I teach you how to use your expertise and build businesses and investments that are worth millions of dollars. Let's talk about how important it is to focus and diversify. And when I talk about this, it's because I've learned from my own experience that where you can really get into a lot of trouble is when you spread yourself too thin and you're trying to manage too many different areas of your life. And any of you who's a parent and is trying to raise kids and start a business, or run a job at a side hustle, you know how hard it can be to stay focused and keep the momentum going. Well, it's the same thing when you're building businesses and your investing.
When I first started investing in houses what I would do is would find a property that I thought had really good long-term value, was a nice little home that a family would always want to live in, it was near the school and it would have some renovation potential. I was a specialist at finding really ugly houses that I could make more attractive. And I don't do all the like total reconstructing and contractor work, although I did have a team of contractors that came in and helped me do a cosmetic makeover. I'm talking about houses that you can do a little work on the garden and things that are not majorly expensive, but make a huge difference to the look of it.
So I would find a series of small ugly houses and I would borrow… Because at the moment when times are lean like they are with the lending, you can get more leverage. You can either buy smaller, cheaper places and try and buy them outright. Or you can borrow a percentage from the bank, say 25 to 50%, and this is just what I do, I'm not a licensed financial advisor, so I'm not giving you financial advice. I'm just saying that I felt a lot more comfortable having a lower rate of borrowing so that I owned a fair chunk of the property and then my rents would always cover my mortgage payments. When interest rates are low like they are now, it just means that you can have a bigger portfolio, you can spread yourself further because you're using the leverage of some of the bank's money as well.
I was doing really well with that strategy. I was buying these houses, borrowing a little bit, the rents would cover them, and I was pretty much set for life. I mean, I had a whole bunch of houses and some commercial properties. I enjoyed fixing them up. I would get long-term tenants, even if my tenants moved out for a little while, it was fine because I had insurance to cover me for periods of anything that went wrong with the property or periods of where I didn't have tenants, but because they were little family homes near schools that usually wasn't a problem for me.
Then I sort of ran out of borrowing power, I ran out of money to buy more houses, but I really enjoy doing it so I started teaching myself to trade the stock market and I was able to make more cash with my stock market trading that I could then invest in the houses. This also meant that the money that I was making in the stock market was being invested, which kept my tax obligations down a little bit. And then I decided that I wanted to learn how to write books and educate people on how to do what I was doing. And it seemed like it wouldn't be that hard except that I was taking on a whole new skillset. I was having to learn how to write books, how to be a speaker, how to create online training programs and all my attention started going into that and I stopped looking after my… I was doing a lot of managing my real estate, looking after the properties, and managing my stock portfolios. And eventually, I was spending so much time trying to learn all these new skillsets that I kind of neglected my investments until I got to a point where I realized that I was going to have to sell some of my houses because I'd over-leveraged and I started lending some money to people to help them with their businesses. And honestly, I ended up losing some of my houses.
My advice to you is to take your time, really learn this, get it managed, make sure that you understand what you're doing. Don't try and do too many things and spread yourself too thin. You really want to stay focused on what's working for you and gradually leverage and diversify. Hope that's helpful.
Written By Cydney O'Sullivan, Founder of Millionaires Training