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Q for Fastlane Members: What if You Lost Everything?

Diane Kennedy

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I'm doing a little different spin off of the $3K to $1 mill exercise Russ posted.

What if you lost everything you had right now - all your money, your businesses, your real estate, everything..... You were left with $5,000 and the knowledge you have.

How long would it take you to get back to where you are right now? And how would you do it?

I'll post my answer to this tomorrow. BTW, I was asked these exact same questions 4 years ago on stage. I was so shocked by my spur of the moment answer, that I did it. My husband and I made $1.7 million from putting that "ah-ha" in place.

So, how would you do it? How long would it take?
 

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SteveO

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It would take a bit more work than I am used to but...

If I lost everything, it would likely be due to some major change that took the apartment market into a major spiral. With the knowledge that I now possess and with the ability to take advantage of the market that would emerge as a result, I am thinking 2-3 years.
 
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Diane Kennedy

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Thanks Steve.

The thing that's so interesting is I bet that it took you more than 2 years to get where you are, but if you lost it, it would only take 2-3 years to get it back.

$5K to $5 mill+ in less than 3 years. Now, that's impressive.

Would you still go the same route - apartment buildings?
 

SteveO

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Multi's are what I know. I could probably deal with retail of office buildings if they were a better option at the time but the money would likely be slower.

I believe that I will make more than 9M in the next 3 years without the effort that would be needed to start over. The difference would be the lack of a base to build off of.

The knowledge is the key. That is why it is so important for people to jump in and start learning now.
 

randallg99

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I realize that Diane`s question was put to us personally, but this very question was put to me regarding my business...

it was phrased like this- If I lost, sold or left the business and had very little to my name, what would it take to get it to where I wanted my picture-perfect business to be.

WHAT A POWERFUL QUESTION[

starting over knowing what we know now has got to be the ultimate tool for success. To answer Dianes question, I think it would take me only 3 years to accomplish what I have accomplished in twelve. but thinking about this in detail has been incredibly productive for my perspective and my ability to handle tasks.

Anyone know the story of the `refugees` who survived concentration camps and moved into the 1940s America? ... fascinating stuff.... sharp business people left with barely two nickels to rub together came to our shores only to succeed beyond most peoples dreams.

I know one first hand and once told me a story that often comes to mind whenever letters come to me from lawyers threatening to sue... and the shortened version of the quote goes like this: `nothing puts fear into life like a soldier putting a gun to the head for absolutely no reason. everything else is in life suddenly becomes meaningless forever`

anyway, starting over has been a successful tactic for many people in business. John Hewitt from Liberty Tax Service and Jackson Hewitt is a perfect example as well as some people in my industry.
 
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Diane Kennedy

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Aug 31, 2007
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I realize that Diane`s question was put to us personally, but this very question was put to me regarding my business...

it was phrased like this- If I lost, sold or left the business and had very little to my name, what would it take to get it to where I wanted my picture-perfect business to be.

WHAT A POWERFUL QUESTION[
Wow! I really like your question here, especially for us business owners. It is a different question than mine. On your business-centered question, it addresses the issue that many of us (ME TOO) have in making a decision sometime ago to start a business a certain way and then in reacting to changes and opportunties, kind of put your head down and just keep going. A few years later, you raise your head and say, "How did I get here? This isn't the business I planned to have at all!" Sometimes it's a good thing, sometimes it's a bad thing...

Randallg99, how would you get your wealth back? I'm guessing you're in business now. Would you do the same thing again?
 

randallg99

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Randallg99, how would you get your wealth back? I'm guessing you're in business now. Would you do the same thing again?
Diane,

Currently, I have my hands in real estate, a potential venture into private equity, foreign land development, retail brick and mortar business and semi active stock trading. In my mind, I created a hedge against the fear of being too concentrated in any one financial area... My focus is seriously lacking and I am aware of the fact that focusing on one single area would prove much more beneficial.

