5 ways to make money

Thomas Beyer

Senior Forum Member
REIN Member
Occasionally I speak at events and people ask me about real estate investing or making money in general.

There are really only 5 ways to make money .. and you can do all 5 in time .. but you have to take them all seriously, especially step one !

1) You work

This is the most common way to start. You work, i.e. you exchange your time for money. The more time you give, the more money you get. A pretty linear relationship. Proven though through centuries !

Many people fail at that stage already. They don`t take it seriously. They show up late. They chat with friends online. They do personal business on the side. They don`t understand the business they`re in. They don`t give 110%. Maybe 50% or 85% .. or 35%.

Yes, you can hide for a few days or a few weeks. Most employers realize after a while who is an excellent performer and who isn`t. If you work hard at your job, you get ahead. Give the extra 10% or the extra 4-5 hours every week. Read up on your industry. Go to industry conferences. Seek a mentor. You get promoted. You get more $s per hour. If you have more skills, you get more $s. So, yes, formal and informal education helps. If you work hard, and get more $s than you spend, you can save some $s. Hence:

2) You invest your own $s.

You buy real estate or mutual funds or stocks or GICs or bonds or whatever seems to fit your risk tolerance, skills and timeline. Like 1) it takes time to find out what a good invetsment looks like. Take it seriously. This investment could be more passive (say a stock or mutual fund) or more active (say real estate or active stock trading)

3) You invest other people`s money.

Once you`ve mastered 2) you have the right to ask for OPM (other people`s money) such as JV partners or money partners or mortgages or lines-of-credit to invest, for example in real estate: Usually a combination of your own time, your own money and OPM (mortgage, LOC, JV money or all 3). You borrow money at, say 6%, and invest it for 12% to 150% ! This assume a modest degree of risk as you must pay the rate your agreed with OPM but invest at a more uncertain, yet frequently much higher rate. This assume 1) and 2) is in ship-shape !

4) You use other people`s time / employ other people

You have a small or large business where you pay people a wage/salary/hourly wage and then use their time to make money for yourself. This works usualy only if you`re good at 1) 2) and 3) as usually your have to work hard too to lead by example and have some (of your own or other folks`) money at risk.

5) You have Intellectual property (IP)

Intellectual property or royalties make money for you once you have created them: maybe you have written a book. Maybe you have written lyrics or songs or music. Maybe you have painted a picture and it is copied widely for a fee. Maybe you have invented a name and copyrighted it. Maybe you have a patent or a system that can be used for a fee. Elton John makes money in his sleep today - but he was very good at 1) in the beginning of his career.

So, there you have it in a nut shell: 5 ways to make money. Are you aiming to fire on 5 cylinders ? Or is it only 1/2 ? Try harder .. or try different ways .. but usually they go in that order of: 1, 2, 3, 4 5 ..

Did I forget something ? Any insights from the REIN world at large ?

Anyone out there with success in 3) or 4) or 5) and who did not work hard at 1) or 2) first ?

Fire away !
 

ChrisDavies

Senior Forum Member
Registered
Those are some terrific insights Thomas!

When I talk with people about things like my personal Belize, even if they understand what I`m trying for they don`t understand how I`m going to get independent without winning the lotto. I`m focusing my efforts on 3,4,5, as well as developing a career I enjoy.

I`m sure there are lots of people who have made the same list you did, but yours is nice and succinct. Thanks!
 

RebeccaBryan

Inspired Forum Member
Registered
quote........"Try harder .. or try different ways".


Just a little something that I learned from a seminar I once attended a few years ago. "Trying" doesn`t work.

Do this simple exercise:

Throw a pen onto the floor in front of you. Now, try and pick it up.

My point. Only doing works.

Thomas, everything else in your post makes perfect sense to me. And, yes I know what you meant by "trying". It`s just that way too often, peole make the mistake of claiming they are either "trying" when they actually are not, or vice versa they are not giving themselves enough credit and they are actually "doing" and using the word "trying". I hope that was articulate enough to get my point across.
 

Thomas Beyer

Senior Forum Member
REIN Member
I should add that REAL ESTATE covers items 1) 2) and 3) .. and/or 4) if you do it as a small business with perhaps a P/T accountant and/or P/T money finder/partner and/or P/T property manager and/or P/T repair guy ..

that`s why I LOVE REAL ESTATE !!

btw: I used to own a software and consulting firm which did reasonably well and actually provided much of my seed capital in the late 90`s .. but item 5 - IP was hard and very expensive to get .. and item 3 - OPM was hard too .. much easier in real estate, more fun, more rewarding, more options and more scalable !

btw2: if you are not good at 1 - work .. likely you`ll fail at real esate as well as it is a lot of work .. the deals or the mortgage or the unique clause in the contract or the investor money or the gains or the JV partners don`t just fall in your lap .. it is a lot of work to get them .. only after a lot of work intially does it seems "easy" later on .. Tiger Woods or Donald Trump or Don Campbell or Robert Kyasaki make it look easy .. but they did and do work VERY hard still !!
 

joeiannuzzi

New Forum Member
Registered
Thomas I think you pretty much covered it!

