By Ozzie Jurock
This article appeared in The Vancouver Sun on October 12, 2002
Why is it that the rich keep getting richer and the poor poorer? What is the secret? What is it that keeps money in the hands of the rich?
The answer: unearned income.
Thousands of jobs are lost every day. We’re promised to have more free time ... instead we are working harder and longer, yet are getting poorer.
Most of us dream of owning our own businesses, we want more time with our families, our friends chase that golf ball. And so we want our own business. We hope that by running your own business we make more money a lot more money to allow us to get more personal freedom, satisfaction and personal growth.
So, more and more of us create new businesses at home and elsewhere, yet we actually find we work harder, longer hours and golf? What golf? We forget that Michael Gerber in the E-Myth said: “ Work on your business not in your business.” And alas, that free time is elusive and the money? Well, it ain’t there either. And we moan: “Yeah, but I have my own business, why isn’t it working?
Well, it is working a bit. Our business and our job gets us the basics a car a mortgage education for the kids and a nice middle class daily slog ... But we don’t get wealthy. Why, because we DEPEND on earning our daily bread ... daily.
Actually, the joke is that we think we are different. I AM DIFFERENT. Yet, I tell you that you are not. You are all doing the same thing. Don’t believe it? What does your living room look like? A three piece couch, a 2 seater, an arm chair, a fireplace with 2 wilting dried flowers on each side and a standup lamp with plastic wrapped around it ... bingo, the North American living room. And ... the unwritten rule: Though shalt not use the living room ... You spend your life chasing your kids out of the living room ... after all it took so long to pay it off. Nope not different ... toil, sweat ... we do ok ... but get rich? No way.
We have a nice middle class life: BUT no more.
People become only truly wealthy, when they don’t earn the money. People become rich only when they start making their money make money.
Think about it, the whole cycle of going to work, earn something, pay off something, save a bit cannot make us truly wealthy. Yet, our dream of becoming rich some day is laid on this rather strange foundation.
OK, so what is the answer? Again: Dream about, think about, learn about, plan for and create unearned income.
How do you create unearned income? There is no better business than real estate investing. To buy real estate, to have someone else pay it off.
But you need to take action. You need to create a plan.
In real estate investing ... ask yourself: Will I be a ‘shark’ and find foreclosures, no money down deals? Will I be a ‘flipper’ and benefit from the mistakes of others ... or create a plan of action that makes me $2,000, $5,000 or more every month in UNEARNED income sometime in the future? As a young couple, I would urge you to consider them all, but DO the later. You can work out a PRECISE plan of action to accomplish the unearned income of the future ... the true wealth and best of all ... you do not need ...
... any special education or credentials to get started.
... you do not need much start up money.
... you can learn the CANADIAN techniques quickly.
... you have a high income potential in a PROVEN environment
... it can be done part time.
But you need to start. Now. If you do not understand how it works, go to the library and learn. Learn your history of wealth creation; learn how to do it. And every time you here yourself say ‘yeah but’ smack yourself firmly on the noggin.
Yeah but, in today’s market all prices are too high too firm.
Nope, first of all in most cases there is no such thing as a firm price. Oh sure, every once in a while you'll find a vendor who says he want's a certain amount and won't take a penny less and really means it. These are the exceptions rather than the rule.
Yeah but, the price is too much anyhow.
Yes, a price could be high, but does it doesn’t always matter. I am of the opinion that in real estate dealing the price is not relevant. I know this flies in the face of everything that you have been taught to believe is valid. Price is paramount. Price is everything. Not so! For example, take any small office building. I am willing to buy it for $1,000,0000 more than its fair market value. Why?
Because my terms are that I will give you nothing down and I will pay no interest and I will keep ten percent of the net income and use the other ninety percent to reduce the mortgage owing. Do I care how long it takes to pay off the mortgage? No! Because eventually the mortgage will be paid off and I will own a building that cost me nothing.
In this scenario the price meant nothing and the terms meant everything. Reading this won't make you an expert negotiator. Only experience will do that. But understand that the real secret of all real estate investing is in the asking. You can't find out where the edges of the envelope are unless you press against them. The people who ask and explore wind up with better terms than the people who don't. Make up a set of rules for yourself and ignore what the other person is asking for. You'll wind up meeting somewhere between the two extremes. But if you don't ask then you're saying no for the other guy instead of having him say no. Ask and ask and ask. You'll be surprised at how often you'll be surprised.
In life you don’t get what you deserve, you get what you negotiate. You'll hear me say a hundred times and a hundred different ways that you make the most money the day you buy the property. And the time that you spend in negotiating is the highest dollar per hour figure that you will ever earn. That being the case it behooves you to learn whatever you can about how to do it.
But whatever you do ... create a plan to get unearned income and start now.
E-mail this story to a friend Print this story Save This Page to del.icio.us
Recent Articles by this columnist:
Debunking the Myths of Yuletide Home Selling
Mortgage Interest Rates - Whither Do They Go?
Should You Sell Your Old Home Before Buying a New Home?
What's a cap rate anyhow?
Developers ignore Feng Shui at their peril
All articles by Ozzie Jurock
Check out this week's Jurock Real Estate Insider Special deal
Have a real estate question? Ask an Expert