Contract Part I

Contracts are very difficult for anyone who has not spent years studying law to read. We live in a very litigious society that has lead to an increased wordiness of any legal document. Once more lawyers get involved, the amount of paper increases geometrically. It can sometimes be terrifying to witness.



However, I am going to attempt to explain our contact to the best of my understanding. Please feel free to jump in if I have made any errors in my interpretations.



It starts out simply enough identifying the sellers and the buyers, and the location of the property that is being sold and bought. Then it even goes as far as to list all of the things connected with the property such as the rights to the leases, and warranties, trade names, or anything else associated with the ownership of the property. And of course the most important portion of the entire document also appears on the front page. The Sales Price complete with the amount that we are to put down in cash at closing.



Page two includes a contingency that allows us out of the contract if we cannot secure financing. This seems kind of obvious to me, but I guess it needs to be there. But in order to actually get to this point we needed a pre-approval letter from a bank to prove that at least one bank is willing to give us financing. So, this item seems a little redundant to me.



Earnest Money: This is the amount of money that you need to present to the seller along with the bid. It is being held by the listed Escrow company and the seller will receive it at closing as part of the down payment, or it will be return to us if the purchase falls through. I have absolutely no idea why this needs to be done. What is the point? We have already proved that we are not penniless delinquents before we placed the bid, why do we also have to show that we can write a check for a few thousand dollars. What is this supposed to prove? Does the seller feel some sort of security knowing that a portion of our money is in an escrow account? It is fully refundable to us if we back out of the deal or if the seller does. But it is one of the things that we had to do, so it is stated in the contract.

To Become Wealthy: The Next Step

Our closing is not until Feb 2nd. Of course this is dependent on everything working out between now and then. There are all sorts of details in the contract that give both parties an out. But I have no doubts at this time that we will purchase this property.

I have a lot of work to do to prepare for the purchase of this property, but my mind keeps wandering to the time after we purchase this property and are looking for the next one. I think back to a previous blog where I mentioned that the profoundly successful people are the ones that did not diversify but rather took big risks in one area that paid off. So, do we continue to look in Dallas or concentrate in other areas? Should we look at non-residential real estate investments? The difficult thing is realizing that there are no answers to these questions. So, I will just continue to look at everything until something, somewhere looks good to me.

Until then, I need to review the details of our current contract better to see what I can learn from it.

To Become Wealthy: Under Contract

As of yesterday we are officially under contract for our first real estate investment purchase. I could not be more excited and nervous at the same time. It is an entirely different feeling from when we were purchasing our first home for our primary residences, and that was a more expensive purchase.

To make an odd point about why we are not investing close to where we live. The cost of our 3 bedroom, 1.5 bath house here on the east coast is more than the cost of a 15 unit apartment complex in Dallas. Crazy but true. You need to already be wealthy in order to invest anywhere within driving distance of where I am now.

The next step for us is to find a property inspector. I spoke to two of them today, and it is going to cost us between $1200 to $1800. I just need to coordinate the times with the realtor and property managers. According to the contract, we have 28 days to back out of the contract for any reason that we find upon further inspection of the property and the paperwork associated with the deal. So we are trying to get it all done soon.

I also spent the day on the phone with a few mortgage people starting to rate shop. The mortgage is going to be the largest expense so I want to make sure that we get a good deal.

So much work, so little time.

To Become Wealthy: Learning Something New

I was reminded today of something I had learned about sometime last year that I was very excited about, and then moments later it was invalid. It is a method that some investors use to get back money at the closing. What happens is the buyer applies for a mortgage at an amount that is higher than what the seller really wants for the property. Of course that stated higher amount must be written in the contract. And then at the closing the seller gives the buyer cash back to help with the closing costs. It is a way of rolling the closing costs or a portion of the down payment into the mortgage costs.

When I first read about it I did not think it all that likely to be true. After all it was part of a no-money-down-deal or something similar. I do not really recall where exactly I first saw it, but since then I have seen references to it, and legitimate references at that.

