Tuesday, October 8, 2013

Making Huge Returns on Real Estate

Would you like to make 1000% or more returns on your Real Estate ?

Do you think these types of returns are even possible ?

Truth is they are and it's not that hard !

Defining Returns

First let's determine what a return on investment (ROI) really is. This is a term that you hear all the time but many have no clue of it's real meaning.

Would you believe me if I told you I have made infinite returns on my Real Estate investments? Probably not, but I have. Let me explain.

ROI or Return on Investment is defined as the amount of profit divided by the amount of money invested expressed as a percentage. For example if you made $1,000.00 on a $10,000.00 investment, your ROI would be 10%.  Now let us suppose you made that same $1,000.00 without investing any money of your own. Any number divided by zero gives you infinity. In this case your ROI would be infinite.

How To Invest Zero

It is all in your perception, but Real Estate promoters advertise all the time about investing in Real Estate with zero dollars. Truth is, the invested capital is all borrowed money, therefore you are investing none of your own money.Whatever return you make on your so called investment is technically infinite.

My Real Estate investments have all been 100% borrowed money, therefore one could say my profits are infinite. It is generally easier to get financing for Real Estate than it is for any other investment. Mortgages for 80 to 90 percent of purchase price are common. The other 10 percent can be funded by a secured line of credit from another property holding. It's that simple once you have it set up properly.

 Beware the ROI

Always take the ROI numbers stated in an ad with a grain of salt. You must dig deeper into the details of any investment to get the true value as ROI numbers can be easily manipulated. Creative Accounting is a term that is used for making an average or below average investment look much better. Remember, there are many dishonest individuals out there, so beware.

What To Do

Be careful of how you perceive the returns on your investment holdings. Many will manipulate numbers to make their product look better than it really is.

Investing in Real Estate with 100 percent borrowed money can explode your wealth tremendously if done properly. On the other side of the coin, if not done properly you could get into serious trouble. Whenever leveraging (borrowing money) your risk becomes much higher.

Gain the knowledge first before leaping into any investment, especially Real Estate. Your time spent researching will be rewarded tremendously once you have the knowledge.

As always, I welcome your comments and suggestions for future topics.

1 comment:

Aleida Steadman said...

It's a rule of thumb that you choose an investment that you are familiar with or have passion with. Don't just dive in to any investment without studying its nature. Make wise decisions and choices to not waste your hard-earned money. Take time to think and weigh your options before making decisions that will greatly affect your future.

-Aleida Steadman @ BlackBeltInvestors