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When you hear these two words, they conjure up very different images, but in reality, these two words aren’t that far apart. The only difference between goals and dreams is that goals are defined while dreams are not. Read over this article from MSN Money and you’ll see a perfect example of dreaming:

Just How Rich is Rich, Really?

Notice the terminology used in this article when people are asked to define “rich”. They say things like “I want a nice house”, “I want a nice car”, “I want stability”, “To just be comfortable”. If that is how you define rich, then you will never become rich. How do you define a “nice house”? Maybe to you right now, a nice house would be $100,000. Then a couple years down the road, a nice house would be $500,000. Then $1 Million. Then $10 Million. You see, “nice” can’t be clearly defined, that’s why owning a “nice” house is just a dream.

If you want to be rich, then you need to set goals for yourself. If you simply say “I want to make more money” then you will never achieve anything, because how would you know when you’ve reached your goal? Now if you said, “I want to be making $100,000 a year by 2010″, then that’s a much more defined goal; now you have something to work with. With that goal laid out, you can construct a plan to achieve your goal. My goal for this year was to acquire 10 rental units. Honestly I wasn’t fully convinced that I could do it, but I always had the goal in my mind and as of today I have acquired 9 units within the first half of the year. My goal is just about reached and I recognize that because I clearly defined a goal. So set some goals for yourself. They don’t have to be crazy, just some modest goals to start with, then work your way up to bigger and better things. If you so you can enjoy the satisfaction of reaching your goals, or if you come up short think about what you can do to achieve those goals in the future.

One of the things that puts people off on the idea of owning income property is the actual landlording side of the business. Many people don’t want to get their hands dirty dealing with a broken water heater or a leaky sink. I guess I can understand that, as I don’t want to do that stuff either. But some people have a mental block toward this kind of thing. Now let me admit to you, I am not the most handy person in the world. When I was a kid, if something wasn’t working in my house either my dad fixed it or somebody else did. So for me, if there’s a problem with a fixture, I just call a professional to go over and figure out what the problem is. Sure it would be cheaper to do it yourself, but if you don’t know how to do something and you don’t care to do it yourself, you may as well pay someone else to do it. If you really don’t want to do anything at your properties, then you could always hire a property manager. A property manager is a person (or company) that handles all the aspects of a rental, from repairs, to taking calls, to getting new tenants to fill vacancies. If you go this route, you won’t have to deal with anything at your property yourself, all you’ll have to do is consult with your property manager every once in a while to see how things are going. Property managers take a percentage of the gross rent (usually around 8% or so), plus they usually charge a flat fee for taking tenants phone calls. Property management does cost a decent amount of money, but if you are, say, a busy professional looking to invest your money in something better than stocks and mutual funds, buying an income property and having it managed is a smart way to invest your money while still keeping things fairly hands off. Since these people will be handling your incoming rents, make sure you investigate the company thoroughly and make sure they are bonded and insured as well.

As I said before, when buying real estate you want to keep as much of your own money in your pocket as possible. If you’re getting a bank loan though, the bank is going to require an appraisal, survey, inspection, and various other fees that are known as closing costs. Your closing costs will depend on how much the property is worth and the type of lender you use (a mortgage broker will cost you more than a traditional bank loan). For me, closing costs have been between $2000-$4000. That’s a lot of money out of your pocket, especially if you’re a fledgling investor. So what’s a cash strapped investor supposed to do?

It’s a little known fact that you can receive up to 3% cash back on your loan. Any time I make an offer, it is contingent upon the seller agreeing that 3% of the purchase price will be given back to me in order to pay for closing costs. Even if you have to pay a couple thousand more for the property in order to get the seller to agree to these terms, it is definitely worth it because it’s a couple thousand dollars less you have to pay up front. The less you pay up front, the better I say, because as I said before, the less money you have into it, the quicker you can “get your money back” and the quicker you’ll be financially free.

One of the key secrets to building wealth is your return on investment, or ROI. The greater percentage of return you get, the faster you get your money back. In the world of business, you want to get your initial investment back as quick as possible. If you invest in a CD, you’ll get about a 5% return on your investment. If you invest in a mutual fund, you *might* get a 10% or more ROI, as long as the market you’ve invested in doesn’t fall apart (see my previous post). Either way, you’re not going to get rich anytime soon using this method. Now let me give you an example of what I’ve done in the past: I used $6000 towards a down payment and closing costs for a duplex I bought, and after all my expenses the duplex is projected to make me over $2000 in profit in a year, which would be an over 33% ROI. That’s much better, but still, it’s going to take me 3 years to get my initial investment back. Now, if you can put together a deal, say in real estate, with no money out of your pocket, what’s your ROI? Well, if I had invested $0 of my own money in the above deal and profited $2000 in a year, then my ROI would be infinite wouldn’t it? With no money out of your pocket, your profit potential becomes unlimited. Now you can’t count on being able to always do this, but putting together such a deal CAN be done, I know because I’ve done it myself and many real estate moguls like Donald Trump have done this to build their incredible amounts of wealth in a relatively short period of time. Just remember, the greater your ROI is, the sooner you can be financially free.

Here’s an interesting article I found today:

Deepening Debt Crisis Hits Close to Home

Basically it’s discussing the impending problems with certain types of subprime loans, how they’ve been sold, and those who are unknowingly invested in them.

