It's
HARD to Make a Living. But it's EASY to Build Wealth.
In Los Angeles the commute is unbearable. In fact, INRIX®,
a leading international provider of traffic information, reports that the City
of Angels is in second place for the worst congested city in the nation.
Many
Angelenos drive three hours per day just to be able to work. I thought that was
bad until I discovered people who commute into the city every week and only see
their families on weekends.
The sacrifices made by individuals just to make a basic living
(food, clothing, shelter) for themselves and their loved ones is mind boggling.
I know what it's like to drive hours every day to punch a clock, it's tough!
Even if you love your profession, commuting for hours, putting up with office
politics and trying to please demanding bosses, can be overwhelming and very
stressful.
Plus, with an economy like this, wages and salaries are just
not very generous. Companies seem to be using the "bad economy" as an
excuse for poor pay, lack of benefits and company perks. It seems everyone is
complaining about the limiting amount of career opportunities that are
available.
When I was in college, I was not taught about finances at
all, in fact nobody ever discussed salaries. When I discovered how much journalists
make, I was shocked (and greatly disappointed). Let's just say it's a career
that you definitely have to be passionate about it because the pay is modest.
Having loved media since I was a child, I decided to enter the trade and watch
my pennies so that I could invest as much money as possible in something that I
knew was a sure thing: real estate.
You see, because I educated myself on the mechanics of
money, I knew that most millionaires made their money in real estate. I understood
vital concepts about the time/value of money and how location and appreciation
could easily skyrocket a person's net worth.
But the hardest part I thought was getting started. So my husband and I worked hard to accumulate
the funds needed to invest. They were busy years and we were handsomely and
surprisingly rewarded when we managed to buy a home with no money down in one
of the most high-priced areas of the nation. How? We found a seller willing to
carry a portion of the note and used private money to get into the deal.
Since we didn't need any of our own money to buy our
home, we used our nest egg to purchase a small apartment building. It was then
when everything began to change.
With a few short years, our net worth skyrocketed. Things
were appreciating steadily back in 1994 and the equity in the properties were
rising much faster than our ability to earn a paycheck by working in our professions.
This is the beauty of real estate. A property can appreciate
either due to market conditions or by adding value through a rehab. Profits can
come quickly, much faster than a person's ability to "earn" a
living.
The average national salary in America is $41,673.83,
according to U.S. Social Security administration. Having a job can provide for the basics just
fine, but what quality of life can that type of salary provide?
In the real estate world, $40,000 is not an astronomical
number. One can do a deal and make that much per transaction either by buying
and holding for cash flow or buying and flipping for profit. I even personally know
someone who made $30,000 on one wholesale deal, and she did not even own title
to the property!
Most of the deals my family and I have done over the
years have grossed us over $100,000 per transaction -- we are lucky to live and
be able to do deals in California where the spreads can be great.
One of my
favorite deals was when my husband and I purchased a small multifamily property
in Hawthorne, Calif., a blue-collar area of Los Angeles.
The market was really hot in late 2004, and it was tough
getting the deal because there were five other offers, but I wrote a personal
letter to the seller assuring him that I would make the best landlord to take
over his building and he sold it to us, even though another offer came in
higher.
Upon purchasing the property, we did slight renovations,
one unit at a time. Nothing major, just new carpet, new paint and I think we
changed the cabinets in the kitchen of one unit. The hardest part was managing
the property because some of the tenants had an attitude because I raised all
the rents to market.
About one year and half into the deal, we decided to cash
out. We purchased it for $425,000 and in 18 months sold it for $659,000. A
gross profit of $234,000! How many
people can make that amount of money punching a clock for 18 months?
And what do they have to go through to "earn"
that money? Get up at the crack of dawn, commute to work, put up with bad
tempers and attitudes, constant deadlines and round-the-clock job stress.
On the other hand, we created wealth by simply buying,
managing, repairing and selling an asset. Can it get any easier than that?
This is exactly why I get so excited about sharing the
benefits of real estate with people because wealth can be created much faster
and easier than by "working" at a given profession.
Even in Corporate America, I noticed that those who invest
in real estate do much better financially than those who only go to work and do
the best they can to save for the future.
After being in the work force for 20 plus years now I've
come to realize that more wealth can be created by focusing time and energy
into finding and buying properties than by climbing the corporate ladder. Buying
one property a year or every few years can really make a difference in your
life and in the legacy you leave behind.
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| Linda Pliagas, investor |
The time has never been better to get started or to expand
your portfolio. Never have we had a combination of so many distressed properties
to choose from coupled with the low interest rates of long-term financing.
The moves you make now can determine your family's
future. So don't make excuses about how
busy you are in your profession. Be sure to take time off from "work"
to concentrate on building "wealth".
by Linda Pliagas, founder
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