How to Become 22% Financially Free

Most of my girlfriends think that
living with my parents is
a horrific idea :)

Over the Christmas break, my family made a very big decision. We all finally agreed that it's time to eliminate one of our biggest liabilities - our home! 

We decided to join efforts cross generations and consolidate two residences: my family moved in with my parents.

This is not only because we love each other to pieces, but also because we saw a great opportunity to optimize our spending. This is a step towards our financial freedom goal and a part of the following chain reaction:

• Spending goes hand in hand with saving.
• Saving goes hand in hand with investing. 
• Investing goes hand in hand with multiple streams of income.
• Multiple streams of income go hand in hand with financial freedom.

I understand if you think it's a crazy move. Even my nine-year-old jokes:

My son: Mom, how do you feel about living with your Mom when you are almost 40?

Leaving 16 years of memories behind

Me: I like it

My son: Why? [Pauses] Free food?!?

Then, he bursts into laughing loudly at his own black humour.

All joking aside, this is a big change for our family. Kids had to change schools, karate dojo, pack
and move all of their stuff, and try to make new friends. My husband and I packed 16 years of life into boxes and garbage bags and piled it in my parents' basement. My parents now have to observe our semi-chaotic living in their previously idyllically quiet home.

Why? Because this change takes us closer to achieving our financial freedom goal. Now, our upcoming year-long Sailing Trip in a couple of years is more real than we've ever imagined.

Myth: Home is an Asset

Most people consider the home that they live in to be an asset.

There is a lot of evidence all around us in favour of this myth. For example, real estate agents will tell us that home is the most expensive asset we will purchase in our lifetime.

A creditor will ask us to put the market value of our principal residence at the top of the Assets column on their credit application.

Our personal financial advisor will ask about the value of our home and enter it on the first line of the assets section of our Personal Financial Information form.

Let's be pragmatic about facts:

A real estate agent will get paid a commission based on the purchase price you pay for your home. 

A creditor will collect thousands of dollars of interest payments when you borrow from them and secure a loan against your home.

A financial planner will help you in many ways:

a mortgage, insurance, a secured loan, an investment portfolio, and a repeating annual financial plan update, all of which is based on the market value of your home; all of which comes with a price tag.

Please keep in mind that I am a grateful customer to a few amazing real estate brokers, mortgage brokers, and financial planners. Knowledgeable advisors help me tremendously on my way to financial freedom! The value of the products and services they provide to me greatly outweigh the associated costs and propel me forward. In fact, I wouldn't be able to achieve what I've done so far without their help. If you are reading this - Thank you!

The trick to appreciating the value of these services is to know exactly what you are after.

The advisors, especially great ones, will give you the advice that you'd like to hear. This is because a huge part of their job is to help you achieve your dreams. They will cater services to your tastes and help you make the decisions to achieve your desires.

Therefore, if you go with conventional definitions and believe your home to be an asset, you will inevitably purchase an expensive home and spend a lot of money on it! Your advisors will help you do it to the maximum.

Your Decisions are Yours to Sponsor

Since my goal is financial freedom, I make it my highest priority to fully understand the costs of each of my liabilities, including my home.

I am fully and solely responsible for all the associated home expenses such as:

Mortgage Interest and principal 

Mortgage insurance 

Life and disability insurance premiums 

Property taxes 

Property insurance 

Maintenance and repair costs 

Snow and grass care costs 

Cable 

Internet 

Phone line 

Security alarm system 

Furnace lease 

Water tank lease 

Utilities 

Interest on the furniture bought on credit card 

Interest on the car as fancy as my neighbour's

Netflix

Amazon Prime 

Cleaning lady (I notice that the trend is more bathrooms than people in a house!)

A second car if the house is far from work 

Given my personal goal, I choose to disagree with the conventional definitions and concur with Robert Kiyosaki, who insists that we put our home on the liabilities side of the equation.

In order for me to balance my personal budget, I have to face the harsh reality and be ready to pay the bills that I signed up for. There's definitely a lot of bills to pay when it comes to home ownership!

