The myth of consulting …

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My wife is always trying to get me to do some consulting, but I just can’t see the point.

I used to do a bit of consulting, but I saw it as a capital-friendly business development opportunity:

Rather than pay to fly out to talk to people about my regular products or services, I repackaged my bus. dev. [read: sales] activities as a paid consulting gig (at the very least, business-class international travel and accomodation paid for).

It worked quite well and was quite nice while it lasted.

Now, my wife sees consulting as a way to get a paid holiday every now and then …

… but, I see it largely as a waste of time.

I also see it as largely a waste of time for those who aspire to consult as their major source of income:

I feel that the biggest mistake that aspiring consultants make (particularly those setting up as an independent consultant/speaker) is to OVER-ESTIMATE their earning potential.

I once posted about a friend of mine, having sold out of his own business, who decided to become a consultant to his particular industry … his earning expectation is $200k for his second year in the business.

I told him “it won’t happen” …

Why?

You have to apply the ‘smell test’ to these sorts of expectations … wouldn’t EVERYBODY leave their $100k a year jobs if you could suddenly earn twice as much as a consultant?

… and, what about ‘lost time’ for marketing yourself, vacations, illness, accounting and business admin.?

Clearly, you have to build up to this (find a unique niche, build a reputation, etc. etc.) and that takes time … a lot of it.

For example, a top sales consultant in Australia recently said that he still spends at least two to three days a week in sales i.e. drumming up new business. Let’s assume that that time includes all of his admin., as well.

That means that he is spending a maximum of 2.5 days per week billing clients for face-to-face time less any unbooked time, travel time, research time, report-writing time, etc., etc.

You may be able to earn $1k+ per day, but I doubt that you can keep that up for 220 working days per year …

You do the math!

Stuffing the income genie back in the bottle …

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As I said in my last post, I think it’s ironic that the time that you think about income the most is when you don’t have any.

And, that’s usually because:

– You’ve lost your job, or

– You’ve retired.

And, the second one only becomes an issue if – like most people – you haven’t really thought about how much income you DO need when you are retired. For example, this 2006 AARP survey (rather depressingly) showed:

One-third of workers (31%) have not yet saved any money for their retirement; 26% admit they are not confident they know how to determine how much money they will need to live comfortably in retirement.

… and, this is before the 2008 global meltdown!

Unfortunately, for most people, the retirement income decision is made in two entirely unrelated sets of decisions:

1. How much income will you have pre-retirement?

This one is not really a decision for most of us: most people receive an income that is simply based on opportunity.

For example, you are presented with a new career opportunity; it may come from an employment ad you happened to see in a newspaper, or somebody contacted you (a friend, a headhunter), or it may be forced on you by a down-sizing at one company that leads you to start looking seriously.

In any event, you think you are lucky, because you score a new job with a 20% pay increase over your previous job!

But, you are not really lucky, because of the second – almost totally unrelated – decision that you then need to make:

2. How much money will you have in your nest-egg when you retire?

This one is really a function of:

a) Time: i.e. how long do you have until your retire – or, are forced to retire (through job loss, injury, circumstance)?, and

b) Accumulation Rate: i.e. what % of your income are you willing – and, able – to save?

The two choices are not entirely unrelated, as I previously claimed, because most people save a fixed % of their income (e.g. 2% with an employer match of some sort) into their 401k; presumably, this increases as your income increases.

But, virtually nobody – and, I mean nobody – really works backwards and says: “if this is my income today, and it grows at least with inflation – or more, if I am really clever and opportunistic – what does that mean at retirement?”

You see, post-retirement income is usually a function of pre-retirement income, give or take 20% or 30% according to most experts.

If you want to scare yourself, try this little calculation:

1. Take today’s income and then scale it up to an income that you realistically aspire to; for example, what income would you realistically like to have in 20 years time?

2. Double that number, because in 20 years (due to the effects of inflation), you’ll actually need double that amount.

3. Now, multiply that new number by 20

That, according to the Rule of 20, is how much you will need to have in your nest egg if you want to retire in, say, 20 years time.

I’m guessing that this will be a Big Scary Number.

So, let me give you two choices:

A. Control your income NOW so that you don’t have to worry about it in retirement

This is the frugal [read: boring, yet sensible for most people] way and it has two major benefits:

– By controlling your income now (i.e. not increasing your income dramatically), your frugality allows you to lower your final pre-retirement income expectations as well. When you plug these nice, conservative, frugal numbers into the above calculation you, hopefully, come up with a Slightly Less Scary Number.