So, to directly answer your question- I would reopen my business which I originally started almost 15 years ago with very little resources. Todays economic climate is different because the use of technology while important is very costly. But the business can manage revenue and reinvested profits/cash flow into necessities. It took me 12 years to become extremely successful the first time around. If had to be done again with $5000, it would take less than 5 years. learning from mistakes made the first time around would prove extremely valuable.

As destitiue as the scenario could potentially be for my family, it would be a perfect opportunity having the knowledge as SteveO described.

Regards,

Randall

ps Greenspan on 60 minutes is fascinating...
 

Satpoint

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Aug 15, 2007
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Multi's are what I know. I could probably deal with retail of office buildings if they were a better option at the time but the money would likely be slower.

I believe that I will make more than 9M in the next 3 years without the effort that would be needed to start over. The difference would be the lack of a base to build off of.

The knowledge is the key. That is why it is so important for people to jump in and start learning now.
Now that is impressive, i've been reading and researching my area and it would be very hard to make those numbers in 3 years.
 

andviv

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Satpoint, I think the right way to say it is "it would be very hard to make those numbers for now". And if that is true, what about other areas?

What's your area?
 

EasyMoney_in_NC

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My (and my wife's) current financial position started when we bought our first home at the ripe age of 22/23 respectively. We had a plan of being in rentals from day 1, just didn't understand how, but the original plan was 1 per year.
It took roughly 12-13 years to get where we've been for a while now. Having to do it again under the 5K question, after getting past the devastation of being reduced to that amount, if took me even a third of the time to get back to here would concern me greatly. If I only knew then what I do now, I would be SOOOO much farther along. Unfortunately, I didn't and I am just great full that we were fortunate enough to have what we have and woke up soon enough to take advantage of the situations that presented themselves.

BTW, the first purchase started with 6K so, pretty similar scenario.
 

aptohosting

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Diane,

I am not able to message you, (sorry for getting off topic). Is your inbox full?

Tom
 

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Russ H

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Diane- great question.

And randallg99-- WOW! What a great twist on that!

I'll answer Diane's first. And I have to admit, I'm going to have to think long and hard about randallg99's question. Very thought-provoking. It just may become part of our PLAN/biz plan review sessions! :thumbsup:

When Sharon and I first started going out, we discussed our financial futures a lot. We both owned sucessful businesses, and were quite happy being "S's" (Self employed entrepeneurs).

I had a retirement strategy mostly based on Suze Orman's 7 Steps and a book I'd read by Vicki Robin and Joe Dominguez called "Your Money or Your Life". Boiled down, my strategy was to sell a house I'd been rehabbing, pay the tax on the amount I made over $250K, and invest it into something conservative (like 30 yr Treasuries). My other house was almost paid off, so once I did that, my expenses would be minimal. If I cleared $300K after selling my one rehab, paying the taxes, and paying off my other house, I would have $300,000 x 5% (30 yr treas) = $15,000 a year to live on.

I figured I'd continue my writing and teaching gigs, which were taking me about 3 days/month on avg (36 days/year total work), and bringing in around $70K a year.

Pretty close to retirement-- 90% of my time would be free. That was enough for me, anyways. :)

Then we started playing Cashflow 101, and our universe changed.

By the time I played with the folks in San Francisco and learned the power of partnering and leveraging, everything I'd read by Robert Kiyosaki made sense. I'd really enjoyed his books before this-- but playing cashflow showed my how to put what I'd learned into action.

Our new goal-- together, leverage and make $2,000,000 after taxes. Still invest in 30 yr Treasuries, but now we'd have $100K/yr to live on (2,000,000 x 5% = 100,000/yr).

We started on this road at the end of 2003 (remember my noob questions about the B&B back then, Diane?).

And by April 2005 (18 months later), we had gotten to the point where, if we sold our B&B, we would have the $2M.

But we were having so much fun that we decided to take things to the next level!

That's what we're working on now. Cashing out w/5-6M, $250-300K/yr.

We should be there in the next few years (depends how long it takes to sell the B&Bs once we get to our gross revenue goals).

