We’re all quite familiar with the term “entrepreneur,” but have you ever considered the prospect of becoming a “micropreneur” instead? The only real difference is a matter of scale and perhaps your mental concept of how to approach capitalism and the business world. Here’s the point. To become a businessman doesn’t require that every deal must be Trumpian in nature. Nowhere is it written you must take huge risks and assume massive debt in order to succeed on the grandest stage imaginable. With income property investing, you can start off small, owning and managing a single property, then leverage your profits into an ever larger real estate portfolio as time progresses.
One of the basic problems (and sometimes wonderful) characteristics of human nature is impatience. Well we’re here to tell you that there’s absolutely no reason to risk everything in a desperate bid to achieve financial independence immediately. Our founder, Jason Hartman, is what most people would call a wealthy man but he didn’t get there overnight and you shouldn’t expect to do so either. Overnight success often is accompanied by great personal financial risk, where you might be more likely to fail than succeed. Makes for a lot of sleepless nights. Why not use the vehicle of income property investing to become a micropreneur instead? Here are the four areas you should concentrate on. Call them the 4 Pillars of Micropreneurism if you like.
While it’s not absolutely necessary to be passionate about income property investing in order to make money, it never hurts. Passion pushes people ever onward towards the land of creativity and knowledge. In fact, a life lived passionately is likely to be a whole lot more fun than one that isn’t. But can you find a passion in real estate? Try a different approach. Are you passionate about ditching the cruel shell game that is the modern day world of work and Wall Street stock and instead try your hand at something that might really work? Can you find motivation in the idea of using history’s best investment to create financial independence for your family today and generations to come?
Once again, we’re not suggesting this is a get rich quick scenario. Try to think of it as getting rich slow, steady, and safe. Trust us, we’re all about conservative techniques to achieve return on investment. The dirty little secret is that a person employing a conservative investment approach that includes income property purchase rentals, using Jason Hartman’s methodology, stands a much better chance of graduating into the famed “one percent” than the average person who takes a flying leap at Wall Street. What we’re saying is this; maybe you’re not passionate about real estate (yet) but most of us can generate sincere enthusiasm for creating wealth?
One of the neat things about a micropreneurial approach to income property investing is the ability to create profits and cash flow almost instantly. Many entrepreneurs take on hundreds of thousands or even millions of dollars in small business loans. They’re going to find themselves personally on the hook for paying them back whether the business succeeds or not. Risky. Very risky, especially in light of the grim statistic that 90% of small businesses fail in the first three to five years.
Here’s the truth about borrowing the right way. Jason Hartman has shown us that a long-term, fixed-rate mortgage tied to a piece of income producing property (a mortgage you should never pay off by the way, but instead refinance every seven years or so) is the way average Americans can generate 20% to 30% returns on their investment. Of course, there is no guarantee your mileage will be the same but history has been consistent in showing this level of profit is not unrealistic. Why does income property investing work so well? There are several reasons but one we can easily point is the power of leverage, which is the 3rd pillar of our micropreneurial discussion.
Let’s take a quick look at why the concept of leverage is so crucial to growing wealthy. Think of leverage as the ability to use a small amount of money to control an asset of far greater value. For instance, when you put down 20% on the purchase of a single family residential home, you are essentially using the bank’s money to extend your own buying power. Assume that you have $100,000 cash to invest. You could find a $100,000 house and purchase it outright. A better idea would be to find five single family residential properties each costing $100,000. Rather than plow all your resources into one property, put down 20% on all five, let the bank loan you the rest, and suddenly you have a portfolio of five income producing properties.
If you’ve done your homework and chosen appropriate deals that provide positive cash flow immediately, you’re sitting in the proverbial catbird seat. Under Jason’s tutelage you’ll refinance all five loans in seven to twelve years and use the resulting proceeds to buy as many properties as you have the down payments to afford. You should NEVER pay off your loans, but rather frequently refinance into more and larger real estate deals.
Here’s the reality of this type of investing. You use other people’s money (OPM) to buy assets that you will eventually own. Along the way, you also use OPM to cover the monthly expense of your investment, which is the mortgage payment. How do you do this? By renting the place out! Assuming the deal is right, which it should be when you do your homework, a tenant’s monthly rent payment should cover the mortgage, all associated expenses, and still leave you with a little cash in your pocket. This is called positive cash flow. The bottom line is this. There is no other asset which allows you to rent it out! Don’t try this in the precious metals market or on Wall Street. They’ll laugh you out of the place.
The final pillar of micropreneurism is achieving financial control over your present and future. Recent decades have shown us that job security and guaranteed pensions are little more than pie in the sky promises. In fact, no one really bothers even making the promise any more. The assumption is that you work tooth and nail until a spasm in the economy sends your rear end out the door and into the unemployment line. The best way to avoid this new reality is to create your own wealth. You build it. You control it. You reap the benefits. Depending on anyone else for your financial future is risky business indeed.
We leave you with this thought related to income property investing. Warren Buffett is perhaps the most lauded stock investor of our times, but in a recent CNBC interview he began talking up the benefits of income property investments, primarily single family residential purchases. When the Sage of Omaha agrees with what you’ve been saying for years, you must be doing something right. Kudos to Jason. Take a moment to watch this video. It’s short and straight to the point.
The Jason Hartman Team
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