– But, this doesn’t mean forgetting about opportunity …. no, absolutely the opposite is true: you still chase all of those increased income opportunities, but instead of spending more when you are lucky (!) enough to land one, you save – a lot – more, which gives you even more chance of reaching that Slightly Less Scary Number.

B. Put your income earning capability into overdrive

But, what if you could reach that Big Scary Number? 

Why, then you would be able to earn and spend as your income grew, and you would be able to keep spending outrageous sums of money (at least, that’s how it would seem to lesser mortals) even in retirement.

But, how can you do that?

Well, rather than focussing on cutting costs, you focus on controlling costs. But, far more importantly, you focus on ways to increase your income …

… ways to increase it even more than you previously had your sights set on (i.e. in question 1., above).

Of course, you then don’t spend the extra income, instead you save it … saving at least half of all future salary increases.

Not only does this allow you to rapidly accelerate your savings (dramatically bumping up the size of your eventual retirement nest-egg), but it also provides a huge income cushion allowing you to deal with short-term income setbacks by temporarily slowing your rate of savings (say, from 50% of your accumulated salary increases to a more ‘normal’ 10%) rather than compromising your underlying lifestyle.

The real safe wealth building secret is to:

Accelerate your income rapidly, but your lifestyle slowly!

So, what could you do to increase your income, even more than you have previously dared to hope?

Any one of a thousand things!

For example, you could chase even bigger work/business opportunities (that’s why I moved to the USA from Australia), or you could start a business (that’s why I left my high-paying corporate job), or you could do something ‘on the side’, or you could invest actively, or ….

This blog is obviously aimed at those who want to choose Door B.

And, far more importantly than greed, the real reason is that once you let it out (i.e. accept an income increase) it’s almost impossible to stuff the income genie back into that bottle …

… in other words, rather than trying to live frugally by focussing your financial plan on cutting costs and saving the little that’s left, it’s far better to prepare a plan that allows you to rapidly increase income and spending in a controlled manner, so that you can build in the buffers that allow you to preserve your lifestyle should things go wrong.

But, which option would you choose?

And, what would you do do if dramatically increasing your own income actually became a financial imperative?

.

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The problem with income …

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I’ve been thinking a lot about income lately, which is ironic as I don’t have any right now (at least, not in the traditional ‘work for a paycheck sense’).

It’s also ironic because, when I did have an income, I didn’t worry about it at all:

Back in 1998, I had two businesses that, between them, managed to earn exactly $0 …

… what one business made (about +$5k a month), the other one managed to lose (about -$5k a month).

But, I wasn’t at all worried.

That’s because this break even scenario already took into account the cost of my (then) still-quite-basic basic lifestyle.

For example:

– I could deduct the cost of my cars as a business expense, so my business paid for those

– I could deduct the cost of my travel as a business expense, so my business (or the occasional consulting client) paid for those

– And, I could afford to pay myself a fairly basic (at least, for a guy with a family) $50k salary a year

So, with my combined businesses breaking even (after these expenses were taken into account), together with the fact that I could control my cost of living by delaying gratification (not to mention, my wife was still working and bringing in a decent income), I simply didn’t worry too much about earning an income.

But, all that changed when I started investing actively, and built up my first $7 million (in 7 years) fortune …

It changed for the worse!

Firstly, my cost of living increased. A lot.

Then, my wife stopped working. Of course.

And, my actively-generated income stopped. Because I sold my biggest business.

Now, I mostly have to rely on ‘passive income’ which is really just spending the money I have in the bank while I figure out how to make more money from investments than I spend on their expenses + the cost of my lifestyle.

And, that’s now a big number!

So, ironically, just when most people think that I have “f**k you” money, I have started to worry about income …

… simply because I have to create my own.

How about you? Do you worry about income? Why (or, why not)?

How to buy a business with No-Money Down

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You’ve heard of ‘no money down’ deals for buying real-estate, but you probably have never done one yourself. But, did you know that it’s much easier – and, more profitable – to do ‘no money down’ deals in business?

[Originally published on Biznik, the small business online network: http://biznik.com/articles/how-to-buy-a-business-with-no-money-down]

You’ve seen the late night infomercials on cable: “buy my course for only $149 (plus S&H) and learn the secrets of how to buy 52 properties this year with NO MONEY DOWN”.

