Stock Forex

That portion of your portfolio you’ve chosen to use as your cash generation machine should be used wisely, yet aggres­sively as you see fit.

It is in your comfort level that you will trade. As you gain more experience, you’ll probably spread the edge of the enve­lope—try new things, or variations. This chapter is about several of these other ways of making money. However, in order to put this information in such a way you can easily use it, this chapter is like a “play sheet,” or a checklist. It will cover most of my formulas in an abbreviated format. I’ll try to be complete with the quantity, but brief with the explanation. Indeed, I’ll try to keep the definition or explanation to one or two paragraphs.

Each of these formulas is explained in detail in other books, primarily the Wall Street Money Machine, other home study courses, primarily Zero to Zillions, and in other reports I write as I perfect various strategies.

I wish more than anything that when I started investing I would have had a chapter like this—to see in a few pages all the potential plays, formulas and recipes.

So here we go. We’ll start with my old favorite. Remember, these strategies are about generating predictable cash flow.

This made it clear to me that the bottom line to wealth is duplication and repetition. A hamburger in Tampa Bay must taste just like a hamburger in San Francisco Bay, and McDonalds took advantage of this, not by selling one gigantic hamburger, but by selling billions of little ones—and french fries. Repetition made the McDonalds fortune.

About nine months after I started driving, Mrs. Potter called us all in for a meeting between shifts. While we were waiting for her to come in, all the cab drivers were bragging about how much money they were making. Bill Marsh sat there and said he had made more money in one month than anybody there. I casually asked him how much he made. With a note of triumph, he said, “One month I made $900.” All the cab drivers started oohing over him, thinking that $900 was a lot of money.

Now remember, my lowest month was over $3,200. But I said with a smile, “Boy, that is a lot of money, Bill.” No way was I going to mention to these guys how much I was making. They could see the rental properties I was buying and draw their own conclusions, but to this day, they still don’t know.

On to real estate. At first, I did not follow the lesson I learned as a cab driver. I went out and started the old buy-and-wait game. I waited for inflation, waited for Washington D.C. tax write offs, and waited for other things I had no control over. After a year of playing the buy-and-wait game— the rental game—I had to sell one of my properties. I desper­ately needed money. I sold the property, received some cash for the down payment and carried back a mortgage. The key, however, is that I didn’t get all cash up front. I sold the property under what you would call “owner financing.”

I sat in my taxi, staring at the check I received from the down payment, and realized something: I had purchased this little property with $1,200 down; when I sold it, even after closing costs, I still ended up with $2,200—$1,000 more than I put into this property in the beginning. And, I would receive net monthly payments of $125 for 28 years.

I just stared at the check. I had stumbled across a whole new way of investing. I thought, why am I playing this buy-and-wait game? Why am I turning my life over to renters? Why wait for tax write offs out of Washington D.C., hoping some benevolent congressman gets a depreciation bill passed through Congress? Why am I doing things I have no control over? Why don’t I just go out and buy properties to sell? Why not do the meter drop with my properties?

I figured that I could sell a couple more rentals right away and then target properties I could buy and fix up a little bit, then turn around and sell on this “money machine.”

Back then, I did not call it the “Money Machine.” I called this “turning properties” or “flipping properties.” Neverthe­less, I realized that I had to treat real estate like the “meter drop.” Instead of getting in and waiting, why not just buy for the sole purpose of reselling? This way I could build up a huge base of deeds of trust and mortgages and have monthly checks coming in. In the end it was these monthly checks that allowed me, and will allow you, to live the way we want.

At that time I had a lot of rental properties, but they were only making a little bit of money. If one renter didn’t pay one month, it ruined the profits for the whole month. I was constantly putting more money into taking care of these properties. Any of you who have had rental properties real­ize that no matter what kind of money you have lying around in the bank, any rental property will “eat it up” and take it away from you. The giant “sucking sound” is real.

The rental game is just not what it is cracked up to be. However, the “Money Machine” is a fabulous way to make money by literally forcing the issue—rapidly accumulating wealth. I did this over the next year. I went out specifically looking for properties I could buy and sell quickly. Again, it was the meter drop. Get the passenger in, get the passenger out, and get on to the next deal. After doing many of these properties, I was able to quit and retire at the age of twenty-nine.