Using Real Estate and Network Marketing to create wealth

Most of us are aware of the many advantages of building a passive income via Network Marketing. Robert Kiyosaki mentions the advantages of Network Marketing in his books “Rich Dad Poor Dad” and  ”Rich Dad’s guide to Investing“. He also suggests that people who are serious about achieving success join a Network Marketing business in order to learn some people skills and learn how to sell.

Although you can earn thousands of rand’s with Network Marketing, it is not this monthly passive income that will make you rich beyond your wildest imagination. It is what you do with that money that will make you rich! A rich man can turn trash into cash, but a poor man will turn cash into trash. What do you do with your money? Spend it on trash like big screen TVs, cars, boats, etc? Or do you spend it wisely to create even more wealth? Do you work for money or do you let money work for you?

I often find people who have been working on their Network Marketing business for a year or two and only earn a couple of thousand rand’s per month. They then complain and claim that it is not working for them. A passive income of R4,000 per month will not make anyone rich!

The reason that their income does not excite them is quite simple; they do not know how to apply their money so that their money can create them more wealth. They are often those who turn cash into trash.

If used correctly you can use your passive income as leverage – to create more wealth. The secret to wealth is to let your money work for you and to use the bank’s money to create wealth.

Real Estate is the fastest way to create wealth, if you know what you are doing. There are various ways of investing in real estate. You can buy and sell; you can buy and let, invest in property syndication,  property funds or listed property.

You can buy and sell or buy and let properties using the bank’s money. You use your extra income only to qualify for a bond to buy a property. We call this leveraging.

Below is an example of how you can use your measly little R4, 000.00 per month passive income, to generate even more money in a relatively short time. This is an example of letting your money work for you!

One of the easiest methods to earn a short term income from Real Estate Investing is to sign an offer to purchase on a property in a new development,  then sell that property once it has been completed.

When you see a new development, you will note that they often say “60%  SOLD OUT”. Sometimes this is a sales gimmick, but mostly it is true. These units have been sold to investors. If a developer needs finance for a big development the bank requires an “Intention to buy” on some of the units – as security! Thus the developer needs people to “buy” the units even before they start building the units. The investors who buy first will get it at the best price.

However, the biggest advantage is that you will sign the offer to purchase today, while the unit may only be completed in a year or two’s time. During that time ‘capital growth’ will take place. The unit will be worth more by the time it has been completed than at the time of your purchase. Due to the fact that it is sectional title (make sure it is sectional title), you will only start paying your bond when the unit is complete. Thus you can enjoy capital growth for a year or two without paying a cent for the property. Once the unit has been completed, you can now decide to either sell it or rent it out. For long term wealth creation renting the unit out will be the best option and for short term capital gains, selling the unit would be the best option.

Anybody can do this if they earn enough money to qualify for the bond. And this is where your Network Marketing income can be just that little bit extra you need qualify for the bond for such a property.

As an example, one of the developments in Midrand – where we signed an offer to purchase, took just over two years to complete. We paid a R5, 000 deposit to secure the unit and qualified for a bond because of my Network Marketing income. We then enjoyed the capital growth of the property for two years before it was completed. Once completed, we sold it and made R190, 000 profit. Thus a R5, 000 deposit returned a R190, 000 profit. If it was not for the extra income I earned from Network Marketing, I would not have qualified for the bond.

Next time you look at the figures; do not think too lightly of the income you might be earning from your network.  Learn to think outside of the box. If you see the bigger picture you can also use it in setting your goals. We often do not know what to do with an extra R4,000 or R6,000 per month, but if we think big and we think in terms of qualifying for a bond for a second property, then all of the sudden such a small income becomes something noteworthy.

In order to become wealthy you need to develop the correct mind set. One way of doing that is by reading relevant books. If you are still full time employed and are new to the idea of earning a passive income and working at home, then I suggest you read “Rich Dad Poor Dad” by Robert Kiyosaki. It will teach you how to think differently about money and its application. Once you finished reading “Rich Dad Poor Dad” you must also read “Rich Dad’s Guide to Investing” also by Robert Kiyosaki. This book is not only about investing; it also teaches some important life skills and shows you how the rich think about money. Both these books can be obtained at any book store or you can buy it online at www.businessbooks.co.za