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Keith Cunningham

5 Quick Wealth Creation Tips

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“So what do we do? Anything. Something. So long as we just don’t sit there. If we screw it up, start over. Try something else. If we wait until we’ve satisfied all the uncertainties, it may be too late.”
~ Lee Iacocca

Wealth CreationFirst, let’s be clear about something. Wealth and income are not the same thing. I think many people confuse the two.

Just because someone is making $250,000 a year doesn’t mean they are wealthy. In fact, they often aren’t. They live in a big house with a big mortgage, drive a fancy car, with big payments and take luxurious vacations. They are living the high life but that doesn’t mean they are wealthy. In fact, many people with big incomes are struggling to stay afloat because they feel they have to keep up with the other people around them. They have to live in a certain area of the city, they have to drive a certain type of car, and have a cottage for their family to spend weekends at in the summer. They have a whole bunch of liabilities burning through the big pay cheques they bring in every month. If something happens to that monthly income then their entire lifestyle will crumble before their eyes.

They are not necessarily wealthy.

Income is what you make… the money that is coming in every month. Wealth is what you have built up. It’s what you’re worth.

So how do you create wealth? There are five simple things you can do:

  1. Learn the difference between assets and liabilities, and then focus your efforts on accumulating assets. And folks, I don’t care what your accountant tells you, your home is not the kind of asset we’re talking about here unless you have a rental suite in the basement that is paying your mortgage. Keith Cunningham says it best when he says “Assets will feed me. Liabilities will eat me.”  If you have to make monthly payments out of your own pocket then you haven’t bought yourself the kind of asset that is building your wealth.
  2. Don’t eat your babies. We partnered with some friends of ours on one of our latest purchases. They were selling their house to purchase a bigger place with a yard and we pleaded with them to not “eat all their babies” when they sold the property. We suggested they send some of their babies out into the world to make more babies. And to this day they continue to report back to us on the babies they’ve eaten or the babies they didn’t eat. The income you earn are your babies. When you invest your money into assets that produce cash flow, like a solid rental property, you’ve effectively sent your babies out into the world to grow up and make more babies for you. So, when you spend that hard earned money, you are effectively eating your babies. When you think of it this way that brand new flat screen t.v. or designer purse doesn’t look as appealing does it? This is also known as paying yourself first and there have been dozens of books written about the subject from the Wealthy Barber to David Bach’s books on the Automatic Millionaire Finish Rich principles. The bottom line is that you can’t spend all your money and expect to become wealthy.
  3. Do what you have to do to become who you want to be. In other words… if you made a new years resolution to buy $1 Million worth of real estate this year then let’s get to it. Too many people are searching for a magic button to solve all their problems but the real solution lies in yourself. If you want to build wealth you have to do something every day to do that. You have to be so serious about building wealth that you are actually going to DO something about it. If you want financial independence you have to take action to create it. Period.“As you begin to take action toward the fulfillment of your goals and dreams, you must realize that not every action will be perfect. Not every action will produce the desired result. Not every action will work. Making mistakes, getting it almost right, and experimenting to see what happens are all part of the process of eventually getting it right.” ~ Jack Canfield
  4. Use leverage. When I suggest that you don’t eat your babies, I am not suggesting that instead of eating them you save them. It’s going to take a long time to save your way to rich. And let’s face it … cash is actually worth a little less every year so if you have money sitting in the bank it’s actually shrinking in value. So instead of saving your way to wealth you invest your way to wealth. And… when you invest a dollar use other people’s money to leverage your dollar into many many more dollars. Leverage is the best part of being a real estate investor. For very little money you can control assets worth hundreds of thousands of dollars… and in many cases you barely need any of your own money at all to do this.
  5. Educate yourself. I cringe every time one of our friends mentions what their financial planner suggested they do. It’s not because they’ve trusted a stranger to invest their money instead of investing in one of our deals (ok… maybe there is a little of that going on but not much!). It’s because the advice of an average financial planner is not really that good. Now… there are excellent financial planners out there. Most of the time they are fee based… so they make money because YOU PAY THEM to evaluate your situation and help advise you on your investments. This is very different than the free financial planners that make money when they do a transaction… and unfortunately while I am sure there are good ones, the advice of these folks is almost always the same. And it’s not usually very good. But it’s easy… and it’s free… and a lot of people will find themselves utilizing the services of a financial planner for that reason. So instead of following the easy and free route take the time, money and effort it requires to educate yourself. If you want to invest in stocks, learn about stocks. And if you want advice pay someone that knows what they are talking about, has made money for themselves and for others. The same things goes for real estate. Don’t just blindly hand over your money… if you want to create real wealth you need to get in the driver seat of your own financial situation and drive. I really don’t think the good things in life come for free … except in the Rev N You newsletter… 🙂


