Occasionally I speak at events and people ask me about real estate investing or making money in general.
There are really only 5 ways to make money .. and you can do all 5 in time .. but you have to take them all seriously, especially step one !
1) You work
This is the most common way to start. You work, i.e. you exchange your time for money. The more time you give, the more money you get. A pretty linear relationship. Proven though through centuries !
Many people fail at that stage already. They don’t take it seriously. They show up late. They chat with friends online. They do personal business on the side. They don’t understand the business they’re in. They don’t give 110%. Maybe 50% or 85% .. or 35%.
Yes, you can hide for a few days or a few weeks. Most employers realize after a while who is an excellent performer and who isn’t. If you work hard at your job, you get ahead. Give the extra 10% or the extra 4-5 hours every week. Read up on your industry. Go to industry conferences. Seek a mentor. You get promoted. You get more $s per hour. If you have more skills, you get more $s. So, yes, formal and informal education helps. If you work hard, and get more $s than you spend, you can save some $s. Hence:
2) You invest your own $s.
You buy real estate or mutual funds or stocks or GICs or bonds or whatever seems to fit your risk tolerance, skills and timeline. Like 1) it takes time to find out what a good invetsment looks like. Take it seriously. This investment could be more passive (say a stock or mutual fund) or more active (say real estate or active stock trading)
3) You invest other people’s money.
Once you’ve mastered 2) you have the right to ask for OPM (other people’s money) such as JV partners or money partners or mortgages or lines-of-credit to invest, for example in real estate: Usually a combination of your own time, your own money and OPM (mortgage, LOC, JV money or all 3). You borrow money at, say 6%, and invest it for 12% to 150% ! This assume a modest degree of risk as you must pay the rate your agreed with OPM but invest at a more uncertain, yet frequently much higher rate. This assume 1) and 2) is in ship-shape !
4) You use other people’s time / employ other people
You have a small or large business where you pay people a wage/salary/hourly wage and then use their time to make money for yourself. This works usualy only if you’re good at 1) 2) and 3) as usually your have to work hard too to lead by example and have some (of your own or other folks’) money at risk.
5) You have Intellectual property (IP)
Intellectual property or royalties make money for you once you have created them: maybe you have written a book. Maybe you have written lyrics or songs or music. Maybe you have painted a picture and it is copied widely for a fee. Maybe you have invented a name and copyrighted it. Maybe you have a patent or a system that can be used for a fee. Elton John makes money in his sleep today – but he was very good at 1) in the beginning of his career.
So, there you have it in a nut shell: 5 ways to make money. Are you aiming to fire on 5 cylinders ? Or is it only 1/2 ? Try harder .. or try different ways .. but usually they go in that order of: 1, 2, 3, 4 5 ..
If you invest in a syndication firm like Prestigious Properties you use pillars 2,3 and 4 mainly : you invest your money, we work for you, we get a mortgage to lever your investment !