So, while we were discussing our latest bid and the fact that the seller is willing to give us credit to redo the exterior of the building I thought that this might be one of those instances where we would get a mortgage for the higher amount and receive cash back at the closing to cover the repairs. Of course this really perked my interest. Cash in hand is a good thing.

But then when I inquired further with my realtor she told me that those sort of cash-back-at-closing deals are illegal in Texas. The credit we would receive for this property would be held in escrow until any work was completed, and then paid directly to the contractor.

What I learned today: Follow your first instinct. It will be the right one.

To Become Wealthy: The Counter Offer

Today we received a counter offer. It was simply stated. They will sell for our offered price of $360,000 but then will not give us a credit to re-do the exterior. If we want the credit, we will have to pay $385,000. Does anything think it will cost $25,000 to redo siding and stucco for 2 buildings? I honestly have no idea.

So, now I am going to desperately call several siding businesses in Dallas tomorrow to try to get a rough idea of how much this is really going to cost us. Hopefully I can convince someone to give me a free estimate and actually drive over to the property to tell me how much work it really needs.

I am thinking of countering with $370- $375 including the credit. But what I an not believe is that this property was first listed at $450,000 and here he is willing to take $90,000 less. That is a 20% mark down. From now on I am going to grossly underbid all properties.

To Become Wealthy: We Placed a Bid

On Friday we placed a bid on the 15 unit property in Dallas. Having looked over all of the property info several times, we decided to bid $360,000. To place the bid was an entirely daunting process itself.

First, the realtor required us to have a pre-approval letter from a lender. This was a quick and easy process that took all of 5 minutes to complete when we were going to purchase the house that we currently live in. The process for buying a commercial property is completely different. It took most of the week, with several back and forth phone calls for more information. Basically the bank wants to make sure that the property will make money and does not care too much about our personal info outside of our credit scores.

They finally approved us and we were sent the letter off to our realtor. In turn she sent us a 17 page legal document that would serve as our bid. We wanted to get the bid in by Friday as a nice way to round off the week. Of course now that we were sure that we really wanted to place the fear of someone beating us to the bid grew and grew. I am still working on getting a lawyer, although I did play a bit of phone tag with one on Thursday and Friday.

We spent one very late night reviewing the bid documents and we only added one part about a credit amount that was yet to be determined for work to be done on the exterior. And off to FedEx I went with signed documents and a 1% earnest money check.

Then we waited…..

To Become Wealthy: Cap Rate

I have discovered that the cap rate is useful when determining the value of a property. Cap rates differ with each area and type of property, but on average you want the cap rate to be between 10-12% for a good investment.

The cap rate is basically the ratio of the net operating income to the price of the property, expressed as a percentage.

CAP RATE= NOI/PRICE

Sounds simple enough, right? I believe it is. So basically the price that I would want to pay for a property should be no more than 10 times what I calculate for the net operating income.

In case you do not know, the Net Operating Income is calculated before any debt services or taxes are considered. It only takes into considerations the cost of operating the property.

Here is how it is calculated:
Goss Income from rents
- any vacancies (assumed at 3-5%)
- taxes
- insurance
- utilities
- property management
- repairs and maintenance
- supplies
= Net Operating Income

So, I am going to start considering this for every property that I investigate.

To Become Wealthy: Commercial Real Estate

I was recently introduced to a site called Loopnet.com by my realtor in Tulsa, OK. You can sign up for free, or pay for different “premium” packages for a monthly fee. I chose the freebee for now. If it turns out to be a useful site, I may upgrade. This site offers listing of commercial properties as well as some residential. It is not part of MLS, and I am not sure how the sellers can list on the site. All I know is that I like all of the information that I am learning from it about commercial real estate possibilities. Here is a brief summary:

1- Commercial Real Estate is not as expensive as I thought.
2- There are a lot of opportunities for developers.
3- Options for unconventional financing are more prevalent.
4- Strip Malls have a High Return on Investment.

