Rat Race!!!: Trump Card

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It's tangible, it's solid, it's beautiful. It's artistic, from my standpoint, and I just love real estate.

Donald Trump - Real Estate Tycoon

Ray Kroc, the founder of McDonald's, was asked to speak to the MBA class. He asked that class a question that sounded quite rhetorical at first.
"What business am I in?" Ray asked,.
"Most of the MBA students thought Ray was just fooling around and did not expect that he wanted an answer."
So Ray asked the question again. "What business do you think I'm in?"
The students laughed again, and kid replied, "Ray, who in the world does not know that you're in the hamburger business."
Ray chuckled. "That is what I thought you would say." He paused and then quickly said, 'ladies and gentlemen, I'm not in the hamburger business. My business is real estate."
Ray Kroc, ensured that the person that bought the franchise was also paying for, buying, the land under the franchise for Ray Kroc's organization.
This is one asset that we should have in our portfolio if we need to get out of this rat race. Our money has to make money for us, make it work for you.
Let me explain, lets say you are earning a salary of $4000 in the year 1990. You have a saving of $1000 per month. Lets assume that this is a constant and for the next 10 years you have this savings and no untoward emergencies came about to eat into this savings.
So at $1000 per month, you save $12000 so over 10 years you have saved $120000. Sounds good. So what you have saved is what you have earned over 10 long years. What has the money done for you other than just accumulating in a bank vault and probably earning some interest? Nothing.
Now lets look at another approach to this. You save $1000 per month in 1990 and by 1995 you have saved about $60000. Then you think of investing this amount, so that this money makes money for you. You look for a real estate bargain, after doing considerable study you find a land which in the next five years will yield you good return. You purchase a 1200 sq ft of plot for $50 per sq ft. You spend $60000 and purchase this money churner. Now you have started the money spinning wheel. Over the span of 5 years this area has made considerable development. The plot of land you bought for $50 is now worth $250 and the prices are still rising due to demand. So now instead of parking your money in the bank you have changed the numbers considerably.
For the plot of land, it worth now at $300000 and for the next five years from 1995-2000 you continued saving and accumulated another $60000. So in all you amassed $360000.
What you have done here is just made your hard earned money work for you. In the above example, there are many other aspects that I have not considered. You would have salary hikes, bonuses, other investments opportunities, taxation, and housing loan. Housing loan is another aspect if worked out intelligently, the returns would be even better. The price of the land would have even hiked to a $1000 or may be $150. One thing is certain though, if the land is legal without any hassles, it will definitely appreciate over a 5 year period.
This is why it’s called ‘Real Estate’ because this is one asset that is for real. It just cannot be taken away that easily or stolen.
Having said this, there is always the cautionary measure that one as an individual has to take before investing in any kind of asset or market. As long as this effort is put in real estate is one important asset that each one of us should have in our portfolio to come out of the rat race. It’s your Trump Card. Go play it.
So what are you waiting for make that lazy money you have earned working to work for you? Enough of sitting around!!!

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