One of the best ways I know of to grow personal wealth is by creating multiple streams of income in your life and in your business. In an uncertain economy, it is important not to place “all your eggs in one basket.” In order to protect your income long term you need to consider diversifying your investments so whether in a bad economy or a good economy you still have income from some of your investments.
As a real estate entrepreneur, there are several ways for you to accomplish this goal. One way to create multiple streams of income has to do with the way you purchase properties and structure your deals. You can wholesale properties for immediate income, or you can lease/option properties so you get some money today, some each month and a big chunk of cash at the end. When you do a lease/option with a tenant buyer, just remember to increase the initial asking price of the property by at least ten percent so you realize the gain in property values over the year. If you extend your lease/option for a second year, you get another chunk of cash; you increase the price again and continue to get a monthly income from it.
You can also hold onto rental properties and have someone else manage them for you. This way, you get to go the mailbox, get checks and not have to do any of the work or deal with the tenants. Apartment complexes and storage units are another great stream of income, especially when they are managed by someone else. Not only do you realize the gain on the property long-term but the monthly checks are even bigger.
You could also invest in vacant properties and either get them ready for development which increases value, or you can hold onto them long term to realize long term gain. There are lots of great strategies for purchasing vacant property well under its value and it is these types of properties that we personally like to hold in inventory for long-term gain as part of our retirement goal. The longer you hold these properties, the more they will be worth down the road. In addition, you don’t have to worry about insurance, vandalism, repairs, weather or any of the other things you would have to worry about when you are holding houses or apartments in your inventory. We also lease vacant land which is a great source of income for us. We lease to individuals who need space for their businesses and we lease land to billboard companies looking for space for signs.
Another way to invest in real estate is to create owner financing on properties, preferably with no money down. Then you can either lease/option these properties or rent them. This is another good way to set your up a personal goal for long term growth and income by realizing both income on a monthly basis on these properties and the ongoing increase in the value of the property each year.
As you begin to realize income from your properties you might want to confer with your tax consultant on other types of investments in order to diversify your portfolio. For example, you might want to do private or hard money lending. This is a good way to get your profit on your deals to make you even more money. It is even better if you do these deals inside your Roth Ira. The tax benefits are amazing. Another investment strategy you might want to think about is to build some type of retirement fund, perhaps a mixture of stocks, bonds and commodities. You want to build a varied portfolio of investments, with some of them being conservative, some risky for higher gains, some long-term and some liquid. That way you can diversity your investments in a way that best meets your personal needs and long-term goals.
Investing in commodities is another good way to invest available cash. What I mean by commodities is gold, silver, palladium or platinum. These types of investments are realizing huge increases in value in our current economy. Additionally, you can hold them for long-term gain or short term gain and they are a very liquid type of investment, wherein you could cash them in quickly if you needed quick cash for whatever reason.
If you are computer savvy, you can also spend time building a website, then licensing products to sell on your site. This is another good way to make income even while you are sleeping. What I mean by licensing a product is that you can take a product created by another person and sell it on your website. You will either have to pay a one-time fee to the person who created the product or they may get a “royalty” on every product you sell. This would be paid to them on an ongoing basis.
If you have a hobby, here is a good way for you to make money with it. If you are a collector of some kind, say coins, dolls, toys, guns, sports memorabilia or something of that nature, you can build your collection now and then sell it later on e-bay or a website that you would build. You will end up creating another business which just creates another source of income for you. Plus, your hobby’s expenses then become a write-off for you. Check this out further with your CPA or financial planner.
Ultimately, your goal should be to make as much money as possible with the least amount of effort. There are just so many ways to make money and so few people are taking advantage of all the opportunities that are available to them as real estate entrepreneurs. Many of the techniques you can use in your business to make money do not require credit or start up capital.
If creating wealth is your idea of fun, then creating multiple streams of income will be an important goal for you. I personally look forward to finding new ways every day of diversifying my business and my assets. I love the idea of waking up in the morning and knowing I’ve been making money while I was sleeping. I love getting checks during the month for various products that I have licensed and my web site does all the work for me. This creates ongoing sources of income for me that I don’t have to do any work to obtain.
I also look forward daily to the opportunity to create win-sin solutions for sellers by being able to help them solve a problem they couldn’t solve alone. I totally believe that while real estate is a wonderful way to make money, it is also a wonderful way to help people. In addition, many of these folks bring me referrals from family and friends, so these are new leads I didn’t have to market to get.
These are just a few of the many systems you can implement to provide you with multiple streams of income. Get creative and look around you for even more ways to make money in your business and in your life. I look forward to having the opportunity to help you learn how to work with motivated sellers, create win-win solutions to their problems, and make a lot of money in the real estate business.