Wealth creation is not something that you can do overnight. It’s not going to be easy but it is relatively simple and if you take these five tips to heart and work them into your plans for 2010 I promise that you will see some very impressive results by the end of the year. And if you don’t, I will give you a full refund for what you spent to read today’s article. 🙂

 

Published on January 6th, 2010

How to Analyze Risk in Real Estate Deals

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Before we had to start a frantic search for a new real estate partner on the two real estate deals we were working on in August we circulated details on one of the deals to some people who had previously expressed an interest in investing with us.

At the time, we were simply gauging people’s interest because we were seeing some really good opportunities and wanted to line up a few other people to work with in the coming months.

The one deal we were working on was really attractive in terms of immediate returns, and in it’s 2 – 4 year ROI. In fact, within 4 weeks of closing we’ve made $8,000 on that deal, and will be making $500/month each month in positive cashflow. Plus, we’ve got a locked-in Annual ROI of 13% that can only go up.

And there are multiple exit strategies and options for this property in the future if the current strategy falls through. It’s an awesome deal.

Because it is such a good deal we wanted to show potential partners what was possible. Many people were interested, but more than one person responded saying that the deal sounded too risky. One of my friends, someone in the real estate industry in Toronto actually said “sounds way too risky for my first deal”.

I was truly shocked. Real estate deals just don’t come with much less risk than this one.

Honestly, even though it’s a down market, this was such a desirable property that we could have flipped it for a small profit! Buyers were literally waiting for the deal to fall through – anxious to grab it from us.

But, the thing is, everyone views real estate risk differently.

And, likely we spend too much time presenting potential pitfalls of a deal but we always strive to undersell and over-deliver. It’s one secret to happy real estate partnerships. And if someone perceives a deal to be too risky we don’t want to partner with them and have them losing sleep over it. So it’s not a bad thing that people weren’t interested in the deal, but it did make me stop to think about how we could better present potential risks in the future and how you can measure and evaluate risks involved in potential real estate deals.

So … I dug into my notes from the books I’ve read and the courses I’ve taken. The one thing that kept coming to the surface for me was this tool that Keith Cunningham shared in his Business Mentoring program that I took earlier this year. The tool is intended to be used to evaluate potential businesses to buy (he specializes in buying floundering businesses and turning them around), but I think it works extremely well for real estate investing too … I created this video to show you how it works. You can also download a one page summary of the tool below.

Download the One Page Summary of the Risk Analysis Tool:


Downlad Real Estate Risk Tool

Published on October 8th, 2009

The Day We Became Real Estate Investors

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Real Estate Investors 3 Year Newsletter AnniversaryIn a way, it was like learning that the tooth fairy didn’t exist. Even with the wild imagination that I had as a child, I don’t remember ever REALLY believing that the tooth fairy really wanted to give me money for the teeth I’d lost. But, I wasn’t about to argue with something that put coins under my pillow while I slept!

As I sat in this seminar though, and listened as my whole vision of reality was splintered, I felt a bit like I did when I learned that there definitely was not a tooth fairy. I had always suspected something wasn’t quite right with the story; It didn’t change how I felt about the tooth fairy, but it was still a bit surprising to learn the truth.

