How would you like an easy 5% raise?

When I worked in the corporate world, a 5% raise was pretty good.   An employee usually had to be working on the right projects and putting in a very solid effort to earn this.   In this economy, many are just glad to have a job, let alone worried about getting a raise. This morning I had a realization!   I have been providing investors with properties that cash flow between $300 and $400 per month in positive cash flow.   I just realized that for someone making a good income, this equates out to roughly a 5% raise.

Since I am a numbers guy, check out this recent deal that one of my investors did:

Step 1. Purchase a distressed home:  $49,000
Step 2. Rehab the home:  $10,000

Now the property is comparable to properties selling for $110,000 in the local area, so we use this as our After Repaired Value (ARV).

Step 3. Borrow $59,000 @ 6.75% APR amortized over 25 years with a payment of $671 including Principal, Interest, Taxes ($3000/year) and Insurance (PITI)

Step 4. Rent the property for $1000 per month, which is the going rate for a property in good condition and of this size.  

That comes out to over $300 per month in positive cash flow   $1000 – $671 = $329 to be exact.  

Now if you make $75,000 per year, a 5% raise would be about $3750 annually, where just this one property, that you have $0 of your own money invested into, and a little bit of time, will pay you over $3600 per year.

Here is the best part!   You can repeat this multiple times to keep adding to this number!  Since you have $0 of your money invested, it is easy to repeat this process.   And of course, there usually some decent tax deductions to go along with this and make the net number even higher.

Going back to positive affirmations, if you focus on keeping your job, that is probably as much as you will get, where if you focus on increasing your income and free time, the sky is the limit.   Next time your boss says he is unable to give you a raise, go out and get your own. 

Regards,

Dan