Income for Life

Coming your way

Posted by Rob Minton
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Income for Life members, I just wanted to let you know that you're in for a real treat with the September IFL monthly newsletter, which should be arriving in the next few days if it hasn't already.

I just finished a great book titled “Million Bucks by 30 — How to Overcome a Crap Job, Stingy Parents, and a Useless Degree to Become a Millionaire Before (or After) Turning Thirty” by Alan Corey. I reviewed this book and told a little bit about Alan's story in the newsletter.

The treat for IFL members is that I also interviewed this dynamic young millionaire for the Income for Life Monthly Audio Series. In his book, Alan takes readers through his journey to a net worth of a million dollars at age 30, after starting with just $9,000 as a 22-year-old fresh out of college.

In our interview, Alan talks about what made him set the goal of being a millionaire by 30 and even shares the four main strategies he used to achieve this goal.
Alan describes what he calls “forced poverty,” challenging himself to live below his means and delay gratification. This allowed him to eventually invest in real estate, which was ultimately the key to building his wealth.

Be sure to listen to the advice Alan gives others striving for a million-dollar net worth -- you will not want to miss this month's audio series, so be sure to watch for your newsletter!

Not an Income for Life member yet? Visit www.IFLapplication.com to fix that.

Can you survive?

Posted by Rob Minton
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In the past couple of days, I've read a couple of columns that predict the recession is not easing, as some are saying, but that instead the worst is yet to come.

I think that reasoning makes sense in some ways. For example, the fact that gold continues to rise indicates that investors are betting that inflation will become an issue, despite what the feds are telling us. It also makes sense that as our aging population moves wealth from the young to the older people in our society, the large percentage of "savers" rather than "spenders" in the U.S. population will slow any recovery.

All the talk of "the worst is yet to come" and the "next financial disaster" reminded me of a book I read -- "Emergency," by Neil Strauss -- earlier this year.

Now, I firmly believe there is opportunity to add to wealth during these tough economic times. Don't get me wrong. But I also believe there are steps we can take to prepare for the worst, just in case. I am big on backup plans. So amid talk of the next financial disaster coming, ask yourself:

Can I survive a financial disaster?

In Neil's book, he details his own story, how he went from fearful of events largely beyond his control to self-confident in his preparation for such events -- controlling what he can.

Instead of remaining in this fearful state, he decided to prepare himself for what he feared. I found this to be very educational. Today, many people are worried about their financial futures.

However, they don’t seem to be taking any action to prepare themselves. They worry about their jobs. They worry about their retirement. They worry about having enough money to pay their bills. They worry about funding their children's’ college education. They worry, worry, worry….

I certainly understand this fear. What I don’t understand is the lack of action to mitigate these challenges. Why don’t more people do more to prepare?

Think of this in a different way. Let’s assume that for some reason some deadly gang were out to get you and your family. Would you just sit in your home and wait for them to come crashing through the door? Probably not.

You would probably take several precautionary steps to prevent or avoid their attack. You might get an alarm system. You might get new locks. You might arm yourself and have the police department watch your home more closely. You might go on an extended vacation. Hell, you might even move.

If you felt this concern for your safety, you would take action, wouldn’t you? Well, how come people don’t take the same action when they have the same threats to their financial well-being?

I honestly don’t know.

The only way to eliminate worry is through preparation. Neil Strauss learned skills that would help him in the event of a physical crisis. He is now prepared.

Here are a few questions you should ponder:

1. What skills do you need to survive a financial crisis?

2. What would you need to be able to do in order to have complete peace of mind over your financial situation?

3. What would you do if you lost all of your money tomorrow?

You need to ask yourself these tough questions. And come up with answers. I predict that, like Neil Strauss, doing so and being prepared for the worst will give you the courage and confidence you need to make your current situation better.

How they went broke

Posted by Rob Minton
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Earlier this year, I read a book titled "How They Went Broke: Bankruptcies and Money Disasters of the Rich and Famous," by Roland Gary Jones. Amid all this talk of a recovery in the economy lately, I started thinking about this book again. I will share some of my findings, which I included an article in the March 2009 issue of the Income for Life newsletter.