I am talking about the story behind the book that got us started …Rich Dad Poor Dad by Robert Kiyosaki. You see, I read so many of the Rich Dad books that I actually started to feel like I personally knew the characters in the story. Even though the whole story behind the book always seemed a little off, I never really questioned it.

Then, I met “Rich Dad”. He’s far too young to be the age of Robert Kiyosaki’s rich father portrayed in the book. Yet, he is every bit the exceptional business man, gifted educator and brilliant communicator I had expected. I’m talking about Keith Cunningham, who worked with Robert Kiyosaki for nearly a decade. His teachings are what Robert based his books upon. Keith is the author of a book called Keys to the Vault, and with his wife Sandi runs some extraordinary business coaching programs in Austin, London, Sydney and a few other places around the world.

Sitting in Keith’s course, learning that “Rich Dad” was not really who the book made him out to be shook me up a bit, but I was not totally shocked. Like I said, it’s like the tooth fairy. It really didn’t matter if the tooth fairy was real as long as she kept putting money under my pillow! It really doesn’t matter that “Rich Dad” isn’t who Robert Kiyosaki says he was, because that book still change my life (and Dave’s).

We wrote about Rich Dad Poor Dad before. Today, I want to share 7 revelations from that book that turned Dave and I into real estate investors and changed the way we looked at money (and I am going to add a few newer thoughts from Keith’s teachings):

  1. “Rich people acquire assets. The poor and middle class acquire liabilities, but they think they are assets.” p.58
  2. As an employee who is also a homeowner, you will find yourself going to work every day to pay for your house, to pay your taxes and to pay the bank. The more you make, the more you pay. The more you pay the harder you feel like you have to work so you can keep up with the payments. You have to learn a way to make your hard work pay YOU more. You need to learn how to get your money working for you instead of you working for the money.
  3. Use assets to buy luxuries. “Too often today, we focus to borrowing money to get the things we want instead of focusing on creating money. One is easier in the short term, but harder in the long term. It’s a bad habit that we as individuals and a nation have gotten into. Remember, the easy road often becomes hard, and the hard road often becomes easy.”p.182
  4. Take action … immediately. It’s not about waiting for the perfect market, the perfect moment or for something else to happen. Take steps today to learn what you need to learn and do what you need to do. Keith said to us “When we can’t find the perfect solution we stop moving … instead of looking for the perfect solution figure out what you can do TODAY to improve your situation.”
  5. Most people actually make choices that result in the easy path – which is not the path to wealth. Most people are actually choosing NOT to be rich. “Financially, with every dollar we get in our hands, we hold the power to choose our future to be rich, poor or middle class. Our spending habits reflect who we are. Poor people simply have poor spending habits.”  p.167
  6. Smart investors aren’t trying to time the markets and they are not listening to the ‘chicken littles’ of the world that will always tell you why something can’t be done. “Why this is hard for most investors is because buying what is not popular is frightening to them. Timid investors are like sheep going along with the crowd. Or their greed gets them in when wise investors have already taken their profits and moved on.”p.171
  7. You have to start where you are today. Keith suggests that most people want to start at the front of the line, not at the back of the line. You can only start where you are today. So instead of focusing on all the reasons you don’t have time to wait to get to the front of the line or on any of the excuses why you won’t ever get to the front of the line, ask yourself “What are 5 things I can do to improve the situation?” Your problem may not be solved right away but if you do those five things you will move closer to the front of the line.

The book didn’t teach us how to invest in real estate, but it gave us the perfect mindset to start. We knew we wanted our money working for us, and we knew we wanted to buy assets not liabilities. And, we started immediately by getting control of our expenses while we read a couple of books on real estate investing. That is how we began. Of course, after buying a few properties we went off track a bit. Thankfully we did because those mistakes taught us our biggest lessons and gave us great stories to share with our readers. But our first investment which was inspired by this book was one of our best. When we began our real estate investing, we did so with a great mindset for wealth creation!We hope you will too!

Published on April 3rd, 2009

Kiyosaki, Robert.Rich Dad Poor Dad. Warner Books, 1998.

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