When I had a day job, and was employed 9-5, there was one thing I noticed that everyone agreed on!
People may have different opinions on politics, sports, health and even on God, but they all unanimously agreed on one thing!
Everywhere I turned, people advised me on the importance of “building your own asset”.
– the internet was full of gurus preaching how to grow your asset,
– my colleagues , boss, and HR at office talked about the importance of having and growing your own asset (and they prided in the fact that the company 401k was the best asset anyone could have)
– heck even my mother in law preached on why I needed to grow my asset (“buy your own house” she said)!
But did they really know what constituted an “asset” , and what constituted a “liability”??
And so instead of taking people’s word i decided to break it down to the basics , and make it simple – what the hell is an asset??
After much research, and poring over accounting books, and talking to “experts” and watching umpteen YouTube videos, I finally understoodAn Asset is something that puts $$ in my pocket!A Liability is something that takes $$ out of my pocket!
So, in essence what 99% of people believe as their house being an asset is really a liability for them (when you buy your house, u pay the lender/bank every month, and it takes $ away from you – and so it falls into the “liability” bucket).
But say you own a rental property, you pay $500/mo mortgage and you rent it out for $700/mo , then you actually make $200/mo profit and so in this case this particular piece of real estate falls into the “asset” bucket (because it puts money into your pocket every month).
And so , thats why real estate is the holy grail of passive income and of all asset classes since it can be a source of on-going income for years!
Now, we do the same in our Rank and Rent model , but with a HUGE difference!!
In the real estate world , to generate a cash flow (income) of $700, we have to invest in a $70k to $100k property (atleast thats the kind of property you need to buy in the US).
You need to buy a $70k value house put $14k min downpayment (and hope there is no bathroom leak to be fixed) to rent it for $700/mo!
But in the digital real estate world (our world of renting websites), I can invest a fraction of the money and generate the same $$ cashflow income!
For eg. in most niches in cities of 150k and less (see my ebook in the files section for more details) here is the cost break down to put up a website and rank it – to be able to rent it out!
Domain – $12
Hosting – $50 for the year
Content – write yourself or $100
Citations – $50
Social – $50
Press release – $100
PBNs – $300 – $500 (includes domain, content, hosting)
Total – $700 – $850
Know how (if u act now it’s $997) – =) shameless plug!
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Once you do the work and rank it, you can rent it for an easy $700/mo cash flow income!
Where is $70k (in the real estate world), and where is $700 (in our rank and rent world)!!?
1% of the money!!
Even if you compare your total expense with the downpayment, its $14k vs $700
Thats 5% of the money you need to invest – to generate the same $700 cash flow!
Not to mention you pay mortgage of $500 for real estate and so profit is really $200 to $300!
So in my opinion I can put up sites all day long in any part of the country and rent it out!!
A lot of people dont understand these numbers and complain all day long on how expensive they are.
Here’s how you turn your liability into an asset!
Instead of buying coffee and bagel at starbucks one day (which is a liability anyways, and an expense), you invest that $12 into a domain.
Instead of going out to dinner and spending $50 another day , invest that in hosting.
Instead buying yourself that xmas gift which is at sale (which you dont need), invest in pbns!
So over a period of few weeks, you won’t even see the money going out, but you are actually in the process of building an asset for yourself in the long run!
This is how I bought my freedom while I was toiling away in a day job!!
Hope this made some sense!
Merry Xmas!
Saravanan