Ok, maybe this title is a bit shocking. In easy time it only really takes money to make money. In good times you can use a dart board at a page of stock symbols and make a decent return. But when times get bad, like they are for many right now, most of the money gets really scared. They don’t invest in the great companies that still exist, they don’t short the walking dead, they don’t buy the houses that are dramatically reduced. They simply sit there and they buy bonds and Gold or just keep the money in CD’s if they can find a bank they trust.
It is said that on a long marathon, or in a long bike race that the best racers are hopeing for the hills to come, because it is the hills that lets them show their mastery and where they can gain ground on the competition. When it course is flat and easy it is much harder to get ahead. In the same way a recession is a great time for the smart and knowledgle person to get ahead. I am confident that if I was given $1 million dollars to invest as I see fit I could turn it into $3 million or more before this recession is over. More self made millionares are made during a recession than during any other time.
During any time of significant change those that figure out the new way things will work and form a profitable business plan around it first are very likely to succed. The people who are failing the most now are all the people who still have not found themself in the information age, the ones who still think that we live in the industrial age, you know the people who like to work for a factory, get a pension and live forever. That age has been gone for 15 years or more, but most americans still live in it. During this time there will be many people entering the information age, maybe for the first time. People who will make a living online. And there will be people like me there to help them, there to show them the way, and of course I will make a small profit on the activity. This actually has been my main source of income for some time now.
So what would I do if I had a million dollars right now. Well first I would build some online businesses, and make oppertunities for those who want to join the information age to do so with me. But most of my readers can not do that I would guess. So what would I do if I was them, and I just wanted to invest. Well first I would take most of that money and start looking for good real estate. There is plenty of it around, and there is plenty of it at prices that are lower right now than where the bottom will settle.
Just last week I was presented with a deal on a rental house, it sold for $180k only 3 years ago. It now sat ready to buy for only $37k, and it could be rented for over $800 per month. Using simple math that means that in less than 4 years your rental income should pay for the entire house. That is like getting a stock with a P/E ratio of 3.8. Sit on this one for 4 years and you get all of your money back, and by then housing prices will be out of the whole and you could sell this house for $120k or so, pure profit. Do that over and over with half of the money and you could buy over a dozen houses, worth at least 1.5 million total 5 years from now. Now that you know how to buy them cheap maybe other investors would like in on the deal, and you can let them buy some of the houses from you. So lets say you buy 10 houses at an average of $40k each (Something that is easy in the phoenix market if you know where to look.) You invest another 5k in to making them nicer, and in getting them rented out to nice tenants. Then you sell the house, and the future cash flows, you can do this at a rate of 10 times the projected yearly earnings, this is what investors look for. That would be near $90k or so per house. Now do this as fast as you can. Lets say you buy 5 each month and sell 5 of the other houses each month, that would be an income of over $200,000 per month.
I am confident that I could do this already, I have the connections, I have the renters, I have the knowledge, my only problem is that I don’t have the money, because I was distraced with my other businesses, and my investment in them does not let me walk away. My plan is to work hard in my current business, make $100k or so and then get started buying, filling and then flipping houses to other investors who don’t want all the trouble. Take all procedes from each sale and buy more houses with it, do this until I am so busy that I can’t sell all the houses, so then start to keep some of them. Do this until the recession is over then ride the wave of the readjustment back up, it will not be as large but should be good. Now these rentals are my retirement fund. Sell one when I need money.
This is a lot of work, and the key to success is partnerships. This was my plan back a few years ago but things happened that distraced me, a wife and two kids later I was ready to go, but I got stunned by the economy a bit, but now I am over it and ready to go. Anyone want to join my team and work with me. Send me an email.