Here’s a couple of points I’d like to bring to your attention, in case you didn’t know: Many of the high risk subprime loans that were approved during the real estate bubble were not sold off singularly to third parties like Fannie Mae or Freddie Mac. Rather, they were packaged together with other, more stable loans, and sold off as a set to third party investors. This practice was banned as of the beginning of March 2007 but of course nearly all of these types of loan sets are still floating around out there. Furthermore, many of these investors in these loans are state pension funds and many mutual funds put together by financial advising institutions. A lot of these loans are now starting to fall apart, and soon the effect will be felt by investors. And if you have a state pension fund or bought into a mutual fund, that could mean YOU. It just goes to show that relying on others to take care of your financial future can put you directly in the line of this type of crisis. Now more than ever it is so important to look after yourself and your finances, because how can you trust anybody else to look after your well being in this day and age?

I guess I always had the entrepreneurial spirit. When I was a kid I lived off a golf course, and I would go into the woods, find lost balls, and walk the opposite direction of the course and sell the balls to golfers. I also lived in an area where there was a lot of construction, and I would go around to the new builds and collect all the aluminum cans in a garbage bag attached to my bicycle, and recycle the cans for cash (back then they paid a lot more for aluminum it seems). By the time I was in high school, I tried various money making schemes, like collecting names, stuffing envelopes, etc. Of course, none of that stuff ever worked and the weight of the world finally got to me and I got a part time job at a grocery store. So I was going to high school and then college all while working in grocery for as many hours as they would give me. While the job really wasn’t that bad I just dreaded going into work every day. I always wanted a way out and finally when I was 21 I figured it out.

This is the story of how I got my start.

Since I was in college I really couldn’t work that much, and my funds were dwindling. I barely had any money and I couldn’t work any more hours because it would have gotten in the way of my studying. I figured there had to be a way to make more than $8 an hour. Working for a wage like that wasn’t going to get me anywhere, and my time (as well as yours) is worth more than that. Way more than that. Anyway, I was a Japanese major in college and I finally gotten to the point where I was poking around on Japanese websites looking for old video games, which I was big into collecting at the time. I found a set that was a really great deal; it was about $600 for nearly 200 games and a system. It seemed like such a steal that I couldn’t pass it up. So with my poor Japanese skills I was able to convince the guy to sell to me. Only problem was, I didn’t have $600 to spare, not to mention the shipping costs which I knew were going to be a ton. Instead of giving up, I contacted a few people and got a game store to buy 120 pieces from me for a total of $1600. The guy fedexed me the check and I used $1000 of that money to wire to the guy in Japan for the 200 games and a system plus shipping. So already I was $600 ahead, and I had 80 games and a system for myself. I eventually sold about half of the games plus the system and I got about $1000 from that alone. And as for the games I sent to the other buyer, he too was very pleased with what he got and the deal we made. So I made about $1600 and kept about 30 games for myself, and my buyer sold his games for a profit in his store. I did all this without a dime of my own money. The secret was offering my financier a great deal that benefitted him greatly. When it comes to money, people take a “what’s in it for me?” stance, which is perfectly understandable. Money is a serious thing and when it comes to investing, people want to be sure that their investment is going to make them money.

The point is, don’t use lack of money as an excuse to not do things. Instead of shutting your mind off, really think and try to figure out how you can raise the funds. The less of your own money you use, the better chance you have of increasing your rate of return, which is quite possibly the most important thing to do if you really want to become rich.

Now that I’ve told you the basic premise of this blog, let me give you some information about myself. First off, I won’t pretend to have all the answers and tell you that I’m some ultra-billionaire living in a castle in the sky or anything like that. What I can tell you though is that I am self-employed through real estate rentals and some other projects on the side, and I am completely self-sufficient. I currently have assets (true assets) valued at around $350,000 and I am not yet 30 years old. While it has taken me a while to get going I have found that investing has a snowball effect; it starts out small but it gets bigger and bigger. And once you overcome the traditional hurdles things get easier and easier. I do not have a traditional job nor have I ever since I graduated from college. Well that’s not entirely true. I worked in an office in downtown Chicago for a whopping 3 days a few years ago. That experience, while painful for me, taught me a valuable lesson: That giving up on my dreams would be giving up on myself. I vowed from that day forward to do whatever I had to to make it on my own. And I will tell you this: There are opportunities everywhere, all you have to do is learn how to see them. Learn to open your eyes and soon you’ll find out that we live in a world that provides us with opportunity everywhere. I personally live in a midwestern town of about 20,000 people and there are tons of opportunities everywhere, so don’t think that you have to live in a big city in order to have opportunity. The problem is most people shut off their minds to opportunity. They get wrapped up in their jobs and buying junk they don’t need in order to numb the pain of their boring lives. To me, self-employment not only makes sense for your finances, but for your spirit as well. Being spiritually sane is important your well-being and your ability to make money. Now, if you do work a 9-to-5 (or any other full time shift) and you love your job, then I’m happy for you. The important thing in your work is to enjoy what you’re doing. Working for money should not be your primary objective. Even if you enjoy your job, investing, say, in real estate on the side is a great way to increase your net worth, offering you a better return on investment (ROI) than CDs, stocks, or bonds, and offering you valuable depreciation which will save you on taxes and ensure that you get a much bigger refund from the IRS than you would just by working. Taking care of yourself financially is so important and most people have no idea how to do it, so it is my mission with this blog to provide you with some zero BS real life examples of how to take control of your financial future.

Well, I still haven’t told you that much about myself have I? It’s not really important though, this blog is not about my personal life. More importantly, this blog is about sharing my personal experiences to help you realize that financial freedom is possible for everybody.

The theme of this blog is “the science of building wealth”. Over the course of this blog I will share secrets of my successes as an entrepreneur and real estate investor, and you’ll also hear various anecdotes from my previous experiences. Not only that but you’ll be sure to hear some of my woes as well. Being self-employed is an adventure but it’s one well worth taking and I encourage everyone to take control of their own lives and work towards achieving your goals.

The real introduction will come soon so just hang tight until then.