Monday, April 7, 2008
simplicity
Since my blog explores the specific aspects of success and business, I felt the need to stress that attaining success is very simple (not easy). The Secret to Success is the law of attraction. Just like the law of gravity; what goes up must come down, the law of attraction is what you think about, you attract. This can be demonstrated simply by thinking about your life today. You are exactly where you expected to be 1 , 2, or even 3 years ago. Given, once in awhile , there can be an anomoly like winning the lotto, but for the most part you are a sum total of your thoughts! Five years ago in 2003 , I was just graduating college , owned pretty much nothing, but had a lot of motivation and positive thinking. I knew exactly what I wanted to do... own real estate and own businesses. My mind back then was constantly filled with thoughts of owning a business and owning several homes or apartment buildings. Today, I do own 2 businesses , and several homes , but it's nothing crazy for me because it's what I expect. The trick now is trying to expand my thoughts to expect bigger things. Can you think on a $1million level, or how about $10 million, or $1 billion? For me, my mind can think on a $1million level. I can smell it , taste it, and imagine exactly what it is to have $1million. Now if I changed that figure to $100 million, my mind can't think on that level yet.
Thursday, April 3, 2008
Buying a Business
Buying a business is a lot like buying real estate. This post will take you through the steps of buying a business and all the options you have as the buyer. In previous posts I explained the difference between a owner absentee business and an owner operated business and which business I prefer. When looking at different businesses you should take a lot of things into consideration:
1. The type of lease in place (how many years, what rate per sq ft.)
- Can it be assgined , sublease options?
2. The location value ( where is it located - good neighborhood, good visibility? )
3. The Value of the business - net income, cashflow, balance sheet, and assets.
4. The assets - certain employees, machinery, inventory, improvements, intangibles (ie .website, emails, licenses, etc).
When considering the price of the business , the main things to look at are the lease, the net income, and how the business is run (absenteee or operated). When you make an offer or deliver your letter of intent, you should never offer the price that you want to pay, always offer less. In the negotiating process you may be able to get certain things out of the seller like a credits, or even a seller carryback loan. The best case for you as the buyer will be for you to buy a $100,000 business with $20,000 or less, and have the seller give you a carryback loan for the other $80,000. The terms of the $80k will have to be negoatiated properly, but you have a lot of power as the buyer, knowing that the seller wants to sell their business. There are no rules to buying businesses so pretty much anything goes if you and the seller can come to an agreement. What I have given you is an outline of how most business transactions work. My ultimate business purchase would be an owner absentee business , with $10,000 or 10% down, a 90% carry back loan at 5% over 10 years, with a net income of $50,000 / year. You might say , this would never happen, but I can tell you it happens everyday! Stay tuned for some actual stories of business owners.
1. The type of lease in place (how many years, what rate per sq ft.)
- Can it be assgined , sublease options?
2. The location value ( where is it located - good neighborhood, good visibility? )
3. The Value of the business - net income, cashflow, balance sheet, and assets.
4. The assets - certain employees, machinery, inventory, improvements, intangibles (ie .website, emails, licenses, etc).
When considering the price of the business , the main things to look at are the lease, the net income, and how the business is run (absenteee or operated). When you make an offer or deliver your letter of intent, you should never offer the price that you want to pay, always offer less. In the negotiating process you may be able to get certain things out of the seller like a credits, or even a seller carryback loan. The best case for you as the buyer will be for you to buy a $100,000 business with $20,000 or less, and have the seller give you a carryback loan for the other $80,000. The terms of the $80k will have to be negoatiated properly, but you have a lot of power as the buyer, knowing that the seller wants to sell their business. There are no rules to buying businesses so pretty much anything goes if you and the seller can come to an agreement. What I have given you is an outline of how most business transactions work. My ultimate business purchase would be an owner absentee business , with $10,000 or 10% down, a 90% carry back loan at 5% over 10 years, with a net income of $50,000 / year. You might say , this would never happen, but I can tell you it happens everyday! Stay tuned for some actual stories of business owners.
