The Attractiveness to be an Investor
As being mentioned in Robert T.Kiyosaki- the author of Rich Dad Poor Dad, different people found in the four major quadrants, i.e. E, S, B, I.
E=Employee – work for company, work for boss
S=Self employed - self-independence, do everything on their own.
B=Business – build business empire to serve as many people as possible
I=Investor – make money from money, leverage people time.
Different quadrants represent different realities. So for people who would like to change their quadrant need to change their realities.
Among the four quadrants, Investors are the wealthiest person in the balance of luxury time and money they have. The definition of rich does not means the definition of wealthy. Rich people maybe a workaholic who spends most of the time in life doing their business or work. The earning divide by time spend in work is the profit of effort per hour. In contrast, investors put money in the potential market and wait for the growth. Investors are always talking about ROI, so called Return on Investment. That is how much return back per year divided by initial investment cost. For example, you buy an apartment in London 1993 which was cost 40,000 pounds, and assume that the rental has already covered the loan interest. In year 2000, your apartment price is worth 120,000 pounds. So 120,000 minus 40,000 equal to 80,000 and eventually you get 200% ROI in 7 years. 80,000 pounds return divided by 7 years and each year you are getting 11k. In a nutshell, you invest 40,000 pounds and get 11,000 pounds each year, the ROI is 25%.
Within these 7 years, you do nothing other than real property documentation work. When you buy an apartment and use it for investment, you will normally rent it out to the local tenants. For your same London apartment, assume you rent out by average 500 pounds in order to pay the loan installment and interest. In other words, you spend nothing to get the 120,000 pounds profit returns plus the 500 pounds rental for the following years. This is the most attractive part in investment. Imagine, 500 pounds rental in UK nowadays is only my lowest estimation.
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