There are only three things you can ever do with money once you have it in your hands.

1) Spend
2) Lend
3) Invest
 

Thomas Beyer

Senior Forum Member
REIN Member
QUOTE (joeiannuzzi @ Feb 23 2008, 02:39 PM) Thomas I think you pretty much covered it!

There are only three things you can ever do with money once you have it in your hands.

1) Spend
2) Lend
3) Invest

almost right: you can also DONATE .. but maybe that falls under "invest" in your category .. i.e. invest with benefits accruing to others than yourself !

How about these phases in life: learning, earning, returning !
 

joeiannuzzi

New Forum Member
Registered
QUOTE (thomasbeyer2000 @ Feb 23 2008, 01:50 PM) almost right: you can also DONATE .. but maybe that falls under "invest" in your category .. i.e. invest with benefits accruing to others than yourself !

How about these phases in life: learning, earning, returning !


Sounds good to me!
 

RedlineBrett

Senior Forum Member
REIN Member
QUOTE (thomasbeyer2000 @ Feb 23 2008, 02:50 PM) almost right: you can also DONATE .. but maybe that falls under "invest" in your category .. i.e. invest with benefits accruing to others than yourself !

How about these phases in life: learning, earning, returning !

Excellent topic Thomas!

I would only comment that while you`ve done an excellent job in framing the five principle ways to make money what I find is to be more challenging is deciding when is the right time to `graduate` yourself and move up to the next rung on the ladder.

How many properties is enough to go out and start pitching money partners?

How much business do you have to have to go out and get an employee? Move out of the home office?

At which point is your business/system good enough to go out and market the IP behind it? Franchise the business or open up another shop in another town?

While my business partner and I know the `end game` that we want to achieve and have a pretty good understanding of the steps to take along the way the business it`s when to take these steps that`s the hard part for us.

But I think that`s just the way it is when you`re running your own business.. no one else can really make these decisions for you.. you just have to feel when it`s the right time and go for it same as getting married, having a kid etc.

thoughts anyone?
 

gwasser

New Forum Member
Registered
It is true, Thomas` five ways of making money summarizes most forms of money making. It is also true, that no matter what you do, you`ll have to work at it. With a bad work ethic you will hit the wall no matter what you do. Yes, you can select the way to make money that suits you most. However, many started with paid job and then graduated to investing and/or running their own business. The luckiest ones, such as Robert Kyosaki, made money from royalties. In fact, I suspect Robert made more money from his seminars than from any other source. He may be a very talented teacher, but from what I read, he is not necessarily a very talented employee, businessman or investor (just my personal opinion).

But with all this, there is one thing missing. You need seed money to start investing, to start your business (like Thomas Beyer) and have the resources to write and publish say a book. This requires you to be good with your money. No consumer debt, living below your means to maximize savings (without living in utter misery - there is a balance) and finding a secure spot to park your money in preparation for your next move.

Your next move, when will it come? Simple, when you`re ready! Both financially and mentally you have build the skills to succeed in your current way of making money. You just feel you like doing something else, like... expanding,... diversifying. That is how it usually goes. When you`re ready to move, the right opportunity will present it self; the only thing you have to do is grab it - after some study, analysis and plain pragmatic thinking.
 

Thomas Beyer

Senior Forum Member
REIN Member
How many properties is enough to go out and start pitching money partners?

>>> I`d say after 3 or 4 .. but if you`re bold and good .. maybe 1 or 2 only ..

How much business do you have to have to go out and get an employee? Move out of the home office?

>>> you`ll notice .. once you do too much stuff you do not like or are not good at !

>> home office: keeps expenses low and the commute short .. what`s wrong with that ? Or use Tim Horton`s or Sheraton hotel lobbies to meet clients .. a 5000 location enterprise !! We finally moved into an office once we hit 8 buildings, 4 employees and 500+ units .. before it was all home based because it works as it keeps expenses low and the commute short ...

At which point is your business/system good enough to go out and market the IP behind it? Franchise the business or open up another shop in another town?


>>> if you see patterns .. and if this pattern is sellable .. but selling this patterns takes work too .. so the work involved to sell may not be worth the IP income !

While my business partner and I know the `end game` that we want to achieve and have a pretty good understanding of the steps to take along the way the business it`s when to take these steps that`s the hard part for us.

>>> or the good part .. YOU make the call not someone else .. if it were easy everyone would do it ..

nothing ventured .. nothing gained ...
 

RedlineBrett

Senior Forum Member
REIN Member
QUOTE (thomasbeyer2000 @ Feb 24 2008, 06:36 PM) How many properties is enough to go out and start pitching money partners?

>>> I`d say after 3 or 4 .. but if you`re bold and good .. maybe 1 or 2 only ..

How much business do you have to have to go out and get an employee? Move out of the home office?

>>> you`ll notice .. once you do too much stuff you do not like or are not good at !

>> home office: keeps expenses low and the commute short .. what`s wrong with that ? Or use Tim Horton`s or Sheraton hotel lobbies to meet clients .. a 5000 location enterprise !! We finally moved into an office once we hit 8 buildings, 4 employees and 500+ units .. before it was all home based because it works as it keeps expenses low and the commute short ...