It strikes me now that for none of the hundreds of famous people listed in the book did it say "lost it all  because of recession," or "the economy ruined him." In fact, several of the people listed in the book built or re-built fortunes during or after the Great Depression, only to squander them away much later.

The lesson there is that WE control our financial well-being, not the economy. It's easy to blame the recession for whatever hardship people are going through, and I know the soft job market is a very real problem for many, but it's important that we also don't use the recession as a crutch. Don't give yourself permission to be lax or sloppy with finances because of the economy.

Again, nobody in the book lost everything because of the economy. Here are the five main categories of fortune-losers from the book:

1. Those who lived above their means

2. Those who chased bad money with good

3. Lack of control over their investments

4. Speculation

5. Tax problems and legal issues

Most of the rich and famous who became poor and famous fall into these categories. And the above categories are all results of human behavior, not the economy. Keep in mind during that as this economic recovery gains steam, we have important financial lessons we can learn from those who have gone before us. The main lessons I learned from this book about not losing money are:

1. Live within your means

2. Don’t over-leverage a business

3. Control your investments

4. Invest, don’t speculate

5. Pay your taxes and stay out of court!

Remember, it's not what the economy does that determines your financial health, it's what YOU do!

Location, location, location

Posted by Rob Minton
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You've heard the saying that the three most important things about real estate are location, location and location. Well, I took that saying to heart recently, and I have the pictures to prove it.

I got a great deal on a mobile home investment (yes, mobile homes are fantastic real estate investments right now), but as much as I liked the home itself, I wasn't thrilled with the location of its site. So, thinking to myself, "location, location, location," I decided not to lose out on the investment just because I didn't like the location..

I just decided to change the location. Since I liked the home itself, I'd simply move the damn home. Here's what that looked like:

Of course, this is an easier solution for a mobile home than for a permanent building. I'm not sure I'd try this on a single-family home! But the mobility of mobile homes (there's a reason they're called that) is one of the things that make them nice investments. A great guide for investing in mobile homes is included with your membership to Income for Life. Have you checked out the guide yet?

By the way, if you are planning on moving a mobile home, hire professionals to do it. It was impressive to watch this company move my investment, but it's not a job I would want. Trust me, you can't simply hook up a trailer to your SUV and get a whole mobile home moved.

How many times have you heard that a home would be a fantastic find if it were just in a better location? Well, with mobile homes at least, you get to pick the location for your investment!

Venus and Mars

Posted by Rob Minton
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Over the years of working with real estate investors, I have seen my fair share of husband-and-wife teams. They are always interesting to work with, and I know some pretty successful couples in the real estate investing game.

Sometimes, there are couples who disagree on things, even argue. I think that this kind of argument can be counterproductive, as it tends to decrease action-taking. However, I stumbled across an article on CNNMoney.com that suggests that maybe husband-and-wife investing teams' differences can be an asset.

The article points out that a study done by the Unveristy of California-Berkley shows that men and women -- Mars and Venus -- invest differently. Men, the study found, are gung-ho, willing to take on more risk for more potential reward. In the stock market, they trade more frequently than women.

Women, the study found, tend to be more conservative. Trading less frequently, sticking with stocks longer and taking less risk. And women earn better returns.

Another study the article mentions took a look at investing clubs. It compared all-male investing clubs and all-female investing clubs to mixed-gender clubs and found that the mixed-gender clubs are the most successful.

This probably makes sense if you think about it. Two people combining two different approaches probably leads to more diversity, as well as a decent balance between high-risk, high-reward investments and "safer," lower-reward investments.

It's an interesting article to read, and it makes you think about how a team with combined skills and approaches can actually make the individuals stronger.

I guess above all, the article leaves no doubt in my mind why some husband-and-wife teams of investors are so successful.

Great question

Posted by Rob Minton
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There's an article in USA Today this morning about the decline of Asbury Park, New Jersey, which has long been in decline but seemed poised for redevlopment until the recession hit.