Tuesday, April 1, 2008
March blog income report
My blog has been alive for almost two months now and has grown a tremendous amount . I know some people are waiting to see how much my blog has earned and if there is any improvement from February's $0.69 earnings. Well, here it is copied directly from my google adsense account, if I could copy the actual page I would.
AdSense for Content
Page impressions 461
Clicks 7
Page CTR 1.52%
Page eCPM [?] $11.16
Earnings $5.14
AdSense for Search
queries 9
clicks 3
page CTR 33.33%
page ecpm $86.70
earnings $0.78
Total Earnings (in March)
$5.92
AdSense for Content
Page impressions 461
Clicks 7
Page CTR 1.52%
Page eCPM [?] $11.16
Earnings $5.14
AdSense for Search
queries 9
clicks 3
page CTR 33.33%
page ecpm $86.70
earnings $0.78
Total Earnings (in March)
$5.92
Friday, March 28, 2008
Why are blog posts the best information?
Because blogs are not trying to sell you anything! Blogs are created to get views and people visiting the site therefore increasing traffic, and 3rd party ad revenue. My blog will continue to give REAL information without diluting or distorting the content. I realized this a few days ago when talking to a real estate agent, and he was trying to get me to sign a contract with him to sell my home after he gave me some information on the housing market in that area. This is the problem and the opportunity for the web industry. It seems like nowadays everyone will tell me some good information only if I buy something or sign up for something. Blogs like www.johnchow.com and www.zacjohnson.com, are outlets for real people to get real information. Of course there is money being made, but in this case the money is being made off of third party advertisers. Stay up to date with my blog I have some really good posts coming up!
Sincerly,
Mitch Matsuno
Sincerly,
Mitch Matsuno
Wednesday, March 26, 2008
single family homes (cont from last post)
Single family homes are by far the best investment for the intermediate investor because it has the biggest market of buyers, they is always a demand, and it offers the best loan structures. Since single family homes are known to be the safest investments in real estate, banks allow you to have the best interest rates and the lowest down payments. For obvious reasons, it is always best to put the least amount down for a property as possible. Single family homes , or SFH, also offer the biggest market to sell to when you go to sell. Every American family wants and looks for a nice 3 or 4 bedroom home, in a good neighborhood, and with good schools. There will never be a trend that sways this trend. SFH also provide you with the biggest market to low interest loans and low down payment structures. SFH can include condos, but the buyers market, especially in a down market like the one we are experiencing right now, will be significantly smaller. One of the properties I bought in 2004 was a condo in Tacoma, WA, which was purchased with $1,000 down. I put $1,000 for the down payment, which was a deposit for this condo, and financed 100% of the purchase price. One year after buying, I sold this property for $41,000 more than I purchased it for. Also, during this year, the rent of $1,200 completely covered my $1,200 mortgage, which means that all I paid out of pocket was the HOA, taxes, and insurance costs. Minus comissions and closing costs, I received a check for $30,000, and reinvested this money into a bar/nightclub (please leave a comment for more info). Currently we are experiencing a buyers market, meaning many properties are being sold for less than market rate, due to the fact that there are not many buyers right now. Many , many millionaires will be created in the next 10 years due to the fact that a lot of saavy investors are buying up quality properties for pennies on the dollar. As all the news articles say that the recession is in progress and people are losing money in real estate, I guarantee that people like Robert Kiyosaki are buying up properties all across the country.
Saturday, March 22, 2008
What successful people do
Business Ownership:
In my life I have met a lot of successful people, six figure earners and millionaires, self-made and some inherited. Today I wanted to talk about two things that I have reconized that true wealthy people have in common, they own businesses and they own real estate. These categories can be broken down even futher as there are different types of businesses to own (this lesson is important! ) There are owner operated businesses , and owner absentee businesses! Owner operated businesses means that the owner operates the business essentially working there to make sure it is running. Owner absentee business means that the owner does not work there and is absentee. In both cases , time is very important and in the second option of owner absentee business, many successful entrepreneurs create a profitable business system so that they don't have to be there and they could move on to start other business without selling or folding the first business. Personally I would rather have a business that nets $30,000 a year without having to do anything but check my bank account, rather than a business that nets $75,000 a year , and have to be there all the time. I have seen this strategy create millionaires, best case example being franchises (i.e. panda express, subway, 7-11, etc).