Consequently, my advisors strive to help me find the best bang for the buck, save every penny possible, and use my personal home to the fullest.

Abundant Opportunities

Homeownership combined with the home being classified as a liability (as opposed to being an asset) gives you tremendous opportunities.

First and foremost, I bet you can save two to three hundred dollars a month, if you carefully revisit all of your regular expenses, decide which of them you no longer need, and stop paying for them.

Keep in mind that small savings add up.

For example, over the past couple of months I shaved off the following on little things:

- Replaced mortgage and loan protector insurance with whole life and disability insurance +$100

- Stopped paying for a home thermostat rental +$15

- Cancelled Netflix +$12

Sub-Total: $127 per month = $1,524 per year = $1,836 before tax.

After moving to my parents, I've also added the following savings:

- Cancelled internet +$65

- Cancelled home insurance +$40

- Cut utilities and property taxes in half +$500

Sub-Total: $605 per month = $7,260 per year = $8,746 before tax.

Adding $656 monthly saving I shared last month, grand total becomes:

$127 + $605 + 656 = $1,388 per month = $16,656 per year.

At 17% tax rate, that is $20,067 of pre-tax salary.

An average family with 73.7K annual household income has to work for over eleven weeks to earn enough money to cover these expenses.

Given the recurring nature of these expenses, it's not just a one-time eleven-week long work project. You'd have to work for eleven weeks every year to pay for all these obligations.

For me personally, getting rid of these liabilities means that my husband can be on vacation for 11 weeks out of 52 every year. 

This alone makes us 

22% FINANCIALLY FREE

Sailing Trip Awaits!

Not bad, eh?

PS Saving and being frugal around your home-related expenses is just one side of the coin. Being a homeowner can open many investment opportunities and become the basis of your future wealth and financial freedom. Email me at ask@50doors.com if you'd like to learn more

Financial Freedom Blueprint Gets You There Faster!

Financial Freedom Blueprinting! LOTS to think about!

Do you ever wonder if you are on the right track? 

Do you ever question your past decisions? I do!

Recently I partnered with a company that creates professional Financial Plans.

Working out the first draft of my financial plan took a lot of pondering, discussion, questions, answers, assumptions, frustration, and so forth.


Once all data has been gathered and finalized, we entered it into the financial planning software.

The program ran through hundreds of calculations and applied a few algorithms to project the value of our estate, upcoming tax obligations, assets, liabilities, cash flow, savings, etc. for years to come.

Within seconds, I got to see:

• how much money I'll have when my kids grow up
• upcoming periods of cash surplus and shorfalls
• the size of my future estate 
• my future TAX liabilities!! 

Amazing! The Financial Plan instantly gave me a visual summary of my financial future. It also helped me assess my progress towards my goal to be Financially free.

Just to give you a taste - below are some sample charts I pulled out. This is using dummy data.

What Will my Net Worth Be?

Here's a sample graph that shows a Net Worth forecast.

Red bars show liabilities. Black bars are total assets.

What will my Estate be when I turn 80?

Here's a sample estate summary  - you can see it for any point in time!

Analyzing Financial Plan

The next step is to review the initial outlook. Analyse it. Consult with experts, run through a few scenarios, and create an action plan.

The biggest and most obvious issue in my personal financial plan is insufficient liquidity.

Most of our assets are hard assets. Therefore, our long term plan shows that we should work on a strategy to acquire liquid assets, and focus on creating additional streams of passive income, as well as converting some of the hard assets into liquid.

This is not a surprise! In fact, we are currently approximately 66% done with our original passive income goal, so there's definitely room to improve. 

However, it was surprising and rewarding to realize the long-term effect of our efforts so far. Even though there's still lots to do - the plan shows that we've accumulated a lot of value, which will continue to grow with time.

Financial Freedom Blueprint

I'm so-so happy to continue to work with the Financial Planning team to build out a few scenarios for the future and incorporate upcoming actions: acquisitions, re-finances, exits, addition of new asset types, and so forth.

There are a few forks in the road when it comes to building wealth. 

Each of the scenarios we've prepared shows me a different path forward. 