So far I still have a lot of questions about purchasing and operating commercial real estate. This will be something that I will try to find more information about in the upcoming weeks.

1- amount of down payment needed for financing
2- requirements and costs of property management
3- leases for commercial tenants
4- aspects to consider of property logistics, such as parking and traffic
in the area
5- other considerations yet to be imagined

Once I learn more I will share my knowledge here.

To Become Wealthy: Other Ways to Make Money

I do not plan on relying on only one source of income to support me in the present day of in the future. Currently I have only one source of income from my 9-5 job as an employee. If I lose this job through my own fault or no fault of my own, I will have nothing but unemployment checks to keep me fed and housed. I am fortunate enough to be part of a two earner household so I could survive a little longer with no income than I could if I were single. However, if both of us were to lose our jobs at the same time, we would have approximately 3 months before we would have to sell our home. It would take less than 1 year before we would be basically bankrupt.

I do not hold a high opinion of my current situation. But, I put myself here, so it is my responsibility to get out of it. Hence my interest in real estate investing. But there is more to life than that. There are a lot of people out there making money with blogs. I want to be one of those people. I read about one man who used his blog to help show off his talents in order to land a better paying 9-5 job. I guess it was sort of a supplement to a resume. There are others who use their blogs as a medium in order to sell products like books to other instructions materials. This may be a method that I will also pursue in the future.

The current method of income that I am using on the blog is Google Adsense. It was very simple to set up. My husband did it for me in about 5 minutes. Today, I am proud to announce, I have made my first $0.35. Yes, you read that correctly, 35 cents. I would like to send out a special thank you to whoever it was that clicked. Thank you and feel free to click anytime that you want!!!

To Become Wealthy: The Secrets of Real Estate Investing

These are the worst kept secrets of the modern day. Every Barnes & Noble across the country has a section dedicated to Real Estate Investing. I just did a Google search for the term last week and came up with 83 million hits. This week the search brought up 93 million hits. Nothing is hidden from anyone willing to look and learn. However, that is where the secret lies. The secret is to figure out what you need to be looking for when you have no idea that you even need something. Most people want out of the Rat Race, but do not know their option to get there. I am giving you two options with this blog. People make money with blogs, and people make even more money investing in real estate. Keep reading, sign up and find out how along with me. I have not invented anything new.

For most of us that have not been fortunate enough to have been born with large trust accounts, we are born into the rat race. Dad works and most times so does Mom. We are taught in school the skills needed to get a job out in the “real world”. Continuing education is used in order to get a better job. We are conditioned to believe that we need to work for someone else until we can retire at 65. We believe that those of us that are fortunate or just lucky will get the really high paying jobs and may be able to retire early. Only those people who are truly gifted and industrious will be successful at starting their own business. You need to invent something new in order to succeed on your own. I believed these things my whole life. Until now.

If you know any real secrets about real estate investing, please share. There is no greater way to grow that to be able to share your knowledge with others.

HAPPY THANKSGIVING

Things I am thankful for:

1- My good health and the continued good health of my family and friends.
2-My husband who is always there for me.
3-A stable and loving home.
4-The yearing and ablitity to always learn more.
5-Two Sensei's who are always willing to train me more.
6-A very prosperous future.

Have a safe, health and happy holiday.

To Become Wealthy: The Master Plan

Ultimately the question is ,”How do I want to live my life?” I never aspired to be a real estate investor. I have no training or formal education in this area. I am enjoying what I am doing so far, but it is far from what I would call one of my passions. However, I am passionate about making large bank deposits.

I am investing in real estate as a mean to an end. That end is financial freedom. To be able to do what I choose with my time. To not have to make a contract with someone for 40 hours a week of my time for only $40,000/ year. I want my time to be my own and my families. Time is the ultimate currency for me.

My husband has different reasons. His passions is to start a company of is own. He is a web designer and a graphic designer. He has some innovative ideas on how to run a business in this field. He plans on starting his own blog about it some day soon. So for him the money w make from real estate investing will free him up to pursue his passion and make a real go at his own business. Of course if it also frees up my time, I will be able to be by his side to help him along the way however I can.

