Your PERSONAL Solution to Income Inequality
Are you a “victim” of the growing well-documented problem of income inequality?
Well then, stop being a victim!
You can reverse your personal income inequality problem by taking action and taking responsibility over your personal finances.
The way to do this is to become a PART-TIME INVESTOR and make money using other people’s money.
We will assume that you have a full-time job that is making you money, just not enough. We will assume that you want to boost your income from the median household income of about $60k’s per year into at least the $80k’s per year or much higher, WITHOUT DRIVING YOURSELF CRAZY!
How can you do this? Here are just three of the many practical ways that many people use, at least those of us who have achieved financial freedom.
One of the most practical ways to generate $25,000 or more in a few months (spread it our into 12 monthly distributions of $2,000 each if you like) is to buy a distressed single family home at a significant discount, renovate it to high quality then sell it at fair market value.
There are banks that specialize in providing construction loans to investors. In today's market, they often finance 70% of the purchase of the distressed property and 100% of the repair estimate. Thus, you can use mostly OPM (other people’s money) to flip houses. You need some money of your own but not a lot, especially if you have a job with income.
If you are making the median household income in the $60k’s per year, an extra $25,000 can make a big difference. In some areas, you can make a lot more than that, depending on how well you get at buying houses at a discount.
Let’s address another mental barrier most people have about flipping. I DO NONE OF THE WORK MYSELF!
That means that I don’t need renovation skills (though I did need to learn to estimate repairs well). That also means that I do not need to spend huge amounts of time painting and hammering. That’s important because I can continue to generate my usual income in my primary occupation (as a chemist) that has nothing to do with real estate investing.
An extra $25,000 per year made without driving yourself crazy can pay off high interest credit card debt, help out your child through college that year, help buy a car with low or no payments, or just let you breathe easier to cover your routine monthly expenses.
If you have equity in your home, many of you can get a home equity line of credit and lend the money to real estate investors, such as flippers. If done properly, the loans are secured by the equity in the home purchased by the real estate investor. I did this for 10 years (I don’t private lend any more, so please don’t ask me for loans).
When the prime rate was 8%, private loans were made at 15%. When the prime rate was 3.25%, private loans were made at about 10%.
So, if you can get a $100,000 home equity line of credit, you might be able to add $500-$600 per month of passive income to your household budget. I know that can make a difference in the lives of a lot of people. That’s how much many families spend on food and groceries every month.
If you have a job with steady income, you can buy, fix and rent houses, building a small portfolio of rentals one house at a time. If each rental house generates, say $300 per month, then having a handful of rental units can make a big difference to your income.
If you have a job, you can find the right banks that will lend you the money to buy, fix and rent these houses.
Did you know that 89% of the 17.7 million single family home rentals in the US are owned by households that own 10 or less rentals? Yup, there are more part-time landlords supplementing their income with rentals than big league full time investors.
You can build your modest rental portfolio one house at a time, such as one per year or add one every two years. This very doable for many people and you don't drive yourself crazy while creating your personal solution to income equality.
After a few years, your positive cash flow can increase to $500 per unit if managed properly. So if you have 5-10 units (a manageable number), you can add a few thousand dollars per month of passive income to your household. I have eight rentals at the moment and they add more than $50,000 per year to my household income and I don’t drive myself crazy nor does it hurt my primary occupation as a chemist.
There are other ways of solving your personal income inequality problem, but you must take action. No one else will take care of you. You must take personal responsibility over your life. Now take control. Now take action!
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