Real Estate:
Real estate has historically created the most millionaires rather than any other industry in the world. This is why lenders give 30 year loans on homes for low interest rates, because real estate is a safe risk. Lets break this down even further! Lets say you buy a home for $100,000 today (not realistic in Bay Area, but for numbers sake we'll keep it low), and put $20,000 for a down payment. Your best friend, Bill, a stockbroker, is trying to tell you to put your $20,000 into the stock market just like he did. Lets say , one year from now, Bills stocks have gone up by an amazing 20% and your home has only gone up by a measly 10%. Bill brags to you why you should have invested with him, but here is why you win. You only put $20,000 down for a $100,000 home, and got a loan for the other $80,000. If you home went up by 10%, you actually made $10,000 on your $20,000 investment, a 50% return! If this home is a rental and the rent that you get pays your mortgage, then this means you have put nothing else in other than your down payment. Now take the same example and make the numbers $1,000,000 or $10,000,000 for homes (or commercial / residential real estate) and do the math. People that have successfully invested in real estate and held on to their investments are now millionaires. They buy good real estate (homes, apartments, or commercial) , let it grow, and over time reinvest their profits. Another reason real estate beats any other investment, is because you can sell your home and pay ZERO taxes (check with your CPA for proffessional advice). Through a 1031 exchange , you can sell your home , take the proceeds, and reinvest in more like homes and pay no capital gains tax. You may be asking how will you ever get the money out? You really don't need to get the money out if you keep building your portfolio of real estate , rents alone will make you money to put in your pocket. If you did want to get some money out tax free, you can take an equity line on your home. Heres a real example: In 2003 , my Arizona home was worth about $350,000 and of this I only owed about $130,000 on the mortgage. I took out an equity line for about $50,000 at 7% interest and paid about $400 a month on payments. My rents for the home were about $1400 and my mortage was only about $1,000/ month. This means that the rent covered my equity line and mortgage. I took the $50,000 and later sold the home and did a 1031 exchange to buy more properties. (please leave a comment if you would like more info)
The last part about real estate is the tax breaks at the end of the year. You are allowed to write off up to $25,000 in depreciation expense, meaning if your income was $50,000 for the year but you own homes that add up to the $25,000 depreciation , your reportable income now becomes $25,000. If you are at the 30% tax bracket that means you just saved $7,500 in income tax! This is probably the best part of real estate , and if you are a real estate professional , you can write off $100,000 or more! So everyone understands how crazy this is, I need to explain a little futher. Depreciation expense means that the govenment is saying that you can deduct cost for your home depreciating and losing value. The only this is that over a long period of time, real estate has never lost value! This is one of the best kept secrets of the rich and wealthy.
Real Estate is very simple if you keep it simple. Of course there are more types of investments like re options, foreclosures, flipping, syndicates, commercial leases , which are all great but a little more complicated. The mentor that taught me this simple strategy owns more than 500 residential homes and is worth over $50,000,000! The craziest comment I remember him saying is that he rents his 4,000 square foot home in Marin, because he says if he lives there it isn't an investment (tax breaks, mortgage, no income, etc)
In my life I have met a lot of successful people, six figure earners and millionaires, self-made and some inherited. Today I wanted to talk about two things that I have reconized that true wealthy people have in common, they own businesses and they own real estate. These categories can be broken down even futher as there are different types of businesses to own (this lesson is important! ) There are owner operated businesses , and owner absentee businesses! Owner operated businesses means that the owner operates the business essentially working there to make sure it is running. Owner absentee business means that the owner does not work there and is absentee. In both cases , time is very important and in the second option of owner absentee business, many successful entrepreneurs create a profitable business system so that they don't have to be there and they could move on to start other business without selling or folding the first business. Personally I would rather have a business that nets $30,000 a year without having to do anything but check my bank account, rather than a business that nets $75,000 a year , and have to be there all the time. I have seen this strategy create millionaires, best case example being franchises (i.e. panda express, subway, 7-11, etc).
