How To Build A Financial Moat With Real Estate

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Ages ago, people lived in elaborate and magnificent castles that were often protected by moats. A moat is a wide, deep ditch dug around a castle to prevent enemies from overtaking the castle. By surrounding the castle with water, moats served as an effective deterrent and provided the castle with the security it needed to prosper.

Today, many of us live in our own plain and simple financial castles that are much more vulnerable than the castles of yesterday. Not only do our financial castles not have any sort of moat for financial security, many real estate investors do not know how to build a moat to accumulate wealth and retain it.

Why do most people today not have a financial moat? Why no financial security? Why are most people so financially vulnerable? We live in a culture that has brainwashed us into thinking that we should be paid per hour of work. If you are like most people, you have to work for a living. If you don’t work, you don’t get paid. You see, most people have “linear” income. So while linear income may be the way most people earn their paychecks, it is also the reason many of us cannot afford to retire. This type of income continues only as long as you continue to work.

? If you are an attorney, you get paid whenever you represent a client. If you don’t provide legal services, you don’t get paid.

? If you are a teacher, you get paid when you teach our children. If you decide not to teach, you don’t get paid.

? If you wholesale or retail houses, you get paid when you flip a house to another investor or sell it to an owner occupant. If you quit wholesaling or retailing houses, you don’t get paid.

The real test is that if you are let go by your employer as I was in June 2002, your income definitely stops. After almost 30 years of working for “security” for different companies, I was left out in the cold in the middle of summer. I discovered I was not secure; I only had the illusion of security. Working for a company is fine, but you must understand it will never give you security.

That’s how linear income works. You receive income when you work. Usually you earn just enough income to pay your bills. When your income stops, you’re on the brink of disaster. In fact, if you’re like most folks, you’re no more than two or three paydays away from a serious financial catastrophe.

OK, so how do we start to build the moat that will provide us with financial security?

You start digging a ditch around your financial castle with “residual’ income. A complete change happens when you start earning residual income. Residual income means you continue to earn money for a long time. When you do something right just one time, you get paid over and over again for what you did.

? If you write a hit song, you get a small royalty every time the song plays on the radio.

? If you write a book that becomes a best seller, you receive a regular royalty check from your book sales.

? If you’re already a multi-millionaire and had a few million to invest in quality stocks and bonds, you now get a regular dividend check.

Residual income sounds nice, doesn’t it? Unfortunately, most people have trouble developing a residual income.

Why?

We can’t sing or write music. We don’t know the first thing about writing a book, much less how to go about having it published. And I really can’t remember the last time someone came up to me and told me they had a few million dollars sitting in their checking account waiting to be invested.

However, there is hope.

There is another way to develop residual income. There’s a way to get monthly checks so that we can do the things we want in life. So that we can achieve our dreams. And best of all, almost anyone can develop this residual income that will give you the financial moat you need to accumulate and retain your wealth.

It was only after my wife asked me how many properties I had kept for ourselves at the end of 2004 that I realized that my “buy and sell” plan was making us very good money, but it would not make us wealthy. I realized I had to keep buying and selling properties to keep making the money. So I launched a strategy that complemented our buy and sell strategy. The approach is to buy properties at substantial discounts, rehab the properties, and then rent them out. And the best part is that the tenants pay for my properties. Once the properties are paid for, I will continue to have rental income for the rest of my life.

But what about tenants and toilets, you ask. Well, everything has a price and you’ll have problems with your tenants. But you have options. You can (a) develop a system to minimize your problems with tenants, (b) retain a realty management company to deal with the tenants or, (c) offer seller financing to your tenants so they become owners and they no longer call you.

Personally, I like the buy and hold strategy for two principal reasons. First, I continue to accumulate assets or rental properties. Second, I will continue to receive residual income for the rest of my life whether I continue to rent the properties or elect to use a seller financing approach so I deal with a buyer/owner and not a tenant.

The more properties you accumulate, the more residual income you receive. And the more residual income you get, the wider and deeper the financial moat you will build for yourself. The wider and deeper your financial moat, the more difficult it will be for circumstances to penetrate your financial castle. You will have the security you need to truly prosper.

About the Author

Lee Salinas, MBA, CPA is a full time real estate investor. Lee started investing in real estate three years ago after losing his job in June 2002. In three years, he has purchased over 140 properties and authored a business plan to help real estate investors get the cash they need to buy properties. The real estate business plan is available at his website – http://www.realestatebizplan.com

Find Homes on the Internet – The Advantage of Real Estate Search Engines

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Searching for a new home? If you’re like the majority of home buyers, chances are that you will spend some time on the Internet gathering information on various homes. The Web provides data and information that was previously only available to professionals in respective fields. However, due to the saturation of information found on the Web, it is sometimes tedious work to dig and find specific information.

Companies have recently started to revamp their Web tools to make them more appealing, intuitive and easy to use for consumers. The most interesting of these Web tools is the real estate search engine. Using the data of Multiple Listing Services, a real estate search engine allows anyone to look for home listings in a given city, county, or zip code. Home buyers can refine their search by entering specific criteria for the type of home they are looking for: price range, number of bedrooms and bathrooms, square footage, etc. Many companies are now offering real estate search engines, be it directly to homebuyers or to real estate agents. Some engines offer more features than others. The easiest to use are those that combine the MLS listings with aerial maps – such as Google Maps – to show where the homes are located. Here is a list of the best real estate search engines and a summary of their features:

• Easy Homefinder is a service that is embedded directly on real estate agents Web sites. It contains many features that consolidates the home searching process. For example, the listings will appear in different colors on the map to indicate the estimated price of each house. Each icon representing a home also displays the number of bedrooms and bathrooms. These two features distinguish Easy Homefinder from competing maps because it allows home buyers to quickly scan through multiple houses and find homes that match their home-buying criteria.
• Mapteam is not appealing visually, but loads quickly. A second version of the map is on the way, which will allow people to save their favorite homes from their search. It only displays homes available in a few U.S. areas.
• Redfin has been featured in many different articles, including one published in the New York Times. Redfin is visually appealing and uses a special set of satellite maps. It provides all the search features common to real estate search engines, but can also display local schools and parks on the map. Redfin started its business with home listings in the Seattle area.
• Trulia has a different way to find the data it displays to visitors. It goes to partner Web sites to retrieve their listings. This means that not all available listings are listed on Trulia. The site allows visitors to save the descriptions of the homes they liked.
• Homepages displays homes in many states. It is quick to load. It can display a lot of information that its competitors do not have, such as the local restaurants, schools, and hospitals. It provides a detailed report not only of a home but also of the neighborhood in which this home is located. The catch: the home listings are not complete, because real estate agents can pay Homepage for exclusivity over an area.

Because these search engines are relatively new, they do not yet cover the entire nation, but they are so appealing that they should soon become a standard feature on real estate Web sites.

About the Author

Content provided by 10x Media. Established in 2003, 10x Media provides innovative online marketing tools. It has expanded its online presence through networks such as Inside Real Estate, Inside Finances and Grab Real Estate, which contain thousands of pages for city and state specific real estate information across the nation.

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Real Estate Fraud Growing in Polk and Across Florida. – The Ledger
DAVENPORT | A gate and a guard house protect the houses in the Sunset Ridge neighborhood, including a three-bedroom, two-bathroom vacation home on Sunset View Drive. While those security measures might prevent criminals from making physical