Naturally, you’re sceptical – and, so you should be because ‘no money down’ deals on real-estate are far more rare than the infomercials would lead you to believe [AJC: post-financial crisis, now almost impossible] … and, some of the ways that they are done are ‘on the edge’ of ethical business practices to say the least.

That’s why I have purchased a lot of real-estate over the years, but have NEVER done a ‘no money deal’.

But, did you know that it is possible to do ‘no money down’ deals on businesses? And, not only are these deals ethical, but they can be win/win for everybody involved?

And, they can be so easy to put together that my 13 year old son [AJC: this was a few years ago, now] put  one of them together for himself!

1. Let me start with my son’s example, as it is a good illustration of how simple the process can be:

My son started a small e-Bay business, but he didn’t have the capital to meet the minimum order requirement of $100 from his online wholesale supplier.

So, he asked me to put up half the capital for that first order for him: $50. In return, he offered me 45% share in the business, which I accepted.

He made that order and sold the stock within one month and promptly bought me back out!

[AJC: he handed $50 back to me and said he wanted his 45% back; I didn’t have the heart to say “son, it doesn’t quite work like that …”]

Not quite ‘no money down’ … but, close.

Now his e-Bay business nets him a cool $30 a week (not bad for a kid who only gets $26 a month in Allowance)

[AJC: Now I’m extra sorry I handed back my equity for $50, because his latest online/part-time business – he’s still at high school – makes him $150k a year]

2. I had the opportunity to take over a defunct family business: it was a finance company that needed both working capital and bank funding (a lot of it!) to run.

Unfortunately, at the time, I had neither the capital nor the access to bank funding … in fact, I was $30k in debt. But, I did have a customer list.

So, I used the same ‘no money down’ technique that my son used: I found an investor (who happened to be a competitor, often the best place to go for help) who put up the 25% capital that the business required to get started.

I then found a bank willing to finance the remaining 75% simply secured against the ‘paper assets’ of the business.

If you think about it, this is very similar to a ‘no money down’ deal on a property: find a partner willing to put up the deposit money in return for, say, a 50% share of the future profits, and a bank to lend you the balance as a mortgage over the property.

If the business is growing, my advice is to buy your partner out as soon as you can afford to … that’s what I did: we parted good friends. Make sure you always do the same.

3. Another way to do a ‘no money down’ deal for a business is where you have an asset that a larger company needs for their own business (preferably a non-profitable division of a larger company … believe me, there are plenty out there).

Most people are happy to sell this ‘asset’ to the larger company, or perhaps consult to them, for a fixed fee. Instead, consider ‘trading’ what you have for equity. Here’s how I did it:

I had some software that I used in my business that made our operation quite profitable; I found a Fortune 500 company that had a division operating in the same niche, but in another non-competing location, and discovered that they were still operating on older technology, hence, were unprofitable.

They offered to buy my software and consulting to help turn their own business unit around. However, we instead proposed a joint venture. For the ‘price’ of the software and our expertise, we received a majority share in that business unit. No money down!

It only took us two years to make the business profitable (using our software) and, we on-sold our share soon after for a huge return. We made about 7 times more profit by trading assets for equity than a simple software sale would have provided.

4. These are the types of ‘no money down’ deals that you should be looking for if you want to get into business or if you want to expand your existing business. But, there is an even simpler way:

If you want to buy an existing retail business with an existing lease … no matter what the asking price: ALWAYS start by offering No Money Down. Simply offer to take over their lease.

Many times that will be enough to do the deal … people need to sell their businesses for many reasons (marriage, divorce, moving) and are tied to their leases. By offering to take over their lease, you are removing a major headache for them … no money down!

Now that you have seen how easy it is – and, how lucrative it can be – to buy any type of business with No Money Down, maybe you will give it a try?

If you already have, please let me know your experiences …

How to pay off credit card debt?

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Last week, I asked our readers what advice they would give to Chris, who asked for help getting out of credit card debt:

Over the past 2 years I have watched as my credit card debt has risen to over 13K. I  have a very well-paying job, making 130K

The vote is in and, as the graph shows, just over one quarter of our readers thought that Chris should just continue paying off his existing cards.

But, why pay at 13% interest, when you can pay the same debt at 0%?

And, if it takes you one year to pay off the 13% debt, say, then you should be able to pay it off in just 10.5 months at 0%, so why pay more/longer than necessary?

Fortunately, just over half of you thought that Chris should transfer his debt to a 0% APR card. I like this strategy … as I said last time, a dollar saved is exactly the same as a dollar earned.

This means that Chris has just earned 13% after tax interest, simply by moving the debt to a 0% card!

Of course, that doesn’t mean that you should now go out and rack up a whole lot of expensive c/card debt just so that you can move it to a low – or zero – interest credit card 😉

Whilst a good first move, another reader (whose name is also Chris) pointed out that just moving credit card debt from one card to another is not really a debt reduction strategy; you also need to figure out how to pay the card off before the 0% interest period expires.

Even more than that, this reader advises:

Not only do you need to pay them off ASAP. You need to cut them up so you don’t rack up debt for a third time…No one should be putting a honeymoon (aka vacation) on a credit card without a clear plan to pay it off.

The other option that Chris offered was to pay off his credit card debt by borrowing against his 401k; Chris says that he can borrow the money effectively at 0% and pay it back at his leisure (the ‘loan’ is at 4% interest, but that is actually credited back to his own 401k).

But, another reader, Steve, pointed out one potential flaw in this strategy:

He needs to weigh against what he could earn (inside his 40k) against what he saves from paying off this debt, and what he puts back in. If he is paying himself 4% interest into this 401k program,but could earn 7% by not taking it out, [it] seems like a bad idea.

I don’t think it matters greatly which option Chris takes as long as he:

a) eliminates the 13% APR debt immediately (either by moving it to a new 0% card, or borrowing other 0% funds to pay it off)

b) has a plan to pay off the outstanding (now 0%) debt off as quickly as possible

c) has a plan to stop the debt from re-accumulating once paid off

The bottom line: if you find yourself in a situation like Chris, follow the 2-Step Wealth Creation Strategy that I outlined in a recent post and you won’t go too far wrong in your own financial life 🙂

 

Help a reader pay off their credit card debt …

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What should this reader do?

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Help a reader out by reading this, then answering the poll:

When I first spoke to you, I had just paid of my cc debts and was working 2 jobs and saving a little money.  4 years later, and I have since moved from NYC to Miami, got married, just had a baby, and right now I am in the process of buying our first home. (Not an investment, but our primary residence.)

With all of the life changes that have happened, my savings is gone (we had to pay for the move, marriage, and honeymoon ourselves) and over the past 2 years I have watched as my credit card debt has risen to over 13K. I  have a very well-paying job, making 130K in Miami as a computer programmer, but right now I am the only source of income, as my wife is not working.

Anyway that is a quick catch-up with my life to date. And I have question for you.

Once I close on my house, my next move is to get rid of cc debt. Here are the 3 choices I see available to me. (Perhaps there are other ways, I am just not aware)

A. Pay it down heavily and hope to pay it off over 2 years.
B. Move it over to a 0% card for 15/18 months.
C. Take a loan out against my 401K to pay it off credit card immediately

Chris also wanted me to know that the “loan against my 401k is special in that the 4% interest I pay back is added back into my 401K account. So every penny I pay goes back to my pocket. There is no hit to my credit, since I am borrowing against my own funds, and it allows me to pay back less aggressively.”

What would you do? Please help me help Chris by choosing one option from the poll …

Note: if you chose ‘other’ please leave a comment; if you didn’t choose ‘other’, please still leave a comment 😉

Real-estate: can you tell the difference?

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I know when it’s time to give up the game: when you start dreaming about it.

Last night I dreamed that I was telling a group of people the difference between commercial and residential real-estate … the one – key – difference.

Don’t worry, because I’m going to continue blogging about personal finance, but I guess I should at least bring my dream into the the real world by writing about these two classes of real-estate here:

So, what is the difference between the two? That one, key difference?

Is it price? Is it purpose (you can live in one, work in the other)? Something else?

I think it’s all of those things, and more, but I think one reason stands out:

This is residential real-estate, these two houses [pictured above] are the same in every respect:

They look the same; they cost about the same; they will provide a similar standard of living … and, they will produce roughly the same investment return over time.

This is commercial real-estate, these two properties [pictured above] are the same in one very important respect, yet:

They don’t look the same; they didn’t even cost the same; they are totally different types of properties (one is an office, the other a small showroom and warehouse) …

… but, here’s the one thing that makes them identical, at least to an investor:

They will produce roughly the same investment return over time.

You see, residential real-estate is bought/sold/valued on the basis of its utility as a home, not an investment. So, while you can choose to live in it or rent it out as an investment … ultimately, it’s all about its desirability as a future home, street, neighborhood.

Residential real-estate is roughly valued by comparison to others like it, and is ultimately favored by investors for its future value …

… even though residential real-estate is considered a ‘safe, easy’ investment, it’s a sham ; a false promise based on comfort: we all know and understand (to a greater/lesser extent) the value of residential real-estate, because we live in it. Or, if not in ‘it’ in something very much like it, probably even in a neighborhood very much like it.

But, this is false and residential real-estate is actually the most dangerous form of real-estate investment because is is largely speculation; most of the return from residential real-estate is based on capital appreciation.

[AJC: there are exceptions, of course: defence housing, rural areas, and so on … generally, though, you are trading future appreciation for lower rents now. Cashflow positive real-estate does exist, it’s just than most people don’t know how and where to find it]

Commercial real-estate has the reputation of being difficult. Of course, it’s not: you purchase a property, you find a property manager, you rent it out, you collect the rents … nothing could be easier.

And, you are rewarded in the short-term: commercial real-estate is mostly about the income that you can derive from the property. It’s current and future value are simply a multiple of that return [the capitalization rate].

The returns are usually higher, per dollar invested, than residential real-estate (although, the banks will lend less against it); capital appreciation more certain; and, it’s easier to manage (tenants generally don’t trash the place; they pay most of the outgoings; they shoulder the lion’s share of the maintenance burden on the property).

Since most people are too scared to invest in commercial (so, they fight each other – in most ‘normal’ markets – to invest in residential real-estate) overall returns, in my experience, are generally much better.

What do you think they key difference is?

How to see the future …

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A Get Rich Slowly reader shared his financial advisor’s advice when asked whether he should go with mutual funds or index funds:

“..in 2008, as banks stocks were dropping rapidly, if they were a part of an index like the S & P 500, they were still held by the fund,  while a  manager of a fund could lower the funds exposure to this sector, thus attempting to limit the downside risk to the portfolio.”

This, of course, is a classic case of trying to time the market … and, we know what happens when anybody (except for Warren Buffett and a select few others who aren’t giving you their advice) try and time the market …

… for example, the famous Dalbar Study shows that people who attempt this reduce their returns from 11.9% to only 3.9%.

In their latest report, Dalbar says:

The unprecedented ups and downs of 2011 drove up the aversion to risk and investors succumbed to their fears. They decided to take their losses instead of risking further declines. Unfortunately, as is so often the case, this occurred just before the markets started on a steady trek to recovery.

So, the idea of ‘taking bank stocks’ out of your portfolio just as they are crashing is very enticing, but simply means that you also need to work out how to put them back in when they are climbing …

… and, if you really could pick when stocks are climbing or falling, you’d be off living the high-life in Monaco.

You certainly wouldn’t be selling your advice to us ordinary folk, now, would you? 😉

A financial playbook for professional athletes …

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A couple of weeks ago I wrote about the dismal financial track record of professional athletes:

78% of NFL players and 60% of NBA players are bankrupt within two years of leaving the game.

Before you jump to the stereotypical conclusion that sports people have had one too many hits to the head, realize that the IQ of professional athletes is no better or worse than yours or mine:

The l.Q. of superior athletes ranges on average from 96 to 107

That’s why I think the reason is simple and generic: anybody who gets money quickly loses it almost as quickly.

To prove my point, look at the financial longevity of lottery winners, who should represent a fair cross-section of society [AJC: setting aside that you must have a low IQ to want to enter the lottery]:

More than 1,900 winners of a Florida lottery who won between $50,000 and $150,000 went bankrupt within five years.

So, if making money too quickly is a sure indicator of later financial disaster, what do you do? Refuse the money?

Not likely!

But, the one advantage that pro-athletes have over the rest of the pupulation is their ability to follow a playbook …

… so, here is the $7 million 7 years playbook for dealing with Found Money (i.e. any large amount of money that suddenly falls into your lap):

If you’re lucky enough to receive such a windfall (e.g. win the lottery; land a professional sports contract; star in a major motion picture; get acquired by Google; etc.), you should spend enough to fully celebrate your good fortune (even more so if it was a result of hard work rather than luck).

