How the Incremental Process and Passive Income Makes a Person Really Rich
There are only twenty-four hours in any day.
The billionaire, Bill Gates, said he would gamble in Las Vegas, if he could win more time instead of money. He has more money than he needs. With his beautiful wife Melinda, he decided to give a huge portion of his billions away.
This act was so impressive that it encouraged Warren Buffet to do the same.
Bill Gates and Warren Buffet became friends by playing the card game of “bridge,” online. For them, the simple mentally challenging card game was a delightful pleasure.
One of the reasons that the game of bridge is so challