Want Personal Success? Multiple Streams of Income

“Want Personal Success?”
“Multiple Streams of Income”

Welcome back…
For those that haven’t read the initial “Want Personal Success?” series, e-mail to: davis@themarathongroup.biz and we will send you copies.
Let us continue.
Planning multiple streams of income should be fun. There are many choices. You might consider starting by saving a percentage of salary. If you know nothing about investing you should get help. Before you expose yourself to the multitude of financial planners, begin by educating yourself. Find and understand the definition, the power and the principals of compound interest and residual income.
To select your financial planner you must really be careful. Interview financial planners as if you are the CEO of your company and the one you select will be the CFO. When you find the one you really like, check his track record. He should produce numbers close to 15% return for his present customers most years. Allow for a stinker year like 2008. Check references. Do not just get references. Check them. A short cut to this task would be to seek references from successful friends. Keep looking until you find the right planner. Remember, you should like him and he/she must have a good track record. Do not rush. You have time to search while you are gathering money for your initial investment.
If you do the math, you may not get excited over the interest rates on savings accounts and CD’s. Educate yourself on any improvement of return available to you. Just imagine all the ways at your disposal to generate cash for your initial savings.
When I turned 50, my wife and I decided it was time to escape from corporate America. When we looked around we found the very best return for our savings was matching funds in a stock program offered by my company. The aerospace company put in 50 cents for every dollar I invested in their stock. This was hard to beat. We started investing 7% of my salary. We nearly didn’t make it the first year for we had been living paycheck to paycheck. The second year we were able to increase our contribution to 10%. This grew and became another income stream of residual income.
By now you may be getting the idea. Good. You are now “thinking outside the box”. If you have no company stock plan or profit sharing program, you might look around and find another job with these benefits.
Back in younger days I did some “moon-lighting” for extra money. I worked car sales (failed), tool & die job shopping, machining, programming automatic machines and started a small machine shop with my brother. These activities generated the money, but I spent it. If you are physically able, a second job will certainly add an income stream. Do not make my mistake. Invest the money. The grind of the second job is lessened if you do something entirely different from your primary job. I do not recommend “moon-lighting” for the long haul. It will ruin your health. For some, it could be the jump start you need, but not long term.
Let us not forget, each of these issues/decisions can now be addressed by asking the question “is this decision in alignment with my purpose?”
Be very careful with the following category or income stream. Some people create a significant income stream with real estate. Of the many strategies, the two most common are rent houses and “flipping houses”. To be successful in both of these strategies you must get the property at a real bargain for the location. The initial buying price and financing is critical to creating positive cash flow. Positive cash flow is the game.
However, to see the real lynch pin, all you have to do is look in the mirror. In the words of John Wayne, “okay Pilgrim, listen, and listen tight…” Real estate success is directly the result of what you are willing to do. You will need to have some capital. With little capital, it will help if you have fix-up skills, have tools and are willing to work hard with your hands.
Another attribute required in the rent business is self control and discipline. You must be able to experience the shock of your property being trashed without mental melt-down. You must be tough enough to evict a renter. Be prepared to physically move the renter’s property out on the curb yourself, change the locks and cleanup the mess. Best test of this attribute is can you sleep at night with some of this going on.
When renting, you need to be able to spot the “professional renter”
Once in he/she will live rent free for six months or more. He knows all the tricks and knows the eviction cycle better than you. To avoid this trap, check references. Check them very carefully.
The initial purchase is critical. Again, this is in your hands. Are you willing to haggle, haggle, and haggle.
A very successful friend of mine would find a foreclosure or heirs to an estate or someone in trouble and would negotiate for as long as it took to get his price. He would pay cash or negotiate favorable financing. He would then rent or lease/purchase the property at a substantial positive cash flow. The cash flow was directed to the note or to the note on another property or to savings. His monthly cash flow was between 5,000.00 to 10,000.00 dollars. When savings exceeded 25,000.00 dollars he would transfer that to other investments or buy another property. He stated that his second million was much easier than the first. He was still doing much of the fix-up himself.
In review the Duke would say,”alright pilgrim, be sure you cover all them issues before you climb on this hoss. Your gonna have quite a ride.” Coming out of shoot number two.
If you decide to travel this path, be very careful.
Step back a few more feet and really look at your financial picture. Is there anything you bring to the table that would create assets or cash flow? Check it out…
To be continued.

Leon Davis
davis@themarathongroup.biz