Foreclosure Philippines » Investment

A financial independence day story: Cross-over from IT to RE

Jay — Sat, 12 Jun 2010 08:08:08 +0000

It’s hard to believe it’s already been a year since I first greeted you all here with a financial independence day greeting. This time around I would like to greet you all again by sharing a story of how an Information Technology professional was able to cross-over to Real Estate investing. I hope this inspires not just IT professionals but also just about everyone out there that it can really be done.

Cross-over: from IT to RE

(The Philippine Star) Updated June 11, 2010 12:00 AM

MANILA, Philippines – For Jay Castillo, crossing over from heading the IT department of a multinational company to investing in real estate seemed like a very big risk at first glance. But there’s no denying now that he’s enjoying real estate investing and making good money out of it.

Jay wanted to get his feet wet in real estate investing after reading Think Rich Pinoy by Larry Gamboa. He still had a lot of unanswered questions, though, on how exactly he could start investing. Fortunately, he was able to attend Urban Institute of Real Estate’s Investing in Real Estate Series. “I also attended Urban Institute’s Comprehensive Real Estate Seminar and Review (CRESAR) to gain knowledge in real estate and I also passed the real estate broker’s licensure exam a month after,” Jay shared.

At present, Jay continues to look for bargain and foreclosed properties to buy and sell. He is also considering buying lots where he can build townhouses which he could sell or rent out afterwards.

“This would be a big departure from what I did last year which was to buy and renovate foreclosed house and lots and then sell them through a rent-to-own scheme” Jay said.

According to Jay, the real estate business can be very lucrative if one focuses on bread-and-butter properties or single-unit houses and lots priced at P2 million and below. “These are the kinds of property many buyers are looking for.”

The other more saleable properties are single family homes below P2 million with 2-3 bedrooms, 1 toilet & bath, with a floor area of 50 to 60 square meters (sqm), and lot areas of around 100 sqm.

Jay’s first completed deal is always the most memorable for him. “For my first completed deal, I bought the property through an auction after many attempts in bidding for properties at public auctions and not winning anything. After I won a bid for the first time, I was very happy, but a feeling of anxiety also began to set in: “What if I am not able to rent out or sell this property?” “What if I encounter a problem with the title of the property, the taxes, the house’s structure, etc?”

His fears were unfounded after all. That property was a perfect example of a great investment as he was able to have it tenanted in just 55 days. “I learned so much from that deal,” he enthused.

One of the more important considerations a serious buyer asks is whether the property is flood-free and was not affected by Ondoy. “Of course, buyers would also want to know if the property is accessible to public transport and near their place of work, in a safe and secure location, and has good investment potential.

Is it true that to be able to sell a property, you must be able to fully explain or answer all the questions a buyer may ask? “Yes, and one also has to be able to answer sincerely,” replied Jay. “I credit Urban Institute of Real Estate for giving me the kind of training and know-how that gave me a lot of confidence in dealing with clients,” he added.

Jay believes that Filipinos have become more intelligent and discerning buyers seeking more value for money and looking for sound investments like real estate.

Before enrolling in Urban Institute, all Jay knew were general concepts on real estate investing but had no idea how exactly they can be done.

“At Urban Institute, I learned exactly how real estate transactions are conducted considering the laws, rules and regulation, taxation, etc. When there’s a difficult question I encounter, I can ask Urban c/o Engineer Enrico Cruz “Engineer Cruz has probably encountered just about everything there is in real estate investing so he is able to answer all of my questions quickly.” Cruz is the president of Urban Institute of Real Estate and has more than 40 years of working experience in the field of engineering, construction, real estate, and education.

(For details about real estate courses at Urban Institute, call 509-7402 or 796-8019, or CP# 0916-426-9174 or 0939-137-9242 or email at info@urbanet.ph or urbanet.ph@gmail.com.)