The article makes the boardwalk town where Bruce Springsteen got his start a symbol of the real estate crisis. There, as well as in other areas, plans to re-invigorate real estate were kind of put on "pause" by the recession. As we know, this has happened in many places.

But the article also points out the story of a New Jersey waitress, who was able to purchase her dream home, near the water. She bought it for probably $100,000 less than she would have had to pay a year or two ago. This made a desirable property affordable for her. For this waitress, there was upside to this recession.

Now, I realize that for every good deal for a buyer like this waitress, there is probably a seller with a bad deal. But with the waitress in mind, the article asks a question that I think was worded perfectly:

"Is the recession the end of our dream, or a chance to dream a better one?"

I've written before about choosing how you view the recession. Do you have the perspective of a victim or an opportunist? Can you only see the loss, and not be able to recognize the potential for gain? Could this recession simply be a chance for you to hit the "reset" button? To dream a better dream?

You could view the recession as an opportunity to dream a better dream. And once you can look at it that way, you could do several things to start dreaming a better dream. You could:

1. Use lower prices and low interest rates to purchase the home you want to live in, or purchase investment properties that will build wealth.

2. Take advantage of the owner-financing opportunities in the market to avoid having to go through banks for mortgages.

3. Refinance an existing residence or investment property, taking advantage of the low rates.

3. Increase -- yes, increase -- your retirement plan contributions to buy more shares while prices are low. This will help you make up for the losses your plan took with the stock market meltdown.

4. Make improvements or major repairs to your home or investment properties while material costs are low and labor is inexpensive because contractors are looking for work.

5. If you've lost your job or had your work hours reduced, you can take advantage of the extra time. Start your own "side" business. Educate yourself. Spend more time with your family. All those things could help with your better dream.

6. If you own a business, you could use the recession as a time to expand. Could you find a new building cheaper? Could you buy out a struggling competitor? Could you add a related business?

7. You could make loans to others. With the bank shakeup, there is demand for private lenders.

I have said before that some of the greatest fortunes in history were built out of the Great Depression. Those who built them chose to view the tough times as an opportunity and didn't consider themselves victims of it. And while you might not have any control over the economy, you DO control how you view it in the most personal terms.

Don't consider yourself a victim of this economy. Victims suffer. Victims don't act. I know that I have worked harder in the past year and a half than I did prior to the recession, and I know that by working hard now, I am building future wealth. Every day.

The recession is not the end of my dream. It's my chance to build a better one.

Are you in?

Would you buy one of these?

Posted by Rob Minton
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There was an interesting article on CNNMoney.com the other day about Bernie Madoff's real estate.

Madoff is the financial advisor convicted of bilking billions of dollars from clients with a Ponzi scheme. His real estate holdings are apparently about to hit the market, with proceeds from the sales going toward re-payment of his victims.

The article says Madoff has four properties to be sold, as well as a boat and home furnishings that could be worth up to $30 million, all of which would go to his victims. What's interesting, though, is that there's questions regarding whether the properties would sell for what authorities have estimated their values to be.

The FBI says Madoff's Manhattan penthouse, for example, is worth $7.5 million, according to the article. A real estate appraister quoted in the article says it could sell for less. Not just because of the market, but because it belonged to Madoff.

Homes owned by famous people will sometimes sell for big money because of the name attached to them. Celebrity status brings high-dollar buyers. How hard would it be to market a high-end penthouse belonging to, say, Derek Jeter or Donald Trump if you were a New York real estate agent? You would think that buyers would be lining up, ready to jump at the bragging rights that come with a property like that.

But, the article states, people are hesitant to buy homes associated with crimes. And while Madoff is definitely a criminal, no one was murdered in his homes. The article asks "Is Madoff more like Manson or Madonna?"

Interesting question, no? I would think that a house owned by Charles Manson would have a bad name attached to it forever. But will Bernie Madoff's? Could a buyer get a deal now because of the market and the bad publicity attached to Madoff, then get a great return down the road?