So all of these scenarios together become a part of my financial freedom blueprint. 

Having an accurate and validated plan adds a LOT of clarity to my action plan. 

There's no reason to constantly question myself - the road ahead is clear.

Million Dollar Decision: Spend or Save?

Balancing Act! Spending vs Saving

Recently, I ran across a fantastic company. I loved their business model.

The team their helps Canadians take control over their finances and build passive income. Most of their clients achieve the following objectives:

1. Pay off their bad debt within about 30 days
2. Create about a $1,000,000 investment portfolio within 8-10 years
3. And all this, without sacrificing their current lifestyle. 

I am starting to work closer with this firm, to learn more about the specific software program and approach they use to achieve such tremendous success. I can see how this process will benefit many of my readers.

Wouldn’t you want to have a million dollar portfolio!?

This afternoon, I worked through my own numbers and a couple of scenarios to see how I can use my primary home plus leverage to build up my passive income.

I'd like to share my notes with you. It’s amazing how the decision to hang on to current lifestyle affects the long-term outcome!

The Formula

Step 1) Re-finance your primary residence to extract as much equity as possible. Pay-off all high interest rate bad debt and invest the rest.

Step 2) Repeat step #1 above three times: today, then in 3 to 5 years, and then again in about 10 years.

Assumptions

Below are the key assumptions I made when working through my own numbers. These assumptions are reasonable in my particular case.

Your situation might be different, so please adjust and feel free to post questions below the post:

• Property appreciates steadily at 5% a year
• At first refinance, my mortgage interest rate will increase from 3.15 to 4.5%
• Mortgage interest rate will remain at 4.5% for all future years
• I will be able to re-finance up to 75% loan to value every five years
• My portfolio will be invested with an average 11% annual return.

Scenario 1: Keeping My Lifestyle

After each re-finance, I’ll spend all of the passive income.

It is important for me to use the extra disposable income right away.

Outcome

• Fifteen years later, my net worth will be $770,000.
  
• My investment portfolio will be $383,000, producing $42,000 of passive income a year. This income will not be enough to cover my annual mortgage principal and interest payment of $55,000.

Scenario 2: Extreme Frugality

After each re-finance, I’ll find a way to reduce my day-to-day spending, so that all of the passive income goes right back into my portfolio. 

As a result, my disposable income will get smaller with each refinance, yet my portfolio will grow very fast thanks to the compounding interest.

Outcome

• Fifteen years later, my net worth will be $1,307,000.
  
• My investment portfolio will be $1,001,700, producing $110,000 of passive income a year – more than enough to cover my mortgage payments of 55K. 

Know Your Options - Make Conscious Decisions 

These two scenarios show you the full spectrum of possibilities.

The first scenario best fits those who appreciate today and live in the moment. It shows that with some effort put into making your equity work for you, you can build some wealth while enjoying some extra passive income.

The second scenario emphasizes the importance of being conscious about the impact of compounding interest over a long time. If you can be frugal – be frugal! This will pay off over time and you could be on the road to creating a multi-million-dollar portfolio and hundreds of thousands in passive income!

Whichever point on the spectrum of options you choose, it's extremely important to know yourself well, evaluate the possibilities, and go for whatever plan you believe fits your needs and desires best.

Cash and Other Benefits of Refinancing

Refinance - a way to convert Real Estate equity to cash

I can't believe it's already June and half of 2018 has zoomed by! May was a productive month. One of the big accomplishments was re-financing two of our properties.

Real Estate isn't very liquid type of investment. This means that you can't easily convert the value of your real estate properties into cash and go buy some groceries. This value is called equity.

Equity equals to current market price of your property minus the mortgage / loan balance that you have against the property.

As you hold a property, equity grows as market prices go up and as your mortgage principal is paid down by your tenants. If market drops, equity drops as well.

There are several conversion mechanisms to convert equity to cash. Re-financing is one of them. Another method is selling the property.

When you re-finance a property, you are basically starting over with a new mortgage.