We have done a lot of taking and planning for the next few years of our lives together. We have already survived the wedding and the first home buying. Now we are trying to figure out who should leave the rat race first. We have discovered that it takes a decent amount of time to look thru properties and prepare to purchase them. So we decided that if I stay home from work that I would do most of the work to manage the real estate investments and expand our portfolio.

I make less than he does, so in one way it makes sense for me to leave my job first. We are also planning on starting a family next year and the mother is traditionally the one that stays home with the children. This is something that I look forward to being able to do. Even though both of the grandparents are hoping to be able to take care of any babies during the work week, I would rather have that responsibility myself. My plan is to have any potential baby sitters come over during the day to give me the freedom to attempt to have uninterrupted time to manage our investments. Those of you out there that are already parents may be laughing at this plan, but I think I am allowed to dream.

The other option is for my husband to leave his job first to pursue his own design business. If he can do this free from most financial stresses his can take more risks, try more things, and do what he needs to do to take this business from just a start-up to a self supporting entity. All while I have the rat race job and the health insurance.

Health insurance. This is the real issue that keeps me in the rat race. I am too dependant on other people paying for it. I did a quick search for rates for small businesses. We are planning on holding our properties in an LLC that we would purchase the policies under. It would be approx $8-10,000/year for the two of us, more if we have any children. Of course we can just calculate this into our numbers and be done with it, but some mental block I have makes me worry about it. For me it is the largest issue that we face when deciding when to give up our day jobs.

Oh how I dream about giving up my day job……

To Become Wealthy: A Better Property in Dallas

I have spent the last two weeks looking over one very good property. We are about to bid on it. I have gone over all sort of numbers and asked all sorts of questions and learned all sorts of info about it.

It is a 15 unit building that has had some work done to it over the past year to each unit. I am not-so-secretly proud of myself for finding it. Now I just hope that all of the details of the bidding process and purchase go thru.

Here are some numbers:
Gross Scheduled Income: $82,200
10% estimated vacancy : $8,220
(only one unit is currently vacant)
Insurance: $4,500
(based on current coverage)
Taxes : $6,630
(based on current year)
Utilities : $4,620
(elec for common areas, water/sewer, garbage)
10% for property manager: $8220
NET OPERATING INCOME: $50,010

The current asking price is $425,000. At that price, with 15% down and a 30yr fixed mortgage at 7.5%, we would pay $30,310.92 for the year, leaving us with approx $19,700 pre-tax profit for the year. We have no plan on bidding that much, but it is the amount that I use for my calculations.

Our wonderful realtor has sent me some background info on the property. The current owner bought the property in Sept. of 2005. He purchased it for $204,000. Since that time he has put in $66,000 to redo each unit. From what I can estimate, he did make some money off of rents collected thru the year. From the rent roll I can see that most of the units were vacant until they were redone. So vacancy has increased steadily throughout the course of the year.

I think $425,000 is a bit much to be expecting from this property, even though it is still a money maker at that price.

Here is what I am estimating his thought process to be for the money he might want to make off of this sale.
$204,000 initial purchase price
$10,000 in possible closing costs for initial purchase
$66,000 in improvements
$5-10,000 loss from vacancies
$5,000 loss due to bad property manager who can off with some money. (We heard this from the previous property management company.)

So that is a minimum of $295,000. Add in a generous $50,000 profit and we get almost $350,000. That is probably going to be what we will bid. I may even go as high as $375,000. There is also an offer from the seller for a credit to redo the outside stucco and siding.

So at the price of $375,000 and NOI $50,000, that cap rate is 13% which is pretty good. I do not yet know how to calculate the prevailing cap rate in the area, but it seems that most places use 10-12% as the average.

How does this deal sound? Much better than the last one, right?

