Real Estate Investing So Easy A Child Can Do It

Today I read a very interesting story from Florida that has made the national headlines.  A 14 year old girl from Port Charlotte, Florida, took her earnings from selling items on Craigslist and invested her money in real estate.

Willow Tufano, who earned $6,000 from selling items on Craigslist, decided not to use her earnings to buy depreciable assets such as video games or other toys. Instead she decided to make her money work for her. She took the first steps toward securing her financial future by purchasing a house that she could rent.

By partnering with her mother, she was able to purchase a$100,000 property being sold as a short sale for $12,000. With a little sweat equity, she turned that property into a positive cash flowing investment. Not only is the property cash flowing, she has built-in equity in the property.  

Willow’s mother says that her daughter is always thinking, “How can I skin the cat differently?”  Willow even helped the new tenants find a free bed and mattress.

Let’s analyze what this 14 year old was able to accomplish.

  1. First, she is a natural entrepreneur. She started an internet business that allowed her to raise capital and build net worth.
  2. Once she had some capital to invest, she looked for a deal that would give her leverage and give her the greatest return on investment.
  3. She researched an found an opportunity in real estate where she could buy the property with little or no money down and maximize her profit potential.
  4. With the help of her mentor and coach (her mother), she was able to negotiate a deal with the bank to purchase the property for pennies on the dollar.
  5. She partnered with another higher net worth individual (her mother), to leverage her investment and minimize the risk to capital.
  6. She bought into a real estate deal with instant positive cash flow.
  7. She also bought into a deal that provides instant equity in which she can use to purchase other investments
  8. She was able to add value to other people’s lives by helping them achieve their goals of having a decent and safe place to live.

I applaud Willow and others like her because she has taken action to secure her financial future.  At the young age of 14, she already understands and has learned how to raise capital, look for and negotiate deals, calculate return on investment, invest for cash flow, use leverage to maximize investment, invest in equity, and form partnerships. She has also learned about the importance of having a coach and mentor to accomplish her financial goals and that by helping others, you actually help yourself.

The question becomes, why aren’t more people doing this? I mean, if a child can understand and do this, why not more Americans?

I think it all goes back to the lack of financial literacy in our society today.  You see, our educational system is still teaching us to work for someone instead of us working for ourselves.  We are programmed to use the old business model of work in a job, pay taxes, live and save what is left. The new business model says that you become a business owner, live on the efforts of others and pay taxes on what left. This is the business model that the wealthiest 1% in this country uses.

We need to get back to common sense when it come to money and investing. I am sure that Willow absorbed every bit of information that her parents were saying about investing around the dinner table.  

Look out for Willow.  She is destined to become the next Warren Buffet or Donald Trump.

For more information on becoming The Savvy InvestorTM ,like Willow, go to www.thebookoninvesting.com.

The Book On Investing — Federal Government Housing Policy: Homeowner Affordability and Stability Plan

A critical part of the Obama Administration’s broad strategy to help the millions of homeowners still struggling to pay their mortgages avoid foreclosure,  stabilize the housing market, and improve the nation’s overall economy is the Homeowner Affordability and Stability Plan

One part of that plan is the Making Home Affordable program.  This is an official program of the Departments of Treasury & Housing and Urban Development.  The Making Home Affordable program offers a number of mortgage reduction relief programs for individual homeowners.  

If you’re not unemployed, but you’re still struggling to make your mortgage payments, you may be eligible for the Home Affordable Modification Program (HAMP).

If you’re not behind on your mortgage payments but have been unable to get traditional refinancing, you may be eligible to refinance through MHA’s Home Affordable Refinance Program (HARP)

More information on the Making Home Affordable program can be found at www.makinghomeaffordable.gov    

Each month HUD and the Department of Treasury release the Housing Scorecard-a comprehensive report on the nation’s housing market.  Data in December 2011, released January 9, 2012 show some subtle improvement in the housing market as compared to the same period in 2010.  However the data underscore the fragility of the overall housing market as the outlook for stabilizing the market remains mixed.  Home prices showed a slight dip from the November 2011 and remain below levels from a year ago. 

The Housing Scorecard can be found at www.hud.gov/scorecard.

WHAT DOES THIS MEAN FOR THE SAVVY INVESTOR?  You should stay abreast of the latest government policies and market trends.  It will make you more knowledgable in your dealings with real estate buyers and sellers.