Real estate profits are created every time we buy, fix and flip a house. Real estate profits are created every time we execute a lease option. Lease options sometimes create real estate profits twice; once when you get your option consideration and once when your tenant/buyer exercises their option and cashes you out. Each of these events can produce a healthy check. Whenever you get one of those nice paydays, have a plan for it, don’t just let slip through your fingers…remember you’re in the wealth building business…so do it! Here’s a formula one of my mentors shared with me and I’m happy to pass it along to you…
10% to your church or favorite charity
You’ll get it back many times over. Some people say you should give til it hurts. I think we should give until it feels good!
10% to splurge on your family
Their love and support helps you succeed. Most entrepreneurs tend to be pretty intense at times and single minded at others. Celebrating your successes with loved ones will only make them more supportive as you grow your business.
10% for continuing education
Keep investing in your skills! Every dollar you invest in your education generates a huge return. While my experience is anecdotal, I anticipate about a 1000 fold return on every dollar I spend on education.
70% to reinvest in the business
I’m not saying don’t pay your bills. But I’m recommending you don’t go out and buy the new car, the new boat or some other, as Robert Kiyosaki calls them, “Doodads”. Invest in the growth of your business by increasing your marketing and improving your ability to do deals! Use those real estate profits to build wealth and one day you might be truly amazed at your results!
You are preaching to the choir, but people in this day and age just seem to have less and less of a desire to plan for any sort of future
If only more Americans would take this sound advice. Unfortunately, we live in a culture (including our gov”t) that believes in spending beyond our means, then borrowing; then spending on borrowed debt. It has become the American way, much to my chagrin. 10% to charity should be a must for everyone, and investing in your continuing education should be a no brainer as well, but it’s not. Thanks for a post that is a voice-of-reason.
RE: “I think we should give until it feels good!” – there is an argument that we should give to charity slightly more than we feel we can afford so that it actually feels like a bit of a sacrifice.
Certainly, people on a good wage may not notice 10% whilst people on a bad one may have really needed that money.
I appreciate any article on how to invest or manage your profits. The biggest challenge is getting parents to teach their children the right way to manage their money. It’s hard to undue bad money habits once they are engrained into your psychology as an adult. We seem to live in a culture (The U.S.) where it’s counter-intuitive to reinvest, but rather live life lavishly until we are up to our eyeballs in debt.
You are preaching to the choir.