Robert Allen, in his book One Minute Millionaire, justly states, “You have to learn to ZERO Out your life in order to Succeed”. Let us examine characteristics of an ideal money-making system.
This means that once you have a project up and running, it should run more or less on autopilot and require minimum time intervention from you.
I am a property investor and I treat each property as a separate money making stream of income. My process is very simple; I buy family homes with surplus land to build a second house on it. I focus on properties that are being sold at a price that is, at least, 15-20% below market value and aim towards a long-term settlement.
Delayed settlement gives me time to get all the clearances from the City Council for building plans and renovations. At times, I also get capital appreciation even before I have settled.
I then try and make renovations to the older house so as to increase its rent. I also contract reputed builders to build a second house on the additional land—thereby increasing the cash flow further. These two actions along-with delayed settlement increase the value of the property by 20-30%, and give me cash flow in excess of 10%.
Once the project is completed, I hand over the property to a competent property manager. I never manage a property myself. I make sure that my investment-properties have adequate cash flow to pay the mortgage, expenses and the property management costs. This frees up my time to do the next project.
There have been times when I do not exchange a single phone-call with my property manager for a whole year. Once a project is completed, properties bring in money on autopilot without my interventions. I then move on to my next project and repeat the whole process. The increase in equity from buying low and adding value gives me money to use as down payment for the next property.
This method of investing in property is only an example. You can buy into proven franchises or self-perpetuating viral programs on the internet that take very little of your time, once they are set up correctly. The goal is to build a massive amount of passive income with little or no investment of your time.
Zero Out Of Pocket Money
You will need money to fund your investment or business. You have to find systems to get the funding from outside and use little or no money of your own.
In real estate, you must have heard of ‘Nothing Down’ deals. It is fairly common for sophisticated investors to buy properties with no money of their own. Even if they have to put money into a deal, they try and take out their investment at the first opportunity available.
Once you learn to do investments and business without putting your personal money into a deal, then your risk is virtually zero.
Many will argue that ‘No Money Deals’ increase the amount of leverage and the risk of bankruptcy. Sophisticated investors set up corporations and other legal entities to protect themselves from any adverse fallout, and limit their liability if something untoward happens.
The more sophisticated you become as an investor your risk management skills to put right systems in place to avoid/ minimize risks will improve.
You have to be constantly on the lookout to find systems and technology to replace yourself. To go to the next, higher level of income, you have to keep finding competent people and systems to replace you.
You have to master the art of outsourcing and delegation. You have to find businesses and investments with systems in place that take up the least of your time and effort. Most people forget to take into account the cost of management time, and base their business and investment decisions purely on ROI (rate of return). This can have disastrous results in the long run as it will not only impede your financial growth, but also have adverse effects on your health, family time and relationships.