How to Steal Money from the Rich and Amass Your Own Riches

 How to Steal Money from the Rich and Amass Your Own Riches

With pension plans in limbo, unemployment on the rise, and the widespread belief that no matter how diligent you are, your expenses always seem to outstrip your income, it's impossible not to be amazed.

Looking for an answer? Then amass your fortune by utilizing the funds of others.

What gives, and how can you become rich off of this?

Using a real-life example would be great. I bought an investment house in Middlesbrough around a year ago, and my friend Mike did the same. I used "Other People's Money," while he used his savings.

Mike is fearful about taking chances. Very cautious and loves to take things easy, while being a pleasant guy. He reasoned that he could reduce his exposure to risk by purchasing the house outright with cash and eliminating the need to rely on rental revenue for repayment. He wasn't aiming to win, though, and that's the whole point: you'll never win until you try!

Now we can compare and contrast these two investing strategies: Mike's cash transaction and my "Using Other People's" arrangement.

Mike took out £100,000 from his savings account, which was already earning about 5% annually, and, to his luck, he found a tenant the very next day. His investment was yielding a profit of around £500 per month from the very beginning.

My share of the cost of the flat was going to be around £430 per month with an interest-only mortgage, and I borrowed 85% of the money to buy it. It took me two months until I finally landed my first tenant, who also paid £500 a month, as luck would have it.

So, Mike made £6,000 in the first year, which left him with about £3,600 after taxes (because he didn't have any outgoings like a mortgage to reduce his tax bill).

My personal situation is that I only made $5,000 in rent during the two months when I was "void" due to no renter. I didn't owe any taxes because my mortgage payment was £5,160 per year, but it appeared like I was out £160 in revenue overall. A surplus of £840 would have been mine if I had a complete year of tenancy.

However, now we may examine our joint capital gains.

Last year, Mike witnessed a 10% increase in the value of his property, despite only earning 5% in his savings account with his £100,000 investment. With his own money, he was able to quadruple his investment in real estate and amass around £10,000 in equity, which is equivalent to a 10% return on investment.

Even though I am a tightwad who hates to leave with money—especially my own—the value of my property went up by 10%.

My initial investment of £15,000 yielded £10,000—a 67% increase—because I had only spent 15% of my own money and 85% of other people's.

My original investment of £5,000 would have yielded almost £10,000, or a 200% increase in capital, had I been able to secure a transaction that required only a 5% down payment.

I don't understand. For Mike to build a portfolio of ten properties, he would need an additional £900,000—or one million dollars—that might have been earning a minimum of five percent in any old savings account.

Ok, so if Mike had purchased ten more fully-occupied homes, he would have earned approximately £36,000 a year after taxes, for a return on investment of 3.6%. His initial investment would have yielded £100,000 (or 10%).

What if, instead, I were to spend a lot more "Other People's Money" to purchase nine more of these properties?

Personally, I would have had to put up £50,000 in addition to the £950,000 that other individuals were willing to put up.

I would have made around £8,400 in net revenue, but my £50,000 investment would have yielded about £100,000 in increased equity, or a 200% return, if the value of all my properties had improved by about 10%.

I could have taken out around £85,100 to reinvest or buy a few luxuries (my choice) after three years, and I would still have around £127,650 in equity (plus my other house deposits) if I sold four of those properties and assumed a 10%, 5%, or 5% growth.

You must understand that I have essentially amassed these additional £85,000 in cash and the remaining £127,650 in equity, primarily through the utilization of other people’s funds!

If Mike had invested his entire million dollars along with twenty million dollars from other people, he could have created a fortune.

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