Real Estate:
Real estate has historically created the most millionaires rather than any other industry in the world. This is why lenders give 30 year loans on homes for low interest rates, because real estate is a safe risk. Lets break this down even further! Lets say you buy a home for $100,000 today (not realistic in Bay Area, but for numbers sake we'll keep it low), and put $20,000 for a down payment. Your best friend, Bill, a stockbroker, is trying to tell you to put your $20,000 into the stock market just like he did. Lets say , one year from now, Bills stocks have gone up by an amazing 20% and your home has only gone up by a measly 10%. Bill brags to you why you should have invested with him, but here is why you win. You only put $20,000 down for a $100,000 home, and got a loan for the other $80,000. If you home went up by 10%, you actually made $10,000 on your $20,000 investment, a 50% return! If this home is a rental and the rent that you get pays your mortgage, then this means you have put nothing else in other than your down payment. Now take the same example and make the numbers $1,000,000 or $10,000,000 for homes (or commercial / residential real estate) and do the math. People that have successfully invested in real estate and held on to their investments are now millionaires. They buy good real estate (homes, apartments, or commercial) , let it grow, and over time reinvest their profits. Another reason real estate beats any other investment, is because you can sell your home and pay ZERO taxes (check with your CPA for proffessional advice). Through a 1031 exchange , you can sell your home , take the proceeds, and reinvest in more like homes and pay no capital gains tax. You may be asking how will you ever get the money out? You really don't need to get the money out if you keep building your portfolio of real estate , rents alone will make you money to put in your pocket. If you did want to get some money out tax free, you can take an equity line on your home. Heres a real example: In 2003 , my Arizona home was worth about $350,000 and of this I only owed about $130,000 on the mortgage. I took out an equity line for about $50,000 at 7% interest and paid about $400 a month on payments. My rents for the home were about $1400 and my mortage was only about $1,000/ month. This means that the rent covered my equity line and mortgage. I took the $50,000 and later sold the home and did a 1031 exchange to buy more properties. (please leave a comment if you would like more info)
The last part about real estate is the tax breaks at the end of the year. You are allowed to write off up to $25,000 in depreciation expense, meaning if your income was $50,000 for the year but you own homes that add up to the $25,000 depreciation , your reportable income now becomes $25,000. If you are at the 30% tax bracket that means you just saved $7,500 in income tax! This is probably the best part of real estate , and if you are a real estate professional , you can write off $100,000 or more! So everyone understands how crazy this is, I need to explain a little futher. Depreciation expense means that the govenment is saying that you can deduct cost for your home depreciating and losing value. The only this is that over a long period of time, real estate has never lost value! This is one of the best kept secrets of the rich and wealthy.
Real Estate is very simple if you keep it simple. Of course there are more types of investments like re options, foreclosures, flipping, syndicates, commercial leases , which are all great but a little more complicated. The mentor that taught me this simple strategy owns more than 500 residential homes and is worth over $50,000,000! The craziest comment I remember him saying is that he rents his 4,000 square foot home in Marin, because he says if he lives there it isn't an investment (tax breaks, mortgage, no income, etc)
Thursday, March 20, 2008
google analytics snapshot
I was so excited that today I hit a record 19 unique visitors to my blog, I wanted to share my google analytics page with everyone.
66 people visited this site
175 Visits
66 Absolute Unique Visitors
280 Pageviews
1.60 Average Pageviews
00:03:07 Time on Site
50.86% Bounce Rate
38.29% New Visits
Thanks to one of my best friends , 02millions, who introduced me to the entrecard. This blog tool has brought 14 new visitors to my site in the last 3 days! My blog hasn't been alive for 30 days and has already reached 66 unique visitors, amazing! I am even more dedicated to keeping the site updated with great content.
66 people visited this site
175 Visits
66 Absolute Unique Visitors
280 Pageviews
1.60 Average Pageviews
00:03:07 Time on Site
50.86% Bounce Rate
38.29% New Visits
Thanks to one of my best friends , 02millions, who introduced me to the entrecard. This blog tool has brought 14 new visitors to my site in the last 3 days! My blog hasn't been alive for 30 days and has already reached 66 unique visitors, amazing! I am even more dedicated to keeping the site updated with great content.
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