As a result, your monthly mortgage payment will change. In my case, it went up considerably because interest rate has gone up from 2.95% to 4.39% and also because the size of the new mortgage is a lot higher than previous mortgage balance.

It might seem on first glance that re-financing and getting a higher monthly mortgage may be a very bad thing. If you think about it, your level of debt goes up. Your interest costs go up. Your cash flow from the property goes down. There are also various costs associated with the refinance transaction including mortgage broker fees, lender fees, and lawyer fees. Why would you do it?!?

Here are the reasons why this worked for me:

1) Getting Your Money Back 

Several years ago, when I originally purchased the property, I put in some money as a down payment. After purchase, I invested some additional money to renovate the place.

Refinancing helps me get all of my money back.

Once you have your money back, you can use it however you please. You can put it as a down payment for another asset, for instance. Or maybe you are nearing retirement age and would like to spend the money on your day-to-day expenses. Or perhaps, you have higher interest debt and you could use the money to pay off the lenders.

2) Maximizing Return on Investment

Let's take a look at an example. Suppose you buy a property for $100,000 with $20,000 down payment and suppose the market goes up by 2% every year.  Let's also say that principal pay down is negligible, for simplicity of calculations.

Then, after the first year, the property will appreciate to $102,000 and you would've gained $2,000.

Return on Investment (ROI) = $2,000 / $100,000 = 10%.

In this example, the market went up by 2%, but you made 10%.

This is because even though you provided only 1/5th of the money (20% down payment), you benefited from the growth of the entire house - and you got all of the gain.

What if you re-finance and pull all of your investment money out? In that case, you no longer have any of your money in the property, yet again you benefit from the appreciation of the entire house. This is when you get maximum returns:

Return on Investment (ROI) = $2,000 / almost nothing  = Infinity!

3) Doubling # of Assets That Work for You

Suppose, you buy another asset using the money that you pulled out at refinance.

Now, you have two assets working for you. Together, the gain from appreciation is $2,000 + $2,000 = $4,000.


Here are sample numbers for a refinance transaction:

The numbers above show you key numbers behind a refinance transaction. In this example;

New lender approved a loan of 255K. Out of this loan, previous mortgage of 135.5K was paid. Almost 7K was paid in fees.

Investors got all of their money back.

There was 63.7K of cash pulled out of equity. This is ~ 115% return on investment since the start of the project. Or, 29% annualized ROI.

Note: mortgage debt increased from 135.5K to 255K.

If you have any questions or would like more info, please comment below or contact me.

PS It might be tricky to figure out how much equity you've got in your property. Here's an Excel tool that I use to do all my numbers when it comes to planning mortgage pay down and future refinance transactions to extract equity.

3 EASY STEPS: How to Make a Dream Come True

Above is a video digest of what I've resisted for the past 20+ years and finally came to piece with:

There is so much I still need to learn from all the people around me!!!

Childhood - Being a Sponge that Soaks In

Let's go back to our childhood. Growing up, we go to school for more than a decade to learn the basics. 

These seemingly basic ideas are in fact a result of thinking, trying, and failing of our predecessors during many previous generations. They worked hard to clear the road for us.

I am watching my kids grow up. 

All the way from birth through school, they are sponges soaking in numerous concepts that they are being taught. 

It's incredible to see them going from little smiley honey bunches to Homo Sapiens (Latin for "wise man")  so fast.

Working - A Sponge that's Being Squeezed Out

Some time later in life, we become the sponges that are being squeezed out for knowledge. 

We give back what we've learned. 

We contribute at work, at home, and in our personal life, sometimes to the point of complete exhaustion. However, in many cases we feel good about it. 

This is natural, since we want to be a part of the future! We'd like to contribute. 

Plus, it feels so great when you are so smart that you can teach or boss others around you, doesn't it?

Well, my husband and I certainly agree that it's fun to kick our kids around. Shhhhh, don't tell the kids...

What if You are Still Asking Yourself: 

How do I become successful?

What I realized recently, during my career change from an HRIS professional to an investor, is that the most certain method to succeed in anything you'd like to take on next remains the same as when we were little.