But, the amount you spend should be a reflection of how much Found Money you have, up to a maximum of 50% of the amount that landed in your lap. For example:

– If you find $20 on the street, buy yourself a latte and a magazine and then put the other $10 in your end-of-month savings ‘cookie jar’

– If you sell your business for $2 Million don’t spend $1 million

– If you get a $200 a week pay increase:

… do spend $100 immediately (enjoy!)

… don’t spend $100 extra a week (unless you HAVE to)

Here’s a table that will help you decide how much to save and how much to spend, depending on how much Found Money you suddenly come across:

[HINT: For the money that you do want to spend, still apply The Power Of 10-1-1-1-1, but reward yourself with a little from each box e.g. spend $10 today; $100 tomorrow; and, so on (in total) up to your spending limit from the table above.]

If you find yourself toward the high end of this table (e.g spending $1,000 or more), spend it on something – or, some things – that you will remember for a long time.

Oh, and if you’re not a professional athlete … well, you can still follow a playbook as simple as this one, can’t you?

How to guarantee a higher return on real-estate …

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About 10 years ago, my wife’s two nephews came to visit their “Uncle Adrian” to discuss potential investments.

They had decided to buy two apartments (in the USA, called ‘condominiums’) together – I advised them to buy one each, but they decided to go 50/50 on one, then another one a short while later.

I remember being quite proud of them, because they were both still in their early-to-mid-twenties at the time and were already investing in real-estate rather than taking the easy options of either not investing at all or speculating on stocks.

My wife’s nephews have since each married, and they each have two children under the age of 5 …

… and, they still own the two condo’s together.

I was taking one of my grand-nieces [AJC: makes me seem VERY old; I’m 53, which is only SLIGHTLY old] swimming this morning, and we got to discussing how the apartments are going.

My nephew-in-law said: “we’ve made a profit, but I don’t think they’ve been a very good investment”

Let’s examine this in a bit more detail, because I think it explains my last post quite well …

He (and, his brother) bought 2 apartments for about $200k each about 10 years ago; they are now worth about $400k each (they were worth as much as $500k each about 12 months ago, but prices have pulled back from their peak).

The apartments are still generating a small loss on a monthly income v costs basis, but he’s comfortable with a small level of negative gearing … and, he has an interest-only loan, so has not paid off ANY principal in the ~10 years that he’s owned 50% of each apartment.

He has calculated his return as about 7% (before tax) compounded, which I feel is pretty good but he feels that “opportunity costs” are such that he could have done a little better, elsewhere.

All in all, it doesn’t sound impressive …

… to him.

To me, the return is outstanding and explains what my last post is all about!

You see, I asked him how much (a) his loan is, and (b) how much cash he has put in so far (since the property has been making a small loss each month for 10 years).

He says that he put in a 25% initial deposit (interest-only loan), and has put (including the deposit), about $100k in cash (before tax costs/benefits).

This is how I think it breaks down (these numbers are now approximate):

– Property purchased for $200,000 (let’s assume this includes closing costs) with a 25% (i.e. $50k) deposit.

– Loan is interest only, so still stands at $150,000

– Total cash put in to date is $100,000 (made up of the $50k deposit plus another ~$50k negative-gearing losses over 10 years)

Now, let’s look at the analysis:

Cost to my Nephew-in-law:

1. $50k deposit

2. $50k losses

Profit if property sold today:

3. Property is worth $400k

4. Property purchased for $200k

5. Loan to pay off is $150k

Total Return:

6. Cash OUT is: 1. + 2. = $100k

7. Cash IN is: 3. – 5. = $250k

[AJC: notice that the price that he paid for the property doesn’t even figure – directly – into the equation; all that matters is what he owns (current value) less what he owes (current loan + the cash he puts in)]

This is no different to putting $100k in the bank (or some other investment) and getting $250k back after 10 years.

Using a compound growth rate calculator, this is  a 9.5% annual compound return, not 7% as first thought!

You see, he was making the common mistake of thinking that the apartment ‘only’ doubled in value in 10 years (from $200k to $400k, which is a still amazing 7% return in today’s depressed investment climate).

But, you simply need to look at how much cash you put in, against how much cash you get back out when you eventually sell (or, you can still do this calculation on the likely selling price, if you want to keep the investment) to find your real return …

… i.e. the less cash you put in, the greater the return.

It’s usually as simple as that!

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