OK, so I am finally going to answer the original question! Here goes:

If we had to start over, we'd probably go back to work as S's, generate $200-300K, and just rinse and repeat what we've done w/the B&B.

We'd probably get to 5M in about the same time as now-- since it was the cashflow game (played before we started) that really accelerated our approach.

Still, we started down this road later than some on these forums. I was in my early 40s when I started playing cashflow, and Sharon had just turned 29 for the 10th time. ;)

The most important take-away from this whole process is:

Losing the MONEY is not important.

WEALTH BUILDING comes from KNOWLEDGE, not from MONEY.

That's something I never, ever understood as an "E" (employee).

As an E, I thought that if I lost everything ($$$), I would be devastated. And that it would take decades to rebuild my $$$, and my life.

Nope.

As long as we have the contacts, the know-how, and the lack of fear to jump back in, the entire process takes a few years.

Amazing.

-Russ H.
 

SteveO

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Now that is impressive, i've been reading and researching my area and it would be very hard to make those numbers in 3 years.

Reading and research will help but nothing subsitutes for experience.

If you look at some of my other posts, I am not a fan of investing in your own location unless it fits certain criteria.
 

SteveO

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Satpoint, I think the right way to say it is "it would be very hard to make those numbers for now". And if that is true, what about other areas?

What's your area?

I tried to give you rep ++ on this but it seems I need to spread some around first. :smxB:
 

nomadjanet

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Aug 28, 2007
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I'm doing a little different spin off of the $3K to $1 mill exercise Russ posted.

What if you lost everything you had right now - all your money, your businesses, your real estate, everything..... You were left with $5,000 and the knowledge you have.

How long would it take you to get back to where you are right now? And how would you do it?

I'll post my answer to this tomorrow. BTW, I was asked these exact same questions 4 years ago on stage. I was so shocked by my spur of the moment answer, that I did it. My husband and I made $1.7 million from putting that "ah-ha" in place.

So, how would you do it? How long would it take?
We started our first company with $2000.00(a long time ago) so I think we would be OK starting with 5K now.
Things I would do the same:
live simply
leverage time since I have no money
use knowledge to avoid the money pit wasters
use contacts ***** big deal here, didn't have many back then
Things I would do differently:
never have any realitives work for me:smx4:
start out with a more structured agreement between my DH & myself (we both want to be the boss):bgh:

I think it might take me about 4 years to get up again. I am just not risk taker I was when I was younger. If I was I would say faster.
 

MJ DeMarco

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How long would it take you to get back to where you are right now? And how would you do it?
A couple years. Do the same thing I do now: Build a web property that cash-flows heavily and then sell it.

The reason why I love the internet is that web properties are like real estate; its an asset that cash-flows. The major difference? You can build a web property from nothing with little cost, cash-flow from it, then sell it. You can't build a single-family house by yourself and to buy an existing one, involves cash (yours, or OPM's)

If you build a web property and cash flow from it, and later sell it, you experience an infinite return, or a return based on your cost of development - which BTW, is getting cheaper.

Real Estate barriers to entry:
1) Cash / Loan Qualifications / Down-Payment
2) Time
3) Land
4) Renters
5) Government regs (state/HOA's)

Internet barriers to entry:
1) Development time
2) Development cost (if you can't do it yourself)

I can build an internet property that cash flows in a few months. I can't build house from scratch in a few months and if I tried, it would cost tens of $1,000's (Land, contracting, construction).

The lure of infinite returns is what will keep me on the internet for a long, long time.
 

HenkHolland

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Hi Diane,

Since I hope to learn from it, I am anxiously waiting for the answer that you promised to post "tomorrow" (that would have been the 16th).

Henk
 
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Diane Kennedy

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Yep, Henk, you're right it's not posted yet.

The forum takes 3rd or maybe 4th place behind my family, charity work and businesses. There were some huge opportunities this week for my son's charity and I spent a day in LA cutting a video that was a sudden opportunity.
 

MJ DeMarco

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Hi Diane,

Since I hope to learn from it, I am anxiously waiting for the answer that you promised to post "tomorrow" (that would have been the 16th).

