- Over a 20-year period, it is difficult not to get rich from real estate if you follow a simple formula. There are always “good reasons” not to buy, but always more and better reasons to buy.
- The “pyramiding power” of borrowing money to buy rental properties, and without any particular striving soon built up a valuable portfolio.
- “Pyramiding power of borrowed money” as the “secret force of capitalism,” used by every great industrialist.
- Whatever your return year to year, do not diverge from these four principles:
- Don’t borrow more than you can safely repay from rental returns.
- Only buy properties that need renovation while still renting out.
- Only make improvements that increase the property’s value.
- Keep selling at a profit and reinvesting your profits.
- Save enough money for a 25 percent down payment on a property, borrowing the remaining 75 percent, giving you a total of $10,000. Two years later, sell the improved property for $14,000. Repay the $7,500 loan, and after the cost of selling the property, you now have equity of $5,800.
- This process, if repeated over a period of 20 years, results in the following:
After 6 years $21,000
After 8 years $39,363
After 10 years $70,548
After 12 years $124,884
After 14 years $219,972
After 16 years $386,376
After 18 years $677,583
After 20 years $1,187,195
- How I Turned $1,000 into Five Million in Real Estate in My Spare Time, William Nickerson
http://66.230.175.74/download/g3752406-50-prosperity-classics.pdf
