How to Increase Your Return by 20% Every Year – Part Two

The key to my investment strategy is utilizing mortgages, especially low rate mortgages, to purchase real estate. After the economic recession in 2000, the Fed has started to “print money” and also began to offer low rate mortgages to the public. Currently, the best rate for investment properties is still below 5% (with certain conditions), which is much lower than commercial interest rate (usually 7%). When the Fed starts to issue more currency, inflation happens; this makes it so that if you just deposit your money in a bank, its capability of buying will become weaker and weaker, even with the interest earned. My investment method is much more competitive than investing in apartment buildings or some other large-scale investments.

There have been a lot of media reports about how “printing money” helped Wall-Streeters earn money, and taking advantage of low rate mortgages is how we, as the middle-class, can also get a share.

Then what is the “Best Investment”? Many friends have asked me about my opinion concerning tips from the internet or advice they heard from other friends. My answer will always be the same: “You should have your own answer! This is your money. No one can manage it better than you do.” Even though there are some people you may trust a lot, such as a financial adviser or salesperson, they still need to earn money for themselves and you can’t blame them for that. Sometimes, you do need to buy what they sell, but before you buy it, you need to understand what exactly it is that you want and how it works. If you don’t know the answer, study it first. Spending some time on reading related books or joining seminars will help you learn.

To learn to invest, you need to think from a long-term perspective.

When studying investment, you need to understand how it works, which basically boils down to how to earn money. Do not simply look at the numbers for the most recent two or three years, but historical statistics, which are at least 15 years in numbers. An economy cycle is usually an average of 8 years, so it’s meaningless to only study a half cycle. If a real estate developer tells you that the average appreciation of houses in many areas of Texas exceeds 12% per year, that’s true; however, it doesn’t mean you will get the same annual return in the next few years.  When you study statistics of at least two economy cycles, you will have more reliable numbers. I don’t think that I’m the smartest person, so I’ve never expected my return to be so much higher than average, but I do think if the average returns are good, my investments should be at least average or a little bit higher or lower.

To be clear, I don’t spend too much time on real estate investment and my returns are considered lower than the average. However, when the method is right, the investment will still bring me good returns, even though it’s lower than average.

There’s no single way or method that can guarantee success that we can copy from. Studying other successful people’s experiences is very important, but the more important thing to do is to think on your own. By integrating other people’s experience and lessons, you will find the right way for yourself.

Investing in real estate at different times or locations results in the method needing to be different as well. My method is relatively easy to use, but it doesn’t mean you don’t need to do some thinking on your own. I’ll share my experience, but I also want to introduce a few books that changed my mindset on investment many years ago.

1. The series of Rich Dad, Poor Dad, by Robert T. Kiyosaki

2. Why We Want You to Be Rich: Two Men, One Message, by Donald J. Trump and Robert T. Kiyosaki

I have no business or personal relationships with the authors of these two books and this is not for advertisement. They are just two books that changed my life.