It Almost Makes Too Much Sense
Del Walmsley, the founder of Lifestyles Unlimited, Inc. has taught and lived by three fundamental rules in his real estate investing career. These rules make so much sense you might not see them at first… because smart people have a hard time letting go of belief systems that took them a lifetime to build.
Let these rules soak in until they become clear to you. Once you can see them you’ll wonder how you ever let yourself put money into risky investments.
Interestingly enough, these ideas aren’t new. They’re based on timeless principles that have been around thousands of years. They are the same principles that Benjamin Franklin used to create a massive amount of wealth over 225 years ago. They are the same principles that Andrew Carnegie used and passed on to Napoleon Hill who included them in his famous book, “Think and Grow Rich.”
These are the same principles that Warren Buffet lives by and has been trying to tell you about for years… but you didn’t hear him.
You Won’t Get It
Even now, after putting these rules into an article and releasing them to the world, most of you won’t get it. You’ll think it’s too good to be true, or too boring, or too whatever.
That’s the paradox of true wisdom. Napoleon Hill, Warren Buffet, and now Del Walmsley have been screaming from the mountain tops over the last 100 years, but only a few will listen and even less will take action based on this knowledge.
What Warren Buffet Has to Do with Real Estate Investing
A lot of people wonder why we reference Warren Buffet while, at the same time, putting down the stock market. Many stock investors look up to Warren Buffet for guidance, but they don’t realize that he is in a very different business than they are.
Warren Buffet is not sitting behind his PC on an Ameritrade account buying and selling stocks for his 401k. In other words: he is not buying stocks at retail with his own money. Warren Buffet is buying entire companies at wholesale with other people’s money.
Retail vs. Wholesale
Can you see the difference? It’s subtle, but it makes all the difference in the world. Let’s start with retail vs. wholesale. Warren Buffet finds companies that he can buy for fifty cents on the dollar. In other words, he is sticking to Del’s first rule of investing: Don’t lose money. More on that in a minute.
Del Walmsley learned to do the same thing in his favorite asset class: real estate. He teaches us to buy properties for fifty cents on the dollar. When you buy an asset so cheap, it’s very hard to lose money on it.
What about other people’s money vs. personal money? Buffet uses the power of leverage to amplify his wealth exponentially. A documentary on his early years of investing says he literally went door to door in his neighborhood to raise money for his investments.
When you’re using the power of leverage to buy assets for fifty cents on the dollar, you can’t get rich slow.
Rule #1: Don’t Lose Money
Don’t lose money. Makes sense, right? So why do you put money into investments that can lose you money?
Don’t lose money. Can you imagine how much money you would have if the principle in all of your investments was sacred?
Del teaches to only invest your money in assets that don’t risk your principle. So, which assets would qualify?
Can you lose your principle when investing in stocks? Absolutely.
We are all painfully aware of this fact since the market crashed… again. But we should have known it was coming because it crashes every seven years or so.
Retail Real Estate?
Can you lose your principle when investing in real estate at retail prices? Absolutely.
People in California and Florida are painfully aware of this fact. As Del says, real estate by itself is not a panacea. In inflated markets, people will pay anything for real estate because they think that all real estate goes up in value.
Wholesale Real Estate?
Can you lose your principle when investing in real estate at fifty cents on the dollar? Only if you mismanage it.
We can’t all go out and buy massive companies for fifty cents on the dollar like Warren Buffet. The easiest way to emulate Buffet is with real estate. An individual can go out and buy single family rental property or even an apartment building at wholesale prices and start to build wealth like Warren Buffet and Del Walmsley.
Rule #2: It Has to Cashflow
Del has mentioned numerous times on his radio show that dividends aren’t what they used to be. In the old days, you bought a stock for it’s dividend. Today, more and more companies are doing away with dividends because people are more focused on appreciation.
Cashflow is the foundation of Del Walmsley’s philosophy and the way we build wealth. We call cashflow the cake, while everything else is the icing. Do not buy an asset unless it cashflows.
An entire industry has been built around flipping houses based on price appreciation alone. What these investors find out is that they are speculating; and when prices correct, they get stuck in a cash-sucking whirlpool.
If you only buy assets that cashflow, do you care if they go down in value? Not really, it is the cash flow that matters and that does not change. Sometimes, like during the last recession, cash flow increases even though the value of single family homes went down. If you buy investment property using Del’s 1st rule, you’re not going to lose money if they go down in value because you bought at wholesale prices.
Rule #3: You Can’t Get Rich Slow
Here’s another paradox: The first two rules seem conservative compared to what you are used to, and they are… but if you follow them, you can’t get rich slow.
Isn’t that interesting? If you become more conservative and only put your money in solid assets, you actually out-perform the so-called “aggressive” investors.
How does this work?
Put simply: once you become a money-making machine, people will literally throw their money at you. You will begin to harness the power of leverage like Warren Buffet and Del Walmsley. The banks will give you loans. People will trust you enough to become your passive partners. Your investment base will become massively larger than what you could have accomplished on your own.
Hear it for Yourself
Del is on the radio across the Nation for several hours each day. Take a listen, he is not challenging your belief system – he is reminding you of it.
Find The Del Walmsley Radio Show on your local station, or listen to his podcasts at www.lifestylesunlimited.com