The Way You Spend Your Money Can Make a Huge Difference Creating Your Real Estate Wealth – Part 1

Posted on April 3, 2015 by

Because money has been easy to get over the past 15 years I wanted to show you how leverage can truly maximize your profits regardless of your credit history. If you can think about the conservation of cash idea borrowing money from banks can definitely be a thing of the past. Leverage is one way how you can use the limited money you have in the most effective way to maximize your profit potential on every property you buy. If you have less than good credit or if you simply don’t want to use your credit you may want to learn how to use less money and with leverage maximize your profits. If you already have limited money you can use what money you currently have to buy one house but you will only profit or grow your money from that one house and nothing more when you rent or sell the property you bought. Leverage can accelerate how you build wealth if done correctly.

Here is a simple example of what I am talking about. For this example let’s say you have $100,000 you have worked hard to acquire over several months or years or you have the ability to borrow $100,000. One day you decide to buy a rental property. You quickly find a house you believe will be a good rental. The sellers of that house are asking $100,000 for their property. During your face-to-face discussions with the sellers you find they would be willing to allow you to make payments to them every month until the property is eventually paid for over the longest period of time you can get the sellers to agree to.

For this example let’s say the sellers want you to make a down payment of $10,000 which is 10% of the purchase price the sellers are asking. You will start making monthly payments on the remaining balance of $90,000 ($100,000 – $10,000 = $90,000) owed to the sellers with a monthly payment of $600 for the next 150 months (12.5 years) in this example. This example contains no interest in the financing. So why would you ever buy a rental property where you have to make a payment of $600 every month for the next 12.5 years when you have in your hands ($100,000) or the ability to borrow enough money to allow you to completely pay for the house before renting or selling it?

Now let me explain to you why you can effectively use less money to give you the money to make the monthly payment on the property you currently live in or a house you would like to live in for FREE. Yes, I said for FREE and here is how. As you look for houses you can keep long term as income properties you need to find properties that will allow you to make a cash flow each month. You are looking for properties that can be bought using the least amount of your money and the most amount the sellers will allow you to negotiate in that deal. If you have $100,000 you worked hard to accumulate or the ability to borrow $100,000. Why not buy the house you chose for your family to live in for $100,000 where the seller will allow you to pay them only $10,000 as the down payment leaving a balance of $90,000 and a monthly payment of $600 for the next 12.5 years? Because you were able to buy your home for only $10,000 out of your pocket which leaves $90,000 of your saved money to do other things. Here is where leverage can allow you to live in a home for free.

What if you took the remaining $90,000 you still have and divided that money into (9) nine piles of $10,000 each and then used each of those piles of $10,000 to buy (9) nine rental properties worth $100,000 each where the seller will allow you to pay for each of those rental properties with $10,000 as the down payment leaving a balance of $90,000 and a monthly payment of $600 for 150 months (12.5 years) to have each of the rental properties completely paid for.

Now, here is the beauty of how leverage can give you your home for FREE. Did you know that owning real estate including rental (income) property is how more millionaires have made their wealth than any other type of business? Owning Rental property has many components that will allow the owners to create wealth. Simply because the income from a rental property is taxed the least of any other type of income, this is because no F.I.C.A. (social security) is deducted from this income saving the owner at least 15% in taxes they don’t have to pay.

Next month I will finish showing you how watching how you spend your money can allow you to live in a beautiful home for you and your family for FREE. Until next month.

Good Luck and Happy Investing!


Larry HarboltLarry Harbolt is the nation’s leading creative Seller Financing expert as well as a popular national real estate speaker and teacher whose time-tested strategies and nuts and bolts teaching style has helped thousands of aspiring real estate entrepreneurs realize their financial dreams with little or no money and without the need for credit. Larry has been successful creatively buying and selling real estate for over 30 years and has written numerous popular articles and real estate courses.

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