Whatever your new goal or aspiration is, learn from someone who already knows and is willing to teach you.

The difficult part is to stay open-minded and follow the recipe your teacher points out to you step-by-step, until you see yourself get it right and succeed.

When my 8-year old misspelled "bird" as "burt" this morning, he didn't question or argue. He laughed, took an eraser, and fixed his writing. 

Going back to myself now. I figure that if I could learn when I was eight, I can most certainly pick new things up when I am years wiser! 

This is why my three step approach has been:

1) Find a formula that works and that I believe in

2) Follow that formula exactly 

3) Repeat until I master the formula.

This works! I am learning one new formula at a time and feeling successful.

I wonder what you are thinking. Would you mind leaving a comment below?

How to Be a Successful Real Estate Investor in 2018

Yesterday, I attended REIN's (Real Estate Investment Network) first meeting of 2018 in Toronto. I was invited as a guest of one of the long time REIN members and am very grateful to her for bringing me there.

The event was very informative. I learned a lot. There were many great and like-minded investors in the room. We chatted and shared our latest achievements and new goals.

"Open your eyes and let the future in. But be sure to look forward and up - because that's where the future lives" Richard Dolan

Presentation topics included:

• GTA housing market - detailed update on GTA housing and rental market by Dana Senagama of CMHC

• What's Behind the Curtain - current view of economic fundamentals by Don R. Campbell
  

• REIN Vest - how to be prepared for an emergency. I found advice and the toolkit presented by Richard Dolan priceless

• The personal performance playbook - a guide on how to plan, prepare and perform in 2018. This was a wake up call for me, as I realized how much more I can do to stay on top of my own goals and make things happen this year as planned.

Presentations were very informative and included a lot of data and insights. In this post, I'd like to share only some key takeaways that struck me the most.

1) GTA Housing Market is Investment Ready

Overall, GTA housing market was super hot in 2017 and is projected to stay relatively hot in 2018. The primary contributing factors include:

• Price overheating - medium
• Price acceleration - medium
• Overvaluation - high
• Over building - low 

CHMC data supports high demand and insufficient supply, which pushed prices up. Even with recent policy changes, they estimate that price increase will continue. CHMC projects a slow down in growth to the level comparable with the rate of inflation of about 2%.

Rental demand is high and is projected to continue to stay high. This is because millennials are starting to rent, baby boomers continue to downsize and rent, and immigrants continue to flow in and rent.

On supply side, market is still short on purpose built rentals. Over 30% of condos are being rented out. Builders are focusing on small units, which may cause a shortage of bigger units in 5-10 years when millennials will start their families and will look for bigger units.

2017 Vacancy rate was at all time low of 1.1% and even lower for condos. It is projected that vacancy rates will remain low.

What amazed me the most was that average age of a first time home buyer in GTA is 37 years old. 

I can't believe that it may be possible that my kids will not buy a place of their own until they are 40!!!

2) Economic Fundamentals: Good Time to Become Real Estate Investor

"Thinking is the hardest work there is", Don quoted Henry Ford's famous saying at the beginning of his presentation. 

Don's key advice to all investors is to carefully consider which market they are in and what position they take before they analyze events and policy changes. Thankfully, groups such as REIN, do a lot of thinking for us and provide a recap in plain English.

The way I understood the recap:

From rental market and landlord perspective, things are looking up. Recent policy changes will push rents up, high demand and supply will continue to play in landlord's favour as well. It is essential to study markets and current economic influences and understand which real estate investment strategy will work best in the next 2-7 years.

The great news is that

"Housing was the world's best investment over the last 150 years" per Dan Kopf Quartz, Yahoo Finance, Jan. 2018 and it still is per Don R. Campbell. 

The time is right for us to hop on and catch up to this success.

Here's a link to Don's book on Amazon. Chapters 5 and 6 explain where we are at today:

Secrets of the Canadian Real Estate Cycle: An Investor's Guide

3) Be Prepared for an Emergency

For me the most thought provoking part of the presentation was about being prepared for a personal emergency in life.

Many of us, investors or not, have families, friends, and valuables.