Article source: Philippines Star, June 11. 2010 (page C-3 on the printed edition)

Here’s a little trivia, if you will notice my picture on the printed edition, I appear to be very serious and somewhat concerned. This was because I was checking what was my maximum allowable bid as I had a lot of competitors who were also bidding for the same properties during this auction of UCPB foreclosed properties. I did not win in any of my bids for properties I was bidding for during that auction but I was able to win three months later with another bank. I guess persistence really pays off!

Happy financial independence day to all!

To our success and financial freedom!

Jay Castillo

Real Estate Investor
Real Estate Broker License #: 20056
Blog: http://www.foreclosurephilippines.com
Mobile phone (Call/SMS): +639178843882
Follow me in twitter:http://twitter.com/jay_castillo
Find us in Facebook:Foreclosure Philippines facebook page

PS. What are you waiting for? Learn from 16 successful entrepreneurs, investors, best-selling business authors, sales superstars, and money experts including Trace Trajano and Eden April Alemania-Dayrit. How? Attend the Money Summit and Wealth Expo 2010, the BIGGEST wealth building and income opportunities super conference and expo in the Philippines, on July 2-3, 2010 in RCBC Plaza, Makati City. Click here for details! I will be attending this and I hope to see you there!

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Top 7 lessons I learned from playing Rich Dad’s Cashflow 101 game

Jay — Sun, 15 Nov 2009 20:28:01 +0000

I first played Rich Dad’s Cashflow 101 game way back in 2007, after I found Think Rich Pinoy Seminar attendees who organized their own cashflow 101 game sessions. I was hooked ever since. I play cashflow 101 whenever I get a chance to do so as part of “sharpening the saw”. I believe that the cashflow 101 game effectively simulates one’s journey out of the rat race and I would like to share here what I have learned from playing what I consider to be a “life changing game” and its practical applications in real life.

Here goes my Top 7 lessons learned from playing Rich Dad’s cashflow 101 game…

A photo of the cashflow 101 board game courtesy of Earth del Mundo

1. Simplify and get out of the rat race faster
I noticed that whenever I played the cashflow 101 game and was able to choose a “simple” profession like a truck driver for example, I was able to get out of the rat race faster. This happened during the Think Rich Pinoy Seminar I attended last August 2007. As a truck driver, although my salary was low, my monthly expenses were also very low. Because I had low monthly expenses, I already had a positive cashflow and all I needed to do was just get those passive income generating deals. After each payday, I had more money to invest, and with just a few passive income generating deals, I had enough passive income that exceeded my monthly expenses, and I was able to get out of the rat race faster.

In real life, I am applying the same strategy by reducing my monthly expenses by leading a simple life. This was also described by Bo Sanchez in his book “Simplify and Live the Good Life ” and T. Harv Eker in his book “Secrets of the Millionaire Mind”. My family and I lead simple lives, which explains my very low target monthly passive income which is why I know I am going to get out of the rat race in real life very soon!

2. Start with small deals first, and the big deals will follow
In the beginning of the game, I always chose small deals even if they produced little cashflow. Later on, when the market presents good opportunities, I was able to sell or “flip” these small deals and then I used the profit to buy the bigger deals that produced greater cashflow, allowing me to get out of the rat race.

My four “green houses” which I’ll exchange for a “red hotel” during a recent game I played with Earth. I was not able to get out of the rat race during this game but we only played for an hour due to time constraints.

In real life, I am also following the same path. I focus on single family homes or properties which may produce little cashflow at the very least, but can actually generate significant profits if “flipped” or sold through “rent-to-own”. I can then use the profit later when they are enough to get bigger deals that can produce bigger positive cashflow.

3. Over-leverage often leads to bankruptcy
During the game, we often encounter great deals that produce a lot of positive cashflow but require a big downpayment and it is tempting to borrow money from the bank just to be able to buy those great deals. However, there is such a thing as becoming over-leveraged which can produce negative cashflow situations because of the high monthly payments for those loans. Even if one’s passive income is enough to cover the monthly payments for those loans, imagine if something happened and the monthly income of one’s investment properties were affected, suddenly the monthly payments for the loans cause a negative cashflow and can lead to bankruptcy. The same can also happen when one is downsized. This is the reason why one should avoid deals that lead to too much exposure or over-leverage.