To Become Wealthy: Money for the Down Payments

Where does the money come from for the down payment for all of these investments that people by? This is still a bit if a mystery to me. I do not subscribe to a lot of the “no money down techniques”, at least not yet. But then there is the problem of where that money comes from. I have seen a few listings where the seller offers the option to help finance the down payment and this is probably where I will end up a lot of the time. I believe the term for this is seller financing. It is good for the buyer because you are buying the property with the all important OPM (other people’s money), but it is also beneficial for the seller, especially if they have a lot of equity in the property. Of course it is another way for them to make money thru loan interest, but it is also another way of deferring the profits from the sale to avoid any capital gains if they can not do a 1031 exchange.

I have saved enough money to cover the down payments on a couple of reasonably priced properties, but after that I do not know yet how I am going to buy more. My husband and I have discussed pulling some equity out of our current residence, but we have only owned it for 1 year, so there is not too much there.

At first I thought that Hard Money was going to be the key. But I recently did a lot of research into that, and it is not at all what I thought it would be. The big companies that lend the money do so at very high interest, for only 65-70% LTV and for very short periods of time. They only seem useful if you need the money ASAP and plan on paying it back in the near future with a lower interest loan or sale of the property. They also have minimums amounts that they will lend, usually around 500,000 to 1 million. I would love to be able to but a property with that amount as 70% of the LTV, but for now this offer is not on the table. So, this is clearly not an option for a small loan for the down payment.

I know that Hard Money can also come from individual lenders. I was advised to mention our needs to lawyers and accountants that we use. They are some professionals who are privy to their client’s financial info and are likely to know people who are looking to invest money. I have yet to try this, but it seems like a reasonable option. I have no idea what sorts of rate or terms these sorts of investors expect.

There is a web site that my husband recently discovered via a podcast. It is called prosper.com and it is a wonderful idea. Individuals can ask for any amount of money for a personal loan. They can put in photos and a description of what they need the money for. The site rates their credit and debt ratios and then people can bid to lend them money. I think the range of rates is somehow predetermined based on the borrowers credit. Lenders can join groups, or bid solo any amount as low as $50. The site then combines all of the bids into one loan. The loan is then paid back over three years thru automatic withdraws and deposits. We have considered borrowing money this way. I have actually seen a few other people borrowing money for investments already on this site.

The advice that I hear most often is to borrow money from family or friends or to join investment groups. I have considered both of these and am not totally happy with either.

Friends and Family- Unfortunately I do not have many friends that have extra money sitting around, at least not in the amounts that I would want to borrow. Most of them would have to take equity out of their homes or borrow from their children’s college savings to lend me the money to invest. The wealthiest friend that I have is currently in bad financial straights due to the loss of a job and may have to sell her own home to make ends meet. Honestly, my parents are the only people that I would feel comfortable taking a loan from. They would always lend me money if I needed it. Unfortunately they would be the hardest to convince that I would be making a wise investment. They would assume that I needed the loan to get out of some financial troubles regardless of what I told them. So, borrowing money from them means that they will worry that I do not have money to buy groceries until I can pay them back in full.

Investment Groups- Honestly I would love to form an investment group. The problem is that I have been burned before by getting involved in business with people that I thought I could trust. So, I do not know if I could be open enough, or trust others to be open enough to make one of these groups successful for me. We have discovered several meeting groups thru meetup.com and the richdad.com that we are going to try to see where they may take us. If we do go, I will be sure to write a blog about it all.

So, the only solutions I am leaving for myself is seller financing or to use our own personal money, savings and assets to grow our real estate portfolio. Of course first we need to purchase at least one property to put into the portfolio. But it looks like we are going to have to use the monopoly technique of trading in four houses for a hotel technique.

If anyone else has any creative financing options I would love to hear them!!!

To Become Wealthy: To Bid or Not To Bid

I have learned to break down the numbers to evaluate any given property from two books by the same author, Frank Gallinelli. The first one is called “What Every Real Estate Investor Needs to Know about Cash Flow.” This is the main one that I am using this week to decided to bid or not to bid on a quad-plex in Dallas, TX.