Henk
Lets see, you're rude to a respected member and you violated one of the forum rules via sending PM spam. Are you interested in staying here or getting tossed?
 

AroundTheWorld

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Yep, Henk, you're right it's not posted yet.

The forum takes 3rd or maybe 4th place behind my family, charity work and businesses. There were some huge opportunities this week for my son's charity and I spent a day in LA cutting a video that was a sudden opportunity.
How great to be able to take advantage of a spur of the moment opportunity. How great for your son's charity ;)
 

HenkHolland

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Lets see, you're rude to a respected member and you violated one of the forum rules via sending PM spam. Are you interested in staying here or getting tossed?
I did not realize that I was being rude. I just expressed my curiosity and from Diane's answer I don't get the feeling that she thought it was rude. If she did, of course I apologize to her.

I did violate the rules once (although not intentionally). I'm sorry and will not do that again. I hope that it will not be held against me forever.
 

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Russ H

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The forum takes 3rd or maybe 4th place behind my family, charity work and businesses. There were some huge opportunities this week for my son's charity and I spent a day in LA cutting a video that was a sudden opportunity.
Go Diane!

I consider myself very fortunate that these forums rank so highly with you.

-Russ H.
 
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Diane Kennedy

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I find the answers very insightful to this exercise. Without exception, everyone who has responded has said they would get their wealth back in a much shorter time period than it took the first time.

No one responded with a “I wish I could start overâ€. There are many people in that spot today – at less than zero. They owe more than they own (negative net worth) or just the thought of $5,000 to start something with is more than they can hope for.

So, my story:

I was on a panel when this question was asked and everyone tried to top the person before. I was last. That’s the hardest spot to be in when you’re doing that type of thing.

So, the challenge that I had quickly put in my mind (cause I wasn’t going to let these other guys come up with a plan better than mine) was that not only did I have to make the money back, but I had to do it WITHOUT the $5,000 and I had to live better than I did when it all happened. That was just because I wanted to set the bar higher for me than anyone else…sometimes that thinking gets me into trouble!

It was December 2003 and we were in Maui at the Maui Mastermind. Just before I’d gotten on the plane, I’d read an article that stated that there were 1,600 homes over the price of $1 million on the market in Phoenix. At that time, 400 homes over a million sold per year. So, based on those two figures, there were 4 years worth of supply on the market. My quick, off the cuff, answer was that I first needed to find a place to live. And since so many of the Paradise Valley homes (an area of Phoenix with homes starting the $1 mill range) for sale weren’t going to sell anytime soon, I figured there was an opportunity.

Without even thinking about how I would make money off the idea, I said that I would approach absentee home-owners (maybe through their real estate agents, didn’t have that part completely figured out) and offer to keep their homes in “show ready†condition. Houses that have to sit start to smell funky after awhile and houses that aren’t vignetted out have a much slower sales rate as well. So, I would arrange for top of the line furniture to be vignetted in the house, coordinate the housekeeping and landscaping staff and keep the house in “show ready†condition so that within 2 hours of any given time the house would be ready to be shown. The homeowner, of course, would be responsible for the furniture rental and labor costs, but my time would be absolutely free. Plus, I would be around to discourage burglaries or trespassers. I would do this all for no cost whatsoever to the homeowner.

Of course, I wasn’t really planning to do that, but it got me thinking – there are a lot of houses at the $1 mill+ level and people are going to start getting desperate. This thought process was all happening at the time that Richard and I were lamenting that our current plan of moving every two years (live in a house for 2 years, sell and take tax free gains) didn’t ever hit the maximum. We tended to live way below our means and at the $300K-$500K per house level, we usually made about $200K - $300K every two years. What would it take to make the maximum of $500K? We knew we had to go to a higher price house.

So with a slowed down market and the desire to maximize the tax free gain, we made the decision to go after that bigger ticket house.