At which point is your business/system good enough to go out and market the IP behind it? Franchise the business or open up another shop in another town?


>>> if you see patterns .. and if this pattern is sellable .. but selling this patterns takes work too .. so the work involved to sell may not be worth the IP income !

While my business partner and I know the `end game` that we want to achieve and have a pretty good understanding of the steps to take along the way the business it`s when to take these steps that`s the hard part for us.

>>> or the good part .. YOU make the call not someone else .. if it were easy everyone would do it ..

nothing ventured .. nothing gained ...

Thanks for posting
I agree - if it were easy everyone would be doing it. And I prefer this `hard work` to when I was working for the man 100x over
 

Thomas Beyer

Senior Forum Member
REIN Member
QUOTE (joeiannuzzi @ Feb 23 2008, 01:39 PM) Thomas I think you pretty much covered it!

There are only three things you can ever do with money once you have it in your hands.

1) Spend
2) Lend
3) Invest

What`s the difference between lending and investing ? Isn`t lending just a sub-set of investing options ? Lending is usually at a fixed interest rate (although it could be tide to equity) wheeras investing is usually equity based / not fixed ?
 

UTCVenturesLtd

New Forum Member
Registered
QUOTE (thomasbeyer2000 @ Feb 23 2008, 11:48 AM) Occasionally I speak at events and people ask me about real estate investing or making money in general.

There are really only 5 ways .. and you can do all 5 in time .. but you have to take them all seriously !

1) You work

This is the most common way to start. You work, i.e. you exchange your time for money. The more time you give, the more money you get. A pretty linear relationship. Proven though through centuries !

Many people fail at that stage already. They don`t take it seriously. They show up late. They chat with friends online. They do personal business on the side. They don`t understand the business they`re in. They don`t give 110%. Maybe 50% or 85% .. or 35%.

Yes, you can hide for a few days or a few weeks. Most employers realize after a while who is an excellent performer and who isn`t. If you work hard at your job, you get ahead. Give the extra 10% or the extra 4-5 hours every week. Read up on your industry. Go to industry conferences. Seek a mentor. You get promoted. You get more $s per hour. If you have more skills, you get more $s. So, yes, formal and informal education helps. If you work hard, and get more $s than you spend, you can save some $s. Hence:


I think most people get caught up in a work and spend cycle and years go buy and they have no or little equity built up. There is just enough money to get to the next paycheque if they are lucky so they think. You work, you earn money and have bills that have to get paid which is money telling you what to do and then the rest, you get get to tell what to do. Each of those dollars that flow through your hands have the potential to earn many more dollars but if you spend them, that opportunity is gone. You are transferring your wealth potential to someone else! Step 1 is to stop, reevaluate your entire situation, create a "budget" to pay what you really need to live within your means, pay down bad debts and try to set aside as much investment money as possible with the "goal" to create enough passive income through a variety of means that you are comfortable with, to be in a positon to eliminate your "job" and live comfortable with passive income and enjoy the freedom that comes with it.

One thing to be said about a "job" is that you are capped with the amount of hours that you put in and the number of days in a week! When you can take it to the next level, getting educated, develop a system for your situation, add a variety of investments, you will really begin to grow your wealth! Once you have the basics down pat, a system in place, you will be surprised what will happen as time goes on! It is all up to "you!"

"It is not to late to be all that you could have been!"
Dean
ve6eee@yahoo.com
 

xcrider

New Forum Member
Registered
There is another way to make money, STEAL it... make sure you steer clear of those who would.
 

Thomas Beyer

Senior Forum Member
REIN Member
QUOTE (xcrider @ Mar 24 2008, 11:57 PM) There is another way to make money, STEAL it... make sure you steer clear of those who would.


yes, or inherit it .. or go to Las Vegas .. or win the lottery .. all not proven and repeatable strategies though .. (although I understand that Black Jack is actually beatable by counting cards ..)
 

Grant

New Forum Member
Registered
QUOTE (thomasbeyer2000 @ Mar 28 2008, 05:21 PM) (although I understand that Black Jack is actually beatable by counting cards ..)

In the movies, anyway.
 

retiredby50

New Forum Member
Registered
If you`re a government, you do it through taxes...oh wait...that was already covered in the post about `stealing it.`

i`m just kidding. I`m sure our governments are using all our cash to it`s greatest potential...


I slay me.

Keith
 

ChrisMewhort

New Forum Member
Registered
QUOTE (thomasbeyer2000 @ Mar 28 2008, 03:21 PM) yes, or inherit it .. or go to Las Vegas .. or win the lottery .. all not proven and repeatable strategies though .. (although I understand that Black Jack is actually beatable by counting cards ..)

It`s true. The old "one up, one down" method is stale now though with multiple decks and oft swapping of decks. There are other more advanced ways which, yes, gains can be achieved through.

You`ll need to be good with math, and lest we forget the casinos will toss you if you are suspected of counting. I`d assume a repeat offender gets to have a talk with a big burly guy out back as well.

Real estate anyone?
 
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