What happens if, God forbid, my house is on fire and I have only a couple of seconds to decide what to take with me and what should be left behind. Kids and the cat are a given of course. But what else should I grab?

During the presentation it was sadly explained that in New Orleans emergency situation people suffered more than they should've because many came back to their houses for expendables, such as flat screen TV's.

What happens if life throws in an accident, disability or death at me sooner than I expect? After all, the average life expectancy is exactly that - the average, meaning that some live more and some live less. I might end up on either side of the mid point.

The reality is that there are many-many details that go into being prepared. And these details may help you in a small or big emergency.

REIN provides a toolkit for its members to fill out and follow. In a nut shell, you have to be prepared and store all necessary items in a single fire/water proof box that you can always grab or open when needed.

Make sure your family knows that they should look for this box, if you are not around to help them.

Here are some items that should be placed in your emergency box:

• Emergency contacts
• Insurance info - Personal, property, casualty
• Legal info - Wills, power of attorney, trusts, etc
• Money info - investments, annuities, pensions
• Benefits
• Banking info
• Medical info
• Assets
• Liabilities
• Passwords
• Keys
• Valuables
• Miscellaneous

Having this emergency box set up will give you and your family piece of mind. I think it's a must have for every household.

4) How to Plan, Prepare and Perform in 2018 - Your Personal Performance Playbook

"Setting goals is the first step in turning the invisible into the visible" Tony Robbins

No matter what your target is and which performance system you are using to get yourself there, setting goals is always the first step.

At the meeting, we reviewed a 10-step personal performance playbook. The playbook resonated a lot with me because it brought up several aspects that I realize and agree with on the subconscious level, but have not been consciously paying attention to lately.

Here's what I'd like to do personally for myself next:

I. Review my target and Focus on It - 50 Doors

II. Set My Goals:

1) Debt repayment and re-consolidation plan by April 2018
2) Acquire New Properties by August 2018
3) Re-Finance Short Term Interest Only Loans by December 2018

III. Plan My Actions

1) Morning - top 3, Afternoon - top 3, Evening - top 3

2) Week's Top 3

3) 30-day Top 3

4) 60-day Top 3

5) 90-day Top 3

IV. Lead Myself To Completion

1) Choose my ways of being and be that way
2) Set up my environment appropriately
3) Journalize my time

V. Review My Own Performance and GET REAL.

So, my main take away from REIN meet up yesterday is to stay focused on my target and pull my stuff together. I have to be a lot more organized and determined to achieve my goal.

The note that I posted a few weeks ago right in front of my face says:

"Get ACTIVE
Stay ACTIVE
Be PERSISTENT
MAKE a COMMITMENT".

All I have to do now is do it. Hope you've set some goals for yourself as well and are on target so far!

Here's another book I think you might like: Unshakeable: Your Financial Freedom Playbook

Hey, good luck in 2018!

Is Now The Right Time to Invest?

The short answer is Yes!

If you are asking this question, then you are probably wondering how you can get richer, have more time, protect your family from unexpected down turns, or build a safety net for yourself.

What I am starting to realize is that investing is VERY similar to growing crops.

Investing = Farming

I Love Growing Tomatoes!

You plan what you'll grow.

You wait for the Spring.

You work the land.

You plant the seeds.

You carefully water them and protect from birds, diseases, etc.

When the fall comes, you harvest.

If You are Like me, You are Not a Farmer 

If I became a farmer today and had to feed my family off my land, I know we'd starve because I don't know much about farming.

But over years, I know I'd learn and get better. A lot of my success would depend on the land, the seeds, the weather, the birds, and my knowledge, experience, skills and tools.

Find a Pro to Get a Good Seedling From

Two years ago, I got a tomato plant from Home Depot. I got some soil and planted the tomato in the flower bed in the backyard. You wouldn't believe it!

With minimal care, the plant grew all over the flower bed and gave us so many tomatoes that we had boxes and boxes of them. It was amazing! I think the result was so good because I got a very strong seedling and was lucky weather-wise.

