Monthly Archives: September 2014

How I will make one million dollars in real estate


Sometimes you just have to bend over and pick up the money off the floor.
Sometimes you just have to bend over and pick up the money off the floor.

Life without a plan

All my life I have wanted to be a millionaire. So far, I have failed and to be honest, the gap between wanting to be a millionaire and doing something about it, has been quite wide.

I have always been a mediocre student with grades ranging from Ds to Bs. I had many odd jobs. I have worked as a janitor, busboy, store clerk and so on.

I consider my college degree to be a complete waste of my money, time and energy; but it did give me a student visa to come to Canada and to stay here for at least 4 years.

After graduation, I worked as a financial adviser for one of Canada’s big financial service firms, but the work made me feel dirty and dishonest. We were never focused on helping the clients; we were always focused on earning fat commissions. I quit after only 9 months.

It was then that I started day trading. The serotonin created in my brain after a few big wins was enough to keep the hope going for many months. I day traded for almost 10 years. To this day, I still don’t know if I would had been better off just parking my money in a market index mutual fund.

My other endeavor was teaching dance classes. What a wonderful job. It created a steady flow of cash while it helped me create a rich pool of friends and kept my body in shape.

After many years of teaching dance and daytrading, I decided to get into the short term rental business. With my own capital I bought one condominium and with borrowed capital I bought a second condominium.

The real estate method

My formula for becoming a millionaire is quite simple: Buy four condominiums, each one of them worth about $250 000 for a total investment of $1,000,000 investment. Then rent those condominiums to long term tenants. The monthly rent received for the condominiums would pay the mortgages and provide a bit of cash flow.

As the years pass, property owners are allowed to increase the rent to the rate of inflation, but the amount of their mortgages doesn’t go up. I could use this opportunity to increase rent, increase my cash flow and, at the same time, increase the regular payments to the bank.

If I increase the regular payments that I make to the bank every year, I should be able to pay off all the mortgages within 15 years instead of the regular 25 years.

To implement this strategy, I would buy one condominium per year. As mentioned before, I have already bought two, so I am already half way there. In two more years, if I buy one condo per year, I will be set to own one million dollars in property. Within 15 to 20 years all the condominiums will be all paid off and I will have achieved my goal of making one million dollars in real estate.

Next week I will write a blog about how to make one million dollars in the stock market. My real life scenario will probably be a combination of the two methods.

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10 tricks to cut your expenses without cutting your quality of life

Couple eating at restaurant
At Beauty’s. Great breakfast for little money.

There are two ways to increase wealth:

  1. To earn more money and
  2. To spend less.

I prefer to build wealth by earning more because there is practically no limit to how much a person can earn. On the other hand, you can only cut expenses so far. Eventually everyone has to eat and sleep somewhere. All that being said, there are many ways in which a person can cut unnecessary expenses without diminishing their lifestyle.

I want to clarify that being frugal is not being cheap, it just means getting better value for your money.

  1. This is a comment from a reader, her name is Lorrie: “No cable bills; just Netflix and free streaming sites. No land-phone, just a smartphone and the REALLY reasonable MagicJack ($20 a year for free long-distance across North America).” I’d like to add that with Google Voice you can call phones all across North America for free and with Viber, you can call from your cell phone to someone else’s cell (for free) anywhere in the world.
  2. When looking for a mortgage, many people go to their regular bank, not realizing that by shopping around they can save thousands of dollars.
  3. Buy a used car. It’s a much better deal than buying a new car. If you buy a car and sell it the next day, the car is still valuable, but the price drops dramatically. I find that the sweet spot for buying a used car is four years. At four years old it’s no longer considered new but it could last you for over a decade.
  4. Sometimes the main difference between an expensive restaurant and a less expensive restaurant, is just that, the price, nothing else. When eating out, go to restaurants which give you better value for your money. Also, choose restaurants where you can bring your own wine.
  5. Comment from another reader: “Buy at a fripperie (second hand store).” I really like this advice. I have bought so many books, dishes, furniture and some clothing at second hands store. The satisfaction of buying something for a quarter or its original price can last for years. I shop at Le Chainon.
  6. A big way in which many of us can save lots of money without making any sacrifices, is by buying generic products rather than brand products. When at the supermarket, just buy the store brand. Most of the time it’s exactly the same product with a different label.
  7. When traveling, use Airbnb instead of a hotel. You get so much more for so much less. Use Uber instead of a taxi. Eat at people’s house with Eatwith.com.
  8. If you are a smoker, a habitual drinker, or a drug user; reducing or eliminating these drugs will be a great benefit to your health and to your budget.
  9. When considering an education, take as many free online courses as possible, then find classes at your local community college, and then and only then, go to a university.
  10. When getting together with friends, consider potlucks at the park or at your house or the house of one of your friends. This is a great way to socialize and have a great time for very little money.

This list is only a start. I am sure if you think about it for a few minutes, you could find ways to cut your expenses without cutting the quality of your life.

Additional advice from our reader Ivan Murcia, Coach & Business Consultant, http://about.me/ivan_murcia

  • “Shopping & Selling on Kijiji, Amazon.ca and the new Amazon Subscription  where you can have excellent products, save time and money plus delivery included! There is also Alibaba if you want to have different quotations or buy directly from the factory.”

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Book Review: Outliers by Malcolm Gladwell


ouliersThis book was a gift from from my co-host and business partner Cheryl.

There are some chapters which I found to be a great read and some chapters which I found long and boring.

