So recently we've been reading The Last Lecture by Randy Pausch and it has stirred a lot of reflection. If you haven't heard about the book, it's the last message a man dying from cancer leaves for his family. He passed away in July of 2008.
It's a fantastic book and a heart warming story.
And it really got us thinking.
Real Estate Investing Opportunities Can Have a Huge Impact on Your Life
I have an eleven-year-old son and an eight-year-old daughter. After reading this book I started formalizing some messages that I would want to make sure were passed along to them.
Now listen up! I'm not dying and I plan on being here for a very long time so don't get the wrong idea! But what this book did was make me formalize some messages around all areas of my life, not just real estate investing opportunities.
Some of them are very private and I may share them down the road, however, because we're here to talk about real estate investing opportunities I want to share one of the messages with you because it directly applies to this theme.
You will have much more freedom in your life if you always work for "Future Value" instead of "Now Value".
Let me explain with a story...
A very good friend of mine is accumulating some very big wealth in his life was commenting on how was confused by speaking to a Senior Vice President in a software company that was making an exceptionally high salary but had no freedom and was living "paycheck to paycheck".
This friend of mine started from nothing six years ago and is now on track to have millions of dollars in equity and cash flow in his life.
He doesn't have a higher education. He doesn't have all the "right" connections. And he didn't have a helping hand in creating his wealth.
But he did have a strong work ethic. Very strong.
And he is able to magically handle any problem thrown his way. Literally, anything. Nothing is a problem for him. He just continues moving forward. It's jaw-dropping and inspiring.
So he was confused by this VP because growing up he figured if you were a Vice President of a company you wouldn't be living paycheck to paycheck. And you would have a big mansion with gates and stuff!
He had always assumed that people with advanced degrees and big job titles had it made. And because he didn't have a fancy degree or hang out in the right social circles he worked terribly hard.
And now over the next 24 months, his income and wealth are set to explode. Massively.
And you know why?
Most people work on things that have a "now value". He always worked on things that had a "future value".
This is the biggest lesson I want to pass on to my children.
So what do I mean by this?
When you are working at your job everything you do has a now value. You work and you get paid. There's no future benefit for you. Nothing.
Even if you are in sales at a big software company and work 2 years to "land that big account" and earn a mega-commission cheque it's still just "now value". There's no recurring revenue.
You've spent two years of your life to create income at one point in time. If that big account comes back to buy more stuff in a few years the commission or benefit of this will go to the company. You may be long gone.
But if you work to create future value then the benefits begin to multiply.
For example, if you work to create your own business you create cash flow and create equity in the business for yourself. You are creating "now value" and "future value".
Now starting your own business has its risks, of course, so let's look at what my friend did and still does.
For the last six years, he has been working on his real estate portfolio and taking advantage of real estate investing opportunities. He was buying houses, working on those houses and then selling them for a profit. He was also buying houses and getting tenants to rent the houses from him.
He was creating "future value". And he didn't even know it.
Because when you start out, everything seems difficult. The light at the end of the tunnel seems so far away. It's hard to see the "big picture". But because the type of work he chose to focus on naturally has a future value built into it, he was set to benefit massively from his efforts.
Now all the work he has been doing over the last six years is coming back to him in multiples.
The equity in his real estate portfolio has grown dramatically (we're talking big dollars) AND he has positive cash flow from his real estate investing opportunities.
So he worked once and he is getting paid multiple times.
With some of the real estate investing opportunities he generated income by selling it, he gets appreciation from the real estate he has kept, he gets cash flow from his rental properties, he gets tax advantages that allow him to pay less in taxes and his equity in the real estate continues to build and compound.
And after accumulating a bunch of real estate things start taking off.
For example, if you went out and picked up 4 small income properties for a grand total of $1,000,000 and then the market goes up 5% your net worth goes up $50,000. You didn't work any harder for that. Your asset base of real estate delivered it to you.
And if the market goes up the next year your net worth goes up again. You didn't have to do anything else. Yours worked to acquire the properties once and you are reaping the future rewards. And the whole time the properties are producing positive cash flow for you.
This doesn't all happen in a straight line. The market moves sideways sometimes but if you are getting positive cash flow from your properties its no big deal.
Positive cash flow properties are easy to hang on to ;)
Even in bad economic times positive cash flow, real estate pays for itself. It's like a mini little business working away for you. That's why we like real estate investing opportunities so much.
Back to this VP....
I mean no disrespect to him. None at all.
I'm just pointing out that when you focus all the productive hours of your day on work that pays you only once you are not leveraging yourself. That VP can easily continue doing what he does and start working on some "future value" on the side. Perhaps a little side business or some cash flow real estate.
When you focus on putting your efforts on work that has "future value" the benefits multiple. You earn income today and you will earn income again from the same work in the future as a bonus. You don't actually have to put in much effort to gain the future value.
If you are reading this newsletter and these articles then you're in the middle of some of our own "future value" work.
This article can be used again and again. We're creating this once and it will be used many times.
And the email list that we are working to create today will have years of value to us. There is immediate value in this newsletter and there is future value because we get to use it again and again.
Focus on future value in everything you do.
"Now Value" is a quick fix. But like everything that is a quick fix, it's likely not worth it in the long run.
So the message to my children is this:
Do what makes you excited. Life is obviously too short for anything else.
And to really leverage your efforts, to really create some personal freedom, build in some "future value" to the work you do.
To your success!