We told our real estate agent that we wanted something in the $1 - $1.5 mill range and more than anything, it had to be a deal. She did an amazing job searching for us and came to us with an 8000 SF house right next to the exclusive Biltmore area with almost 2 acres. It was 15 minutes to downtown Phoenix or the airport, but had massive trees and an arroyo running right through the property. Actually, the arroyo ran right through the house. The house bridged the arroyo so that water flowed under part of the house (with plenty of windows and views of the dramatic water scenes.) There was a 3000 bottle wine cellar and a total of 3 kitchens. Really the house was something I’d never seen before in my life. But the problem was that a group of investors had bought it and then someone stole from someone (or at least was charged with that) and litigation held the property up for 3 years. Meanwhile, someone had the idea of turning the water off on the property, so there were dead and dying vegetation everywhere and the house was in disrepair. The title was finally clear, right when the market tanked.

We ended up getting an accepted offer at $1.1 million and then my husband started in on round 2 of negotiations, so that we actually got $30,000 back at close…from the sellers. The problem was closing the house. Every appraisal came in much higher than our purchase price and so no one wanted to finance it – they thought something must be wrong. In the end, we paid for 8 appraisals. The day we closed, the listing agent came to us and said he had a solid offer at $1.4 million. We turned it down, mainly because we were just so happy to finally have the property closed! Now, 3 years, 3 months after the purchase and $300,000 in improvements later, we have an appraisal at $3 million. (Gain of $1.6 mill) We’re considering doing a more major remodel that would cost about $500,000 but should bring us a quick sale of $4.2 - $4.5 million.

And what happened to the supply of $1 million+ houses in Phoenix? The market exploded within a year and for this higher end, it’s never slowed down. Houses are still selling in our area, most within 3 months, at listing price or close to it.
 

HenkHolland

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Diane, thank you.
Very good story, which helps triggering creativity in finding ways to get into the fastlane.

Rep++

Henk
 

Talkintoy

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Oct 4, 2007
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What if you lost everything you had right now - all your money, your businesses, your real estate, everything..... You were left with $5,000 and the knowledge you have.
For me i think it'll be a great pleasure for me as i will start and begin learning with someone that already been to the fastlane. Instead of learning slow piece by piece most of the decisions i'll be making will be somewhat right than wrong.

It took awhile for everyone to learn as the process was little bit different than how it is now with your knowledge. Its like your learning very slow thats why it took more than 5 years to build but only took 3yrs to rebuild back because you already have the risk mind etc...out of the way and its not stopping you anymore.
 

reipro

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I guess I would have to quote Henry Ford here

"I would have it all back in 3 years instead of the lifetime it took me the first time"

I have made all of the mistakes and I know how to build it faster and better now.
 

fanocks2003

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Mar 31, 2008
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I'm doing a little different spin off of the $3K to $1 mill exercise Russ posted.

What if you lost everything you had right now - all your money, your businesses, your real estate, everything..... You were left with $5,000 and the knowledge you have.

How long would it take you to get back to where you are right now? And how would you do it?

I'll post my answer to this tomorrow. BTW, I was asked these exact same questions 4 years ago on stage. I was so shocked by my spur of the moment answer, that I did it. My husband and I made $1.7 million from putting that "ah-ha" in place.

So, how would you do it? How long would it take?
2-3 years at least.
 

John

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Sep 18, 2007
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Very interesting question, Diane!

Starting over from $5k, if I went back into overdrive mode working long hours as I did when first building my business I think that within 6-12 months I could have a solid comfortable cashflow going again. Within 3 years or so I could be back where I am today doing the same business I'm in now. I'll even go one further and say that within 5-6 years I could be where I am today financially doing something COMPLETELY DIFFERENT than what I'm doing now.

The important difference now as compared to when I first started is that I have a good general knowledge of how business works, and more importantly, the belief that it works and that it is possible for me to put systems in place that generate cashflow. It's a lot easier to believe it can happen and work towards it after you've already seen it happen before. I feel that I could now put this knowledge and mindset to work to be successful at almost any type of business.
 

andviv

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John, if you don't mind sharing, what's your business?
 

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