The introduction: “The Roseto Mystery,” tells us about this little Italian town in Pennsylvania where people die mostly of old age. “There was no suicide, no alcoholism, no drug addiction, and very little crime.” It turns out that the reason for this small town’s well being is that they have a strong social network. The takeaway here is that one of the best thing that you can do for your overall health is to give priority to the quality and quantity of time with family and friends.

In The Matthew Effect (or accumulated advantage), Malcolm explain why most of the Canadians best hockey players are born in January, February and March. The reason is that the leagues of teams are determined by calendar year. So a kid born in January is older and bigger than a kid born in December. Since the kid born in January is more mature, he is considered a better athlete and he gets extra coaching and extra practice and he does become a better player, therefore becoming a self fulfilling prophecy. Other than being an interesting fact, I don’t know how to use this information.

The 10,000 Hour Rule. I believe that this is the chapter that made this book famous. In principle it’s easy to understand. People who have 10,000 hours of practice in any particular activity, become experts in those activities and eventually they get a break which catapults their careers and makes them famous and successful. Some of the examples are Bill Joy, co-founder of Sun Microsystems, The Beatles, Bill Gates, etc.

I wonder, what happens to the people who practice over 10,000 hours and never become successful in their fields? And people who became famous and successful without paying their dues.

Malcolm tries to democratize success. As he explains the series of particular events which occurred in Bill Gates’ life, he implies that Bill Gates had many lucky strikes which contributed to his success. Unfortunately, he discounts character, perseverance and determination. Bill Gates was lucky to have affluent parents and to have access to computers when practically no one else had access to computers. But Bill Gates had to use one of those computers between 2 to 6 am. in the morning. As a teenager, to have the ambition and the determination to get up every night to use this computer, in my opinion, shows that his character had a bigger roll in his success than his lucky chances.

Of course, the examples that disprove the 10,000 hour rule are abundant. Sir Richard Branson created one of the most successful airlines without knowing anything about airplanes, the rock band The Sex Pistols became a great success even if their musicians could barely play their instruments.

In The Trouble with Geniuses, Malcolm proves that being smart is not enough to become successful. Smarts is no more than a factor in the equation. It does help to be smart, but many other factors can become more important. “Intellect and achievement are far from being perfectly correlated.” Another factor which is considered more important, is the upbringing of a child, and he explains the concept of “Concerted Cultivation.”

This chapter makes me feel hopeful because I don’t consider myself an intelligent person, yet I like to think that I have a chance at being successful in life.

In The Three Lessons of Joe Flom, Malcolm tells us the story of how Joe Flom, a Jew,  became a prominent attorney in New York City. Malcolm attributes this success to the fact that Joe could not get a job working at any of the well known firms in New York City, simply because he was Jew. So Joe opened his own law firm in association with other Jews who also were discriminated against. Joe et al. ended up doing the kind of work that no other law firm wanted to do, mergers and acquisitions. When merger and acquisitions became popular, Joe et al., were at the top of the pyramid and they became among the most successful law firms in New York.

What is the lesson here? to become a well known, high paid attorney you have to be Jew and be discriminated against? Maybe to become a good gardener in California you have to be a Mexican immigrant? To become a good maid you have to an immigrant from the Philippines?

Here are two excerpts which summarize Malcolm’s attempt to democratize success:

“Successful people don’t do it alone. Where they come from matters. They’re products of particular places and environment.”

“The sense of possibility so necessary for success comes not just from inside us or from our parents. It comes from our time, from the particular opportunities that our particular place in history presents us with.”

True in most part. You have a higher chance of success if you live in the U.S. than if you live in Ethiopia. But there is a point in which we have to acknowledge the character and personal ambition of each individual.

In the chapter “Harlan, Kentucky”, Malcolm explains why people from the South of the U.S. have a hotter temper than people from the North. My question is: How is this relevant to me. This chapter suggest that we are the sum of all the generations before us. I agree with Malcolm, but was not able to figure out how to use this information.

The Chapter “The Ethnic Theory of Plane Crashes” is one of Malcolm’s favorites. He claims that airplane pilots from countries which have pronounced social hierarchies have more airplane accidents than airplane pilots from countries with less pronounced social hierarchy. The reason given is that the copilot is less likely to question the actions of the pilot.

This chapter was 47 pages long. He could have made the same point in 2 pages.

In Rice Paddies and Math Tests, Malcolm claims that there is a direct relationship between countries that farm rice, such as Japan, Korea, Singapore, and Taiwan and the outstanding math results that kids from those countries achieve.

On the surface, this seems plausible, but then how does he explain that kids from India, Indonesia, Vietnam and many other countries in Southeast Asia, which are major rice producers, don’t do as well in math exams?

Marita’s Bargain turned out to be my favorite chapter and the only one with information that I can put to use. He uses a case study of KIPP (Knowledge Is Power Program). KIPP is a national network of college preparatory schools in under-resource communities throughout the U.S.

What makes this network special is that the students spend more time in school every day and they have shorter summer vacations, therefore giving its students the edge of extra preparation. I see the logic in this chapter, the more that you prepare, the higher the chances of success.

The last chapter A Jamaican Story, was Malcolm’s autobiography. He shares with us the origin of his ancestors,  from the racial mix of a white landlord and a slave woman in Jamaica, to the present time when Malcolm has become an accomplished writer living in New York City. Malcolm finds a way to thank his grandmother Daisy for the sacrifices that she endured in order to get an education for her daughter (Malcolm’s mother), who in turn provided an education for Malcolm.

In short, I found the book highly entertaining and I appreciated the nuggets of information through the pages. At the same time I will not go out of my way to recommend this book. For each anecdote that proves the points he is trying to make, there are many anecdotes which prove the contrary.

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