
Learn
to
love
leverage.
It superjuices return.
160 The
Ten
Roads
to
Riches
They
borrow!
Done
right, leverage
super juices profit.
Done
wrong, losses and
humiliation are
massive-beyond
total. Isn't
borrowing risky? Sure, if you do it wrong.
But this road requires leverage.
If
you're debt-averse, stop now and
flip to another road. Otherwise, overcome
your
debt
fears. Learn to
love leverage to achieve land baron success.
The
Magic
Here's how the magic works: Suppose you
put
down 5 percent on
a $100,000
property-$5,000.
In five years, you sell for $125,000.
Ho
hum-a
25 percent gain, just 4.6 percent annualized. But no!
You only tied up
$5,000-that
$25,000 gain is actually 500 percent
and 43.1 percent annualized. Magic!
Yes,
you had interest payments
on the
debt-we'll
get to that. And if the value fell you would lose
your $5,000. Leverage goes both ways.
The
key is finding a good
value you can monetize
that
others don't want. You must turn prop-
erty into a money-rendering machine by monetizing it.
MONETIZE
IT
Here's how. But first, a disclaimer:
I'm
no land baron. Yes, I own
over $100 million
of
real estate, mostly buildings my firm uses. But
it's my wife Sherri who's the family land baron.
In 1999 two men bought 1450 Fashion Island Boulevard,
a then 15-year-old, 104,000 square foot Class A office building
in San Mateo, California, at the intersection
of
freeways 101 and
92-the
crossroads of the San Francisco Peninsula connecting San
Francisco to Silicon ...