Applying this is real life is a no brainer. I would not dare buy those multi-unit apartments unless they were in the same price range as the single family homes I focus on. As mentioned in lesson number 2 above, I can go for those bigger deals later when profits from my small deals are enough.

4. It is better to wait for a good opportunity than settle for those not so good deals
In the game, good opportunities come in the form of deals that have big ROI potential, and can be bought with little or no downpayment, while producing positive cashflow. If any of these elements are missing, I consider a deal as “not so good” and I pass them up and just wait for the good deals.

In real life, I do the same and patiently wait for good opportunities. If a not so good deal comes my way, I can either look for ways to make it into a good deal, or I just pass it up and wait for another more worthwhile deal to pursue.

5. Learn how to spot a good deal and grab it
One of the biggest challenges one faces in the game is how to spot those good deals so that you can grab them. Sometimes a good deal is right under your nose and it slips away because you didn’t realize soon enough that it was a good deal.

I believe spotting good deals is a skill and you can only learn this skill by continuously analyzing deals. Once you get the hang of it, you will start seeing those good deals more often. Normally those deals would have normally slipped away without you knowing it. If you see good deals often, it’s just logical that you will eventually grab one of those deals right?!

6. Learn how to protect your investments
I distinctly remember games where apartment buildings getting toppled by mud and all the cashflow generated by these properties are gone, unless I am covered by insurance.

Does Ondoy and Pepeng ring a bell? Who would have thought that a game like cashflow 101 actually teaches us to protect our investments from such disasters and calamities. Better get your investments insured with “Acts of God” coverage pronto!

7. Net worth is worth less, cashflow is king
Once you play cashflow 101, you will notice its emphasis on the importance of cashflow over one’s net worth. You will see that it really is more important to have positive cashflow from passive income. What is the use of having a big net worth if you don’t have any positive cashflow?

In real life, we should apply this by focusing on building our positive cashflow with income generating assets. Even if we have to use leverage to buy these assets, it really is okay. We call this good debt. Don’t be afraid to have good debts that buy real assets that produce the cashflow we need to get out of the rat race for real!

Get out of the rat race in the game, and in real life!

So you got out of the rat race when you played cashflow 101. So what?! That’s useless if you don’t take action and apply the lessons you have learned from the game in real life. But playing a game is one thing, doing it in real life is an entirely different thing… or is it?

I can truly say that Robert Kiyosaki’s Cashflow 101 game is a “life changing” game because my life has really changed ever since I decided to apply in real life the lessons I have learned from it. Take note that I only listed the top 7 lessons I have learned and I can assure all of you that there are more lessons one can learn from this game.

People may find it hard to believe that one can learn so much from a game and can have such a huge impact in life. I guess you just have to play the game and experience it for yourselves.

How about you, have you played Rich Dad’s cashflow 101 game? What did you learn? Are you applying them in real life?

—

My vision – financial freedom for all!

Jay Castillo
Real Estate Investor
Real Estate Broker License #: 20056
Blog: http://www.foreclosurephilippines.com
Click here to contact me via E-mail
Mobile phone (Call/SMS): +639178843882
Twitter: http://twitter.com/jay_castillo
Facebook: Foreclosure Philippines fan page

PS. If you are a new visitor, please start here to learn more about foreclosure investing in the Philippines.

PS2. Larry Gamboa and Bo Sanchez will give the Think Rich Pinoy Seminar this November 21 at the Philamlife Building in UN avenue in Manila. Larry will discuss his unique Real Estate methods, buying foreclosed properties and turning them around for passive income. You’ll also get to play Robert Kiyosaki’s CashFlow 101 Game and learn! To attend, click here now!

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