Our Philosophy on Investing

We do not endorse any product or book, but our investing philosophy has been influenced by the character of rich dad in: 'rich dad/poor dad'. The game 'cashflow' has helped us structure our internal methodology as well. I do think that book can be boiled down into six basic rules, three of offense and three of defense.

1. Be Sober. I met Kiyosaki at a party and noticed he was drinking bottled water and so was his wife. everyone else was enjoying the free champagne. It occurred to me that sobriety was something he probably valued. Rich dad talks a lot about not losing your temper or letting your emotions get the best of your judgement. No matter what you achieve in life you can lose it all in a flash with one stupid act.

2. Free Roof. The roof over your head is usually your largest monthly expense. If it isn't taking care of you its a liability. There are those that argue it becomes an asset once paid off, but I would argue that most people only live in the same place for about five years on average. Most jobs that people have are also becoming shorter. A thirty year mortgage that depends on thirty years of continuous employment is a time bomb for anyone in this day and age. Get a plex, get a cheap rv or bus, grow a garden in the back yard, or do something creative to make your home pay you back for that loss of cash flow. Why sleep through your largest expenditure each month?

3. Learning to Earning Ratio. If you spend more time learning about the subject of investing than earning money (once you sleep under a free roof) you can start working smarter and spending smarter. Sometimes a little free time to think goes a long way!

4, Make friends. This is not a nerd business. Its also not for boorish people that turn others off. Investing is some science and some art. It can take 'a village' to raise an investor. Some are born, but most of us could use a mentoring relationship or a few of them. What I can tell you is if you are going to do real estate deals it helps to have a community. If you want to know why just visit sec.gov and look what it says about prior relationships. Or try to buy a house without having a conversation with another person!

5. Create agreements. A contract is an agreement. Investors make money when they agree. Lawyers make money when they decide to stop agreeing. Are you a happy, agreeable person? Then you have what this takes. If you aren't get a job or go to law school.

6. Honor agreements. This is the tough one. good luck. But if you succeed here you develop a reputation which will precede you in life and advance your progress in investing.

Two Camps of Investing Philosophy

You could almost certainly fix up a house one per month if there were no serious complications that might drag it a month further out. But even if there were, almost anyone could fix and rent out six houses in one year. If you made 300/month in cash flow after expenses (possible in a depressed market like this one) on a 3 ro 4 bedroom house (plexes and other unit types attract more difficult tenants), in one year you would have enough income to replace a full time job.

If you sat on those houses and that income from that one year of hard work and did nothing else with your life, you could save excess cash or just enjoy life. If there is one thing ive learned about money, it is that your bottom dollar is worth infinitely more than your millionth.

But lets say you put a few hundred a month into texas tax deeds paying 50%, and you put half the interest in a long bet that the market would crash using put options with a payoff of ten to one.

1 : 4426.75 2 : 9712.01 3 : 16481.02 4 : 25150.29 5 : 36253.31 6 : 50473.3 7 : 68685.28 8 : 92009.94 9 : 121882.5710 : 160141.39

If the market crashed in year ten, you would have lost equity in the houses, but you would have ten times 160K, or 1.6 million dollars in cash.

Ten years is not forty. And one year to a comfortable income until you get rich is a nice alternative someplace in the middle of these two philosophies. Now what if that was tax deferred? Or what if you started a business with that money? You might be able to catch a tax break here or there with careful planning with your CPA.

So you might have to fix a toilet a few times a year, or call a guy to come and do it for you. But in the bigger scheme of things I still think it is a prudent and aggressive approach to the difficulties of making yourself wealthy, and easier than a full time job.

Get rich quickers will tell you to join mlm or sell something expensive. Slow money people will tell you to work your life away and sell you the 'power of compound interest'. The first will think you are a fool and so will the second if presented with a middle ground, albeit for differing reasons. Get used to some people lacking vision and just deal with it.

We also think people have the right to our opinions on investing. That is why we don't charge for our services. Please try to keep that sharing of information alive, as some people out there really need liberating!

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