Next post will be....

.....About leveraging! Me going into mortgages sparked a heated response. Next post will go into leveraging (mortgaging and then renting the estate also called accumulating equity amongst others). Hmm I'll give pros and cons. And why it's a good way to go and why it isn't from my perspective and others.

Rich Dad$ Poor Dad

Check out some of the Rich Dad$ Poor Dad videos I posted on the
blogg. RIGHT hand side scroll down! Enjoy (quality's ok).

More to come!

Leveraging when it comes to real-estate, cash-flow quadrant,
building a business, Brokerage and network marketing!
What changes you have to make.....just one:
to have an open mind!

Hey guess what! Here's how mortgages work!

Mortgages:

Is the death of

people. Most

people think that

their house is

their biggest

investment. Why?

Because it's their only investment!

It's kinda funny come to think of it

is that most people have all their money tied

up in their house and prepare very little in

terms of "actual" investments. This is going to

be a long one!Ok. Mortgages work such:

Let's say you mortgage a 300,000$ house at

around 4.5% (no interest rate is guaranteed

to stay the same over the years remeber that!).

You set you'r mortgage so you end up putting

a what 15,000$ down payment that's 285,000$

at 1700$/month for the next 30 years.

Mortgages are set-up so that in the first 2

years of the loan 80% of you'r monthly payment

will go into the bank's pockets and only 20%

will go to the principal of 285,000$.

So it's what 1700$/month and that's 1360$/month

and the rest of 340$ goes to the principal.

So in the first 24 months bank gets what

1360$x24 months= 32,640$ really nice! You'r

loan gets 340$x24 months= 8160$ kinda sucks!

So now you'r balance is what:

285,000$-8160$=276,840$. After those 2 years

you'r ratio of interest/principal let's say

lowers to 60% for the next 5 years ouch!

Catch my drift..... Mortgaging is probably the

dumbest thing one can do when it comes to

purchasing a home. When I buy a house I'm

going to buy it with cash so I can live

in it! Not so I can have monthly payments

to the bank hoping I can make a profit out

of selling it. Here's the fault line.

Let's say that the house's value goes up

in the next what 10 years from 300,000$

to 400,000$ which is pretty good. So the

house's value went up 10,000$ every year

(this is under very favorable conditions

when it comes to real-estate, this a very

good return. But right now 2007 is not the

real-estate year. So let's say that in those

10 years you have a remainder of 200,000$ on

your mortgage: so you sell and you turn out

what a 200,000$ profit which in those 10

years represents a 20,000$/year income.

Guess what in those 10 years lets say that

you'r spending around 1000$/month on utilities

(not to mention property tax amongst others)

that's 100,000$ on just let's say

up-keep/repairs/additions which bring

up the value. So you'r profit comes out at

actually 100,000$ and here's the kicker...INFLATION!!!!!.....haha....

you'r 100,000$ now has the purchasing power

of 70,000$ (calculated at around a 3.7% rate

of inflation over the 10 years,of course

this constatly fluctuates.)

Sucks to be you! But now you need

to..guess what..buy another house! So you take

you'r little 70,000$ profit and use it for a

down payment on now much expensive house of

400,000$ at a 6.8% interest rate prices and

rates go up because of inflation......

So you spend you'r life buying and selling

houses and making no money! That's why a house

is a really dumb way to invest!

Actually it's not an investment at all......

Regarding RRSP, RRIF's and LIF's

In regards to one of my previous posts! The on that mentions RRSP's. I'm going to expond on such and correct some of that information. I will go into taking one's CPP or any other pension plan for that matter and transfering it into a locked-in plan. Particualrly going into RRIF's (Registered retirement income fund) or LIF's (Life income fund). etc. Additionally I'm going to discuss spousal RRSP's and such. Get you thinking about retirment cause it's never to late to start. Lol! Nor to early!!!!!!!!