Last year, I planted some sun flower seeds. The seeds had been in my kitchen drawer for over 5 years. I had doubts about them to begin with. But my son really wanted to try.

We planted the seeds. We watered them. And waited. Watered. Waited.

Nothing. Not a single sprout came up. So much hassle and zero result.

Spring is Coming! Are You Ready?

Can't Wait for the Spring!

Well.

This Spring, I will find better sun flower seeds and try it again.

I will also go for another tomato plant.

That was fun and I look forward to repeating my previous success and learning more about tomatoes.

If you'd like to invest in your future, you have to educate yourself, prepare, and plant the seeds or bulbs or seedlings.

Spring is on the way! Start now!

Buy and Hold Rental Property Recipe

I must be hungry :) 

Yesterday we closed three properties (two duplexes and a single home aka 5 doors). Yoo-hoo!

If you told me three years ago, that I'd be buying three houses a day, I wouldn't believe it. The reality is, buying several properties together is not much different than buying one house at a time. The recipe is the same. All you do is follow the recipe and, if you run into any problems, figure out how to overcome them.

So if you have a big goal, find a recipe that will take you closer to your goal and do your best to follow the recipe. One step at a time! As long as you keep going towards the destination, you'll get there.

Initially, when my husband and I set course towards 50-doors goal, we thought "Okay, let's figure out how to buy the first door". Our hypothesis was that if we buy one property and make it work, we can then repeat the process 49 times... Sounds childish, but so far this approach has worked for us.

And here is the recipe we are using.

Recipe - Buy and Hold Rental Property 

Serves: $200 / month

Preparation Time:  up to 6 months

Cooking Times: 30-90 days

Equipment: Determination, computer, wi-fi, and phone

Ingredients: 1 house that can be rented, 1 insurance policy, 1 real estate lawyer, 1 real estate broker, and 1 property manager. 

Method: Using a computer, wi-fi, phone and determination,

1. Find a house with positive cash flow 
2. Find money to buy the house
3. Add a real estate broker, a mortgage broker and a lawyer, mixing well 
4. Stir in an insurance policy
5. Simmer until successful closing
6. To serve, add an experienced property manager.

The Best Way to Always Keep Kicking

Whenever I throw my hands up in the air and say "I have no idea why I'm doing all this!" or something along these lines, my dad always tells a story of two frogs:

The two frogs fell into a jar of milk. One gave up, stopped moving, and eventually drowned. The other one kept trying to get out, she was paddling her webbed feet inside the jar, trying ever so hard to escape. After a long while, from all this kicking, the milk turned into cream, and then into butter.

The frog pushed off of the butter, jumped out and lived happily ever after.

Today is One of Those Days

Today is one of those days when my hands are down. It isn't very clear how I will ever achieve any of my goals. 

Knowing myself pretty well, I can tell you that this depressed state is a result of three things combined:

1. Physical exhaustion after a long day yesterday
2. Starving myself yesterday since I thought I didn't have time to eat and, so, I didn't eat
3. Emotional drama because my best friend told me she doesn't want to be friends with me any more.  

Yes! You heard it right. I admit that am not capable of feeding myself when I'm hungry; taking a break when I'm tired and am re-living the worst nightmares of my pre-school life in a grown up version.

Very awkward. 

Head and Body Management

What led me to this situation is my diversion from my routine and discipline of head and body management.

Every day since July to end of October, I meditated for 10-15 minutes and worked out for 30 minutes to an hour. 

Regular meditation and exercise help my life balance a lot.  They keep me from saying nasty things to my family and friends. They keep my head clear. They make me super productive. They also help me eat, sleep and rest on a daily basis.

Whenever I stop meditating and exercising, my emotions spill out and unfortunately usually shoot at the most dear people to me; I stop eating; and I forget to take breaks from work.  

You know what happened in June before I started exercising and meditating? 

Exactly the same chain of events. I was too busy and one day I had no time to meditate and exercise. Then, another busy day followed. Sure enough, two weeks flew by with no basic self-control and things got out of hand. 

