Mr.

Breaking the mindset of poverty and our first example of a good real-estate deal... By Property Boys (This article is written in an unformal style, Jason Tee as co-author.) Being a millionaire implies that you have sufficient funds to sustain your current lifestyle, for the rest of your earthly existence, without having to lift a finger. It all began over two glasses of Seidelberg estate red wine, Merlot. While sitting in a rented apartment, in an upper class suburb in Pretoria the capital of South Africa; two recently graduated chemical engineers pondering how they could relieve themselves of their financial burdens. We were struck by an amazing epiphany after reading the first two books of "Rich Dad Poor Dad" series (of Robert Kiyosaki) several times. Reaching financial freedom is achieved by cumulative growth in numerous small adventures. The idea is based on moving your money fast, and not to stick to the original idea of leaving your money in long term investments. If you leave your money in long term investments, you will only allow the bank to make the fast money with your money. This means that you are working for the bank, but we contemplated a method of being the bank. By this we mean, that we don't work for our money, but our money works for us and no one else. The bank is an institute where you can access the required capital for your investment or business ventures. Your money in the bank only just outperforms inflation, but if you account for the banking charges it probably performs worse than inflation. So money in the bank is money wasted. You don't need a formal education to achieve financial freedom. Virgen Active's Richard Brandson is a popular example of a grade 9 scholar acquiring a fortune by taking calculated risks. He started out as a paper delivering boy and realised the potential that is out there. We are by no means degrading tertiary institutions qualifications, because this could actually be a stepping stone to give you a better credit status at banks. Also while you are working, you can start your own business part time with much less risk by using the skills you acquired with your formal education, while being paid by your employer. Thus you are basically educating yourself to become a millionaire on your employer's revenue, thus getting value for money while being in the rat race. But please do not get into the position where you get so comfortable earning a salary and only enriching your employer instead of looking after yourself in the first place. But the only financial education you require is to understand how inflation and interest rates influence the time value of money. The time value of money can easily be explained by the following example: Say you have a hundred Dollars in your pocket today; this money will be worth more the longer you can use it to pay yourself rather than paying your creditors first. Thus you should be the banker and not pay the bank. If you paid your creditor first, then they can use your money to enrich themselves. Thus you should negotiate the terms of your contract to pay the creditors last and yourself first, because then you can keep your rightful interest on your money. This is the same principle which Pick and Pay follows, they organize to pay their creditors only after 3 months, but they receive the cash for your goods immediately, thus they can receive the 3 months of interest on your money. Acquiring a fortune is accomplishing many things in life. It is a school of learning, and this means having failures, but having the courage to stick by your convictions and to take the leap of faith to do what others fear. Hunger and poverty is a reality, but we believe that we destined for more. By this we mean that you can achieve a more wealthy reality for yourself by just being confident and equip yourself to financial freedom. An integral part of this is to believe in yourself and not to be unmotivated by the pessimists who have not recovered from their failures. We all make mistakes, but it is how we react to them that makes us failures or successful. Thus if you make a stumbling block your stepping stone, financial freedom is in your grasp. Why is it that certain epiphanies are only reached while being in an intoxicating state or sitting on a toilette? We are conditioned to worry and be captives of unnecessary pressure the world puts on us to keep up with the Jones's. They are so last season anyway, so why don't you just become the new mister Jones that everyone wants to be, being rich...stinky rich. Now by this arbitrary comparison we are simply referring to the fact that any stinky rich individual is actually drinking the same $3 juice that you are. You are not anything less in person, but you must realise that the system should not play you but you must use the rules of the system in your own advantage to play the system. For instance why would you spend a $100 000 on real-estate when you could spend $1000 on a property which have enormous potential growth in the near future? Usually the $100 000 estate will be in a developed area, but the cheaper $1000 estate will be in an undeveloped area. Do not be apathetic towards less expensive investments, because if it makes absolute financial sense you can invest in at least 5 properties in the same area for only +- $5 000. This we actually used as our first step to ultimate financial freedom. We decided to invest into 4 properties for app. $1000 a property. These properties made financial sense, because they were situated in a small town which was going to have substantial growth potential in the near future. This was due to the fact that it is situated on or near to a large body of water where fishing and boat trips are possible and a golf course where going to be build within 4 months time. Also it is situated close to another town, where a large chemical engineering factory is situated (but out of pollution and eyesight range), thus providing a close property for employees of this large corporate facility. Another interesting fact was that on an auction of some properties in that town, we found that the properties actually went for double the price we could get from the agent of that town. Thus, after the auction we went straight to the agent to put in our offers for these properties that were at half the estimated figurative price of the auctioned properties. This insured a calculated increase in money for these properties within a relative short period of time. Thus, allowing us to sell of the properties immediately for more than double the purchase price. While the bank financed the properties for us, we used the banks money to enrich us. Remember now, that for a property bank loan the down-payment is only 10%, thus we bought these properties for the approximate down-payment of only $500. This means we purchased a property for $100 worth $1 000, get it! Thus, we were thinking like the bank and not paying the bank. Remember real-estate is just one investment vehicle. Tip: Always buy from a motivated seller, because you make the most money on your investment when you purchase and not when you sell! Obviously we paid off the mortgage and 10% interest on the loans, but the sole purpose of these smaller real-estate investments was to create capital. Now with more cash in our pockets we could invest into larger opportunities and real-estate which now generates us a positive passive income. How, you ask? Well it is simple; use other people's money to generate your passive income, by using the same basic principles already discussed. Be the bank! With more capital, we could give a bigger down-payment which equals a larger bank loan...and bigger investment. With the money ($100 x 4 = $400) we started investing with, plus the extra (+-$1000 x 4 = $4 000) we maid with our previous smaller investments our total down-payment currency amounted to $4 400. Now if you divide this amount by 10% then you get $44 000 of investment power we obtained in a relatively short period of time. This meant that we could now invest into rental apartments which in turn generated a passive income for us. Thus, we didn't have to rely on the value of the property to increase substantially in order to make the business deal as feasible as our previous smaller investments. Now we started making money immediately with our new investment and did not have to wait for good markets in order to sell the property to gain capital, and so we started our journey out of financial bondage and into the fast lane where only the rich and powerful dare to tread. In hindsight, these smaller properties exceeded all expectancies. This was because everyone is hungry to get into the real-estate business, but these were some of the last affordable starter properties. Within 6 months these properties where valued at $10 000 - $20 000 depending on their individual locations in town! Thus, this equals $40 000 - $80 000 of pure investment power after we sold the properties after a year. Now, if you use this as the deposit for your next investment then your capital investment capability increase to $400 000 - $800 000 within only one year after starting with only $400 deposit and total investment of one years payments. And so can you! The important thing is not to have an unbelievable deal, but to start. If you start taking action, you will gain priceless experience which in turn will allow you to see all the wonderful opportunities which where there all the time surrounding you. You only learn by actually taking the risk to do something, the only sure way to eventual success. Go to auctions, read investment articles on the internet and evaluate the growth of properties or shares as they grow on the internet and test it against your own calculation. Do this even for the multi-million dollar opportunities, so that when you have accumulated enough know how and resources you will be able to act fast. If I can do this, then so can you! So don't wait, start today! Join me at: Property Boys