These are the numbers that are given on the MLS listing:
Asking price $174,900
Gross Rent $1975/mo or $23,700/yr
Taxes $2717
Insurance:$2200
Owner pays Water/Sewer/Trash:$175/mo or $2100/yr

These are estimates of other expenses that we will have:
Property Management: $1896/yr
Repairs and Maintenance: $1200/yr

This gives me a Net Operating Income of $13587.

I have not added in a vacancy rate because I have been told that all tenants are long term tenants. Of course I will verify this once I get the opportunity to see the leases.

So far the numbers look pretty good to me, until I calculate the mortgage costs. My knowledge of mortgages comes solely from the purchase of my primary residence last year.

First I looked at a 30yr fixed at 7.5% with 10% down payment and no PMI. (I am assuming that we can do an 80:10:10 piggy back loan.) In this case, my mortgage payment for the year would be $13.207.56.

This will only leave me with $380 pretax cash flow for the entire year. This is a whopping 2% return on our initial investment of the down payment.

Then I thought about an interest only loan at the same rate for the same amount. Then the payments for the year would be $11805.72.
This leaves me with $1781 pretax cash flow.

Now, I have done a lot more numbers with the mortgages, since that is the biggest expense by far for the whole property. If we put down 20% instead of 10% then we increase our yearly cash flow to $1847 and that increases our cash on cash return to 5%. This is the bare minimum cash-on-cash return that we want for our money. However, we do not want to put that much money into any one property unless it has a lot more units in it.

Our best bet will be to take shorter terms for a much lower rate. If we could get an ARM with a 6% rate. With only 10% down, the yearly payments would be $11,325, leaving us with a positive cash flow of $2262. A 13% cash on cash return would result. If you add in an estimated $10,000 other up front costs (lawyer, etc), the return on investment is 8%.

So, is this property worth my while? I still need to evaluate the taxes and depreciation, and then do another analysis to figure out how low I should bid.

To Become Wealthy: A Property in Dallas

We have been working with a wonderful realtor in Dallas. We found her thru a Google search. She has put us on an automatic list that sends us newly listed properties each day that fit our criteria. We had further inquired about several properties so far, but none has worked out. This week we are very excited by a Quadplex that has just gone on the market for $174,000. Each unit has 2 beds and 2 baths. We are waiting to hear back from the seller with more details before we can decide if we want to bid and how much we are going to bid.

Let me go back a step and explain how we became connected with different realtors. We are currently working with two, one in Dallas and another in Tulsa.We basically did some Google searches and then sent them a pre-written email asking for their assistance. We stated that we were out of state investors and what our criteria are. The only question we really asked was if they had experience working with other investors. We initially contacted about 3 or 4 realtors in each area and just went with the ones that we got the best feeling from. There are tons of realtors out there, so if we get to a point where one is not working very well for us, we can always switch to another.

These are the criteria we use for our search. The purchase price is based on the amount of money that we have to put down on any one property.
1- purchase price up to $200,000
2- minimum of a two family house/duplex
3- minimum of 2 bedrooms per unit
4- currently used as a rental property
5- the property does not need a lot of work

I am keeping my fingers crossed for the Quadplex.

To Become Wealthy: Inspiration to change

Sometimes all it takes is one little thing to inspire me. At other times the message needs to be repeated over and over and over again. Hearing the same message repeated in different ways cements it in my mind. My inspiration to become wealthy first came from my husband. Once we got engaged and started planning our lives together I began to see how I wanted so much more from life than what I had. My eyes began to open. They just did not know what they were looking for. I wanted so much more, but I did not know all of the options that were available to me. That is when we began discussing real estate and passive income. I realized that these were not just things that rich people can do, but things that anyone can do.

This weekend, on public television, I saw Robert Kiyosaki and his wife speak in an effort to sell some of their products about investing and building wealthy. They were also promoting a weekend long seminar of investment gurus at the Javits Center in NY. For anyone unfamiliar with him, he is the man behind the Rich Dad, Poor Dad series (richdad.com). I admire what he and his wife are doing. They both possess a lot of intelligence about money and how to make it. The best part is their passion to share their knowledge with everyone else. They have had tremendous success and they are trying to teach others how to be successful too. They are worthy of my admiration and have certainly been a source of continuing inspiration for me.