At the end of the two weeks, I literally starved my self having 5 coffees a day instead of eating food, worked like a machine for over 16 hours every day, got super tired, started crying for no reason, and quit my job on an impulse. 

Lessons Learned

I must be disciplined about my head and body management routine.  ALWAYS! 

I am not sure how the story of the two frogs ties in here, but thinking about it definitely cheered me up. I also just re-watched "Nothing Box" about men/women brain and had a good lough. 

Going to meditate & work out now. 

Cheers! Wish you all a great balanced day! Keep kicking :) 

PS If you can relate to this post or would like to share your survival tips & tricks, post a comment!  I already had one comment on another blog post and can't wait to see some more

How to Set Up a Join Venture and Raise Other People's Money

The meet up I attended yesterday was really great. Russell Westcott, Former Vice President of REIN, JV & Raising Capital Guru, gave two brilliant presentations. In the first one, he covered key foundational elements of real estate investing. The second topic was Joint Ventures (JV) and raising people's money.

I'd like to summarize JV presentation. I am sure that at a certain point, I'll hit a financial wall and will have to figure out how to get a down payment and financing using someone else's money. In addition, it will be amazing to grow personally and also together with others as a team.

What's Joint Venture 

I loved Russell's definition of a JV. He showed a comic (which unfortunately I can't find to add here) with three kids on a play ground: a girl, with a jug of peanut butter; a boy, with a can of jelly; and another boy with a loaf of bread. The little girl elbows her buddy with the jelly and suggests: "Let's JV that guy for his bread".

Principals of Success (4 G's)

To get started with joint ventures, most important is to have the right mindset. Russell covered 4 G's to recap what he believes is crucial.

Growth Mindset

It's important to recognize that no matter how afraid you might be to get started, the skill of raising money is a just skill and you can master it. Everyone with a growth mindset can change and grow through learning, action and consistent practice.

Grit: Learn and keep going 

Another hurdle many get stumbled upon is getting "no"s. Russell is sure that the person who gets the most no's wins. I agree with him! It's important to remember his tip on learning from every no: just ask what would have to be different in the deal, for the answer to become a yes. Then, adjust course or pitch, and try again. Focus on finding solutions and chop on a problem bit by bit, things will come together.

Giving

Many people are afraid to ask for money and feel awkward just thinking about it. The reality is that you are not asking for money. You are a leader and do-er who opens up opportunities for others, which they'd probably miss out on without you.

For example, I know some of my friends, often tell me: "hey, I don't know how you even do this?" and share that they worry a lot about future, job security, etc., yet can't figure out how to start shifting and taking control of the situation. If the right opportunity presents itself, it will be so great to be able to help them out - get a property together and show that investing is doable.

Find what the person needs, his/her why's, dreams and obstacles. Show them how to get there!

Gratitude

Russell reminded that practicing active gratitude will be helpful along the way. Be grateful for your  partners, team-mates, family and friends and make sure they know.  Gratitude will return to you from everyone around ten-fold. In his book "The Happiness Advantage", Shawn Achor explains that gratitude plays an enormous part in our well-being. It makes people happier, more optimistic, better connected socially, forgiving and energetic. Be more grateful and you will get more done faster.

Negotiating a Joint Venture (4 M's)

Now, in order to actually get the deal done, you'll need to negotiate and align with your partners on 4 aspects and terms behind them:

1) Money - who will be giving the money to cover the down payment and acquisition costs

2) Mortgage - who will put their personal name as the guarantor and qualify for a mortgage

3) Management - who will manage the venture

4) Mastery - who has the right skills, knowledge and experience for the venture to be successful.

I loved the event and feel very inspired. Cheers to building more and better together!

50 Doors - The Big Plan

So,

I'm starting this blog to share my progress on the way to exiting the Rat Race.

My husband and I started to invest in real estate three years ago when we joined Robert Kiyosaki's Rich Dad Coaching Program.  Back then we set a goal to get 50 doors over 5 years. We planned that a door would give us $200 cash per month. $200 x 50 = 10K monthly in passive income!!! would be a dream come true for us!

So the adventure began. I'll elaborate on what happened in the upcoming posts.