Why RATE OF RETURN is CRITICAL

Question

“Compound interest is the eighth wonder of the world. He who understands it, earns it ... he who doesn't ... pays it.” - Albert Einstein

I detest LAZY money.

It pains me to see good people who kill themselves at their job working for money and then allow that same hard-earned money to essentially sit on its rear-end…doing next to nothing…parked in some low-rate or no-rate investment.

I spend a significant amount of thought on making sure my portfolio is optimized. The staggering difference rate of return makes on the future value of your investments is astonishing.

EXAMPLES:

The value of $10,000 invested for 30 years earning:

3% - $24,272.62

6% - $57,434.91

12% - $299,599.22

Keep putting in the extra effort to find those great real estate deals.

You work hard for your money, now make sure it works hard for you!

Mike Reynolds · Answer

Account Closed So true that is. I remember in 2008 when my 401k went south. It wasn't the going south that worried me either. It was the part about me agonizing over how I have let people I don't even know and have never met in my life plan my retirement. I knew there would be ups and downs along the way. But how did I let it get to this? I knew there had to be something better.

First I moved what I could into a IRA that was local and I could talk to the broker. She did a good job too but I was still not sure what to do. Would she do a good job or listen to the established way of thinking. I now have a solo k and for better of worse I will see what happens from here. Since I have only myself to please or blame I think I will do just fine.

Alexander Alguire · Answer

A great reminder! Thank you!

Account Closed · Answer

@Lisa Lincoln - well said!

Thomas S. · Answer

"You work hard for your money, now make sure it works hard for you!"

If investors actually understood the value of money no one would ever allow equity to languish in a income investment property. Sadly most actually believe paying down a mortgage increases cash flow. Little wonder so few succeed.

Michael Lee · Answer

Hello and welcome to BP!  The ROI varies depending on your financing and what you padi for it and any capital expenses made. Anything that is from known operating expenses should be dropped to show that used its future value and convert it to present value.  The capital expenses can drastically reduce the present value calculation.  I see ROI is just a rule of thumb that shows you X the insight and wether you should take that prospective property to the next level for your purchase decision.   I do believe in most of what you said.  Most people do the wrong thing because of what is not usually actual is brainwashed on them by their public schools that are governed by ignorant politicians that want to maintain control.  They do everything that they think it is a good thing to do but they were not educated properly educated when they grew up, and we're not taught any financial matters.

Those hard working people sit on any their investments becaus the typically do know what to do.  Nobody was eduacated properly and not educated on how to see investing work and not that any techniques have to be determined.  Educational that is really good and at least worthwhile using those necessary tasks.  You see, that is why many people have no real numbers or decide not to invest, much was misled about financial freedom.  You are suppose to understand financial statements at least.  You need to know people that call themselves "professional" do not necessary know anymore than you do.  Therefore, you should not assume that they really know anything that you hired them to do.

Most people do not know do it, invest their money where they will put money in their pocket.  It is like doing anything at all.  It takes work to get the proper education. It is something that be needs to be learned so you may be able to invest their money to be invested into something that makes money.  Most people that are ignorant in investing and that the government is going to help prevent you from working while you should be retired and not working.  I am sorry to be so long in making my point.  I am 60 years old and recovering from a medical problem.  Right now I am not working or walking and spend about 8 to 10 hours per day (7 days a week) learning about real estate investing from successful people that know what they are recommending.

I am lucky because I have been married over 32 years and my wife has been saving money for about 25 years.  Because of that and the equity (175K) in our home.  The bottom for me having a daughter who is in her 3rd year of going to college education at the University of Arkansas.  When my wife had my daughter and my working flexibility allowed me a bunch of time to be with her until she was 14.  When this actually came down I thought I would be back to normal was going to take only about 6 months to get better.  It took me over 6 years to get back to normal and I am still not there.  My wife's boss has been real good to us.  She is kind of a leader in computer programming and he only makes her go to the office for her office 1/2 a day but he still pays her full time.  We live in northwest Dallas Texas County and our house's value has now gone up in value has gone up in value about 2.5 times.

Always do the math analysis on your look of the house or prospective properties or at lease have a clause in the sales contract that speaks of the time (about 10 to 15 days) you will get to make a detailed inspection and possibly back out of the deal without a penalty that will not hurt you too much.  Do not try to do everything yourself.  Use a local and experienced Team filled with professionals that can help you get some things done that you do not know how to or do not want to do.  Put as much as your time that you have on income productive things.  Always keep things under your control and have the education to do that.

Just do what is average in that neighberhood.  Track everything you do and review that report regularly so that you may see how to cut expenses or raise the income.  Being successful in things is not easy and requires education that never takes place of experience but is very useful in seeing how things actually work.  Try to average 3 offers a day.  Do not start using only pictures.  Try not to waste any time.  Make written systems for things that you cannot   Eventhough you have a Team to help you, you are responsible for getting things done.  Eventhough a Team of professionals may try their best know that you are responsible.

Good luck to you!

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