I want to add in a small point here about my journey to become wealthy. One of my other major goals in life is to be a philanthropist. Wealth just happens to be a prerequisite for that.

During the past year, I have read one of the books in the Rich Dad, Poor Dad series, called “Cash Flow Quadrant”. The book does not tell you how to buy or sell real estate, but it give a whole new perspective on money. It brings up simple ideas about how your money should be working for you, instead of you working for your money. After reading it I felt like I had an entirely different view of my life, and the lives of those around me. I can not longer imagine working for the next 30 years for other people. How other people have managed to do it, I will never again understand or accept. I have so many things that I want to do with my life and none of them involve spending 40 hours a week in a cubicle.

Another gentleman that I listened too before beginning this blog was Steve Pavlina (stevepavlina.com). He is a personal development guru. He is responsible for inspiring me to write this blog. He does not have anything to do with real estate development, but he has a lot of wonderful ways of looking at life that are very inspirational. If you are not ready to jump in and change your life just yet, go and read what he has to say. He also has several pod casts that are also great to listen to. I find the tone of his voice and his manner of speaking to be very comforting.

Please let me know if there is anyone else out there that has inspired you.

To Become Wealthy: How to Begin a Search for Properties

Once I created the list of cities that I thought would be good to invest in, I took each and searched further. But to really begin to get an idea of what is available, I spent a lot of time on realtor.com. However the most effective thing I did was to randomly contact realtors. I performed a simple Google search for realtors in an area, and emailed them stating my intentions to buy investment properties within the next 6 months. Some replied with interest, others did not reply at all. I simply concentrated on the area where I got the best responses.
Once again time has become a factor. I simply do not have the time to chase properties in each location. Realtors can set up automatic list services thru MLS that automatically send you daily listings that meat your specific search criteria. Ultimately, I should be set up in all of these areas, but so far I am only set up in two areas. I need to add more areas once we purchase our first property.

There are two different schools of thought on investing. Those that tell you to diversify and those that put all their money into one area. The most common advice that you hear is that diversification is the beat and safest way to go. However, if you look at some of the most successful people in the world in any industry, they made it big by not diversifying and by risking it all in one area and having the payoff be all that much larger because they did not diversify.

I am not a very big risk taker, so I am trying to diversify my real estate holding across the US.

To Become Wealthy: Cities of Interest- Where I am looking to invest

After the initial search for good cities to invest in, I still had to dig a little bit deeper. I compared several lists. Forbes has a list of over and undervalued cities. Expansion Magazine has a list of the areas with the most growth in business. So, I cross checked and picked out about a dozen cities that ranked favorably on both lists.

From there I went to the site realtor.com. For those of you who are unfamiliar with the site, it allows you to enter basic search criteria for a nationwide search. It also allows for a more detailed search, but I have discovered that the less info entered, the better the results. So, I entered the city, state and my price range. The purpose was to see if my price range fit this city. Were there a lot of properties that looked nice enough that I could live in them in that city? And I narrowed the list down even more.

Then I searched on Google for the Economic Development websites for each city. I read thru the web sites for a better understanding of the dynamics of the city and to see what programs they have to spur growth in different industries. It also gives you a good idea of the size of the area, and the largest industries and employers.
This is the list of cities that I have narrowed it down to:
Tulsa, OK
Dallas, TX
Houston, TX
McAllen, TX
Little Rock, AR
Memphis, TN
Rochester, NY
Dayton, OH
Wichita, KS
Greenville, SC

To Become Wealthy: More on Passive Income

My husband is a very patient man. I am not. It is sometimes painful for me to sit patiently and wait. So I am expecting that the steps it takes to build passive income to come difficulty to me. I want to be wealthy now; I want to quit my day job now. And there are plenty of people out there who promise instant wealth. I do not believe them. I can not see how I am attend one seminar or buy a few products and suddenly be wealthy. I am very skeptical of those promises.

My husband and I live a comfortable life. We both have decent jobs. (His is much more decent that mine.) We bought our first home a year ago, right before we got married. It is a wonderful house with plenty of room for our future family. I am in love with this house and think about all the things I would rather be doing there while I am stuck at work all week long.
We are also fortunate that our only debt is the house. We have no outstanding car, school or credit card debt. And we are able to save some money each month. But now I realize that simply saving money will never make me wealthy. Sure, we invest in the stock market, but what do we know about stocks? Our day jobs have nothing to do with the stock market. I own some index funds in an IRA and he owns shares of Google. Both are pretty safe investments. They may pay out well one day and help us retire, but they will not make us wealthy.

Both of us work for our money, but we are going to switch things around and have our money work for us. It sounds easy, but it is taking more work and time than I expected. I have discovered that even passive income takes a lot of work to set up. But I would rather work hard now to rest later, than have to work with no end in sight.

To Become Wealthy: Where I began in Real Estate.

I began my search a short while ago on the internet. Anyone in the world can tell you that when it comes to real estate it is all about “location, location, location.” So, I listened to other people’s advice and then added some logic of my own. My objective was to find cities that were growing, but had not yet reached their peak. Some people tell you to buy only in those cities at the bottom because they have the most potential for growth, and therefore more room for your equity to grow. I decided to play it safe and look only in cities that were already growing, but have not yet reached the insane peaks of New York, California or Miami. Sure, there are still good investments to be made in these areas, but they probably require more skill and money than I have right now. I want to start out easy. Basically, I was looking for cities that were middle of the road, growing but still affordable. We are planning to purchase our first investment home with conventional financing. I have a limited amount of money that I can put down on any one property, so the purchase price is a limiting factor for me.

The two big sources I used to find cities to invest in were Forbes and Expansion Magazine. Of course Google is also an invaluable resource. Just put in simple phrases like “growing real estate markets” or “cities for real estate investment”. The tedious research has already been done. You just need to find other peoples results.

To Become Wealthy: Passive Income is Real

I want to make passive income because I am stuck in a rat race. Only 2 days out of each week belong entirely to me. The other 5 belong to my employer. During those weekdays, only 4.5 hours each day belong to me and my family. (Not including sleeping.) The rest are spent at work or commuting to work. (I have a long commute, 1.5 hrs door to door each way.)

My husband was the one who introduced me to the idea of passive income, and the idea of not having a 9-5 job until I turn 65. I am NOT one of those people who love my job, but I am a slave to that weekly paycheck, so I continue to work for other people. Fortunately I no longer see this as the only option for my life. Eventually I am going to create several different sources of income. I am expecting real estate investments to be the most lucrative, so I am putting most of my time and effort there. There will be lots of work involved to set up each source, but then they will run themselves with a little work as they still continue to produce the same levels on income. (One source of income might even be this blog.)

There are so many people out there with ideas on how to change your life. Some of them will help you organize your life so that you are mentally prepared for what you need to do. Others take it even further and will tell you how they became wealthy and how you can do it. All you need to do is open your eyes and look. Let me know what you find.

To Become Wealthy:Starting in Real Estate

Most people work for their money, and they can become very rich doing that. But wealthy people have their money work for them and can become even wealthier with ease.
I have already begun to go down the road to a life of wealth. I began my journey thru education. I read everything I can about real estate. Some books are better than others, and I only read the good ones from cover to cover. As I go along I will mention those that have helped me in my journey.

I have heard time and time again throughout my life “There is no time like the present”, “Just do it.” and other encouraging things, but I was always too afraid to try, or did not know exactly what to “just do”. Well, my advice is not to just go out there and buy investments, but do go out and learn about them. Nothing could be simpler. In this modern day, you do not even need to buy the books. The bookstores offer you comfortable seating to read the books right there in the store.

So what are you waiting for?