My thinking is that time heals most wounds in most cases. No, a house owned by Jeffrey Dahmer might not ever be a hot commodity, but I would think that in Chicago, for example, there might be interest in properties once owned by Al Capone, also a notorious criminal. Could an investor win big with a gamble that buying Madoff's home now could pay off years later, or will Madoff, a symbol of the greed that helped bring down an entire global economy, also bring down the value of his homes forever?

I hope his homes go for top dollar, because I'd like to see his victims get some payback. I wonder how the homes will be marketed, though. Do you try to capitalize on Madoff being well-known, or do you downplay the fact that these homes were his?

One final question: If you had the money, would YOU buy one of these homes if it represented a fantastic deal?

Older lesson for new times

Posted by Rob Minton
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I recently stumbled across an article I wrote for the Income for Life Newsletter last year. Reading it now, over a year later, the lesson hits even harder, so I am writing about it again.

My wife and I have been purposely selecting for our family DVDs of older TV shows that display family values. It doesn’t seem like many shows on TV today capture these same values, which is very sad.

If you’re over 30, you probably remember the Ingalls family from "Little House on the Prairie." The show was about a family living in the 19th century. They didn’t have electricity, cars, computers, TVs, Wiis, etc. One of the great things about the show is that it teaches my kids how nice they have it today. I’m trying to instill some gratitude in them. Maybe gratitude comes with maturity...

In one episode, the Ingalls family had worked hard to grow a large crop of wheat that they intended to sell. With the large crop, they purchased two horses. They had planned on paying for the two horses when the wheat was sold. They were also going to use the balance of the money earned to help get them through the winter.

Unfortunately, severe rainstorms drowned out the wheat field and their crop was lost. This loss eliminated about $2,000 of future income to the family.

Guess what the Ingalls family did?

Mr. Ingalls immediately took back the two horses he purchased. He didn’t ask for any money back. He simply returned them and let the seller keep all the money he paid. He realized he couldn’t pay the loan and he didn’t want to cheat the person who sold them to him.

Mr. Ingalls then set out on a 100-mile walk to find work. He packed a few small bags and planned to work for a few months to earn enough money to get through winter. Many other wheat farmers did the exact same thing. They immediately left their families, looking for work to replace the lost income.

Mrs. Ingalls rounded up all of the wives of the wheat farmers. Together, they decided to harvest the wheat anyhow. This was a very manual task because the field was too wet for the plows. The kids also helped out a great deal.

By the end of the show, Mr. Ingalls returned home with money earned from hammering rocks in a quarry. Mrs. Ingalls successfully sold the wheat and everything was OK.

Now, I realize this is a TV show, but it displayed an amazing family work ethic that I think we lack today. Here is what would have happened in today’s society:

• The family would have kept the horses until they were re-possessedthrough the court system. This would have cost the horse seller a significant amount of time and money.

• The family would have completely given up on the wheat. It’s gone. We have become a bunch of quitters.

• Instead of leaving town to look for an honest day of work, Mr. Ingalls would head straight to the local welfare office to sign up for government assistance.

Yes, this might be a little funny, but, unfortunately, it’s true.

Where is our work ethic? Where is our fight? Where is the concern for our reputation? Why don’t we take responsibility anymore?

Today, many people are facing foreclosure because they bought houses they couldn’t afford. Why aren’t they getting second jobs or working overtime to pay for these homes? They simply let the homes go into foreclosure without any fight whatsoever. In fact, they work the foreclosure process to stay in the home for months on end without making a payment. Today, everyone blames someone else for their problems. We don’t take any responsibility. It’s sad…

In the States, we are in the midst of a considerable rcession. The best thing you can do to protect your family is to keep your job. A loss of income right now would be devastating. When you go to work, work your ass off. Do your job and then some. Don’t be lazy like all of your co-workers. This isn’t the time to copy the masses. Stand out. Work like Mr. and Mrs. Ingalls. If layoffs come, you won’t be one of them.

And in case you're interested, the Little House on the Prairie episode I referred to can be found on the first-season DVD. It’s titled “The Hundred Mile Walk.”