This lesson allowed me to do my first deal.
I trust you’re enjoying these lessons, they are the fundamental to ANY successful investment.
Whether property, stocks or Gold & Silver – these fundamentals apply, I’ve used them repeatedly in EVERY investment, and they’ve never let me down.
Ok – so whats the last one?
Well, this one actually allowed me to be able to do my deal, my first property deal at 17, £1,000,000+ of property with a £68,000 cash back and £250,000 in equity.
This lesson is pretty powerful, but we need to jump a bit more foreword in the story to get to this point…
Picture this… I’d just finished reading Rich Dad Poor Dad, which my Dad gave me at 14, I was 16. Yes it took me 2 years to finish reading a book. Well to be honest, I didn’t start reading it until 15 and a half when I did my first school “work experience” at a letting agent and realised that “work” just wasn’t for me. There had to be a better way.
So I read the book and immediately after reading anything Robert Kiyosaki your attention turns straight to real estate. Luckily, my Dad was investing heavily in property at the time and I could over-hear conversations and pick up things now with my new found knowledge.
One day, I’m sitting on the sofa watching TV and my Dad walks in, he’s on the phone and talking to someone, instantly I knew he was in the middle of a negotiation when I heard “I need to get the property surveyed but I can offer…”.
So I turned the TV down and just listened, what I heard confused me, someone was selling their property for £230,000 on the market, but my Dad was trying to buy it for £184,000.
In simple terms, thats FORTY-SIX THOUSAND POUNDS less than what the buyer wanted to sell for. Why would anyone in their right mind do that? And wasn’t it rude to offer that little money for someone’s home?
So when my Dad came off the phone, agreeing that the property would be surveyed and then the offer revisited, I began prying.
“How can you offer someone £46,000 less for a house they know is worth £46,000 more? That’s a bit unfair isn’t it.”
At this point, my Dad was typing a text message to someone, he finished and looked at me, told me to sit down with a pen and paper and explained the most critical lesson in Investing to me.
He said “okay, let’s look at this. Investing is a game, money is a game, there are winners and losers, but the key is to get a win-win deal. One where both parties don’t get everything they want, but they’re totally happy.”
“Okay… so why do you want his property for £46,000 less then?” (Looks like I couldn’t see the PROFIT!)
He continued “2 reasons, 1) it makes us more profit, because we can sell it immediately and make £46,000. More importantly however is reason 2. Investing is a game, in a game there are players, in the game you need a competitive advantage over the other players and for yourself. So the bigger the discount we can get on the property, the more below the market value we can buy it, the more flexibility we have.”
“Huh? How does it give you more flexibility?”
“Ok, say if there are 5 investors like me, we’re all buying properties in this area, all the properties are £230,000. I get mine for £184,000. All the other investors can’t buy them for less than £200,000. I have a £16,000 buffer. So say if I need to sell in a rush for example, if I bought for £200,000 the minimum I can sell for without losing is…?”
“Right… but say if there’s only 1 buyer, he has 5 properties to choose from, but because I have an advantage of £16,000, I can sell my property for £199,000 and suddenly, I WIN!”.
“Ahh, I’m getting it.. So we gotta always buy our property below market value?”
“Not just property, any asset you buy, make sure you buy it below market value, it gives you the competitive advantage you need as an investor”.
There you have it… The third lesson, always buy assets BELOW MARKET VALUE, gives you the best competitive advantage over the rest of the market, also it gives you an instant built in profit & can cover any initial costs of getting into the asset.
This lesson served me so well, that with it, along with the power of my youth and inexperience, I went on to start negotiating property deals with developers on the phone by the time I was 16. I guess with my youth an inexperience I could literally get on the phone, offer to buy 15 units subject to a 30% discount and feel nothing to walk out. This, unknown to me, gave me the ability to create deals and investments that had huge profits built in, eventually, within 1or 2 months of starting, no one in my Dad’s circle could get a better deal than me from a developer…
Following these rules of investing, I was clocking up more in profits than most of my teachers wages. That was a good feeling.
This allowed me, with the creative financing methods that were around for property when I was 2 years in, to structure a deal in Canary Wharf, right around the corner from where I’m sitting writing this email, that got us a £68,000 cash-back and £250,000 in equity, at the age of 17/18 with NO MONEY DOWN (ok – about £1,500 that I borrowed from my Mum).
All of these rules, and the others, but these are the fundamentals, have formed the basis of every investment. Including Gold & Silver.
Now you might be wondering, if you’re not already a student that is, how can you:
– Compound Gold & Silver without any more of your own money
– Generate a cash-flow from Gold & Silver
– Buy Gold & Silver below market value
Well… In 2 days time, I’m going to start to tell you how we do it.
Remember, these are INVESTMENT FUNDAMENTALS, they apply to anything. The investment vehicle can & will change with the market, what investors need is a reliable strategy or formula to allow them to take advantage of ANY vehicle in ANY market.
That’s what I do, I’m the strategy.
The vehicle’s are plain & simple. The strategy is what’s important.
That’s why we need these fundamentals, they keep us from getting unfocused.
Take these, apply them to your investment intentions, go make some serious money & change the world. Please.
P.S. I’m going to create the spreadsheet from over the 3 lessons and send that to you tomorrow, keep an eye out for that.
P.P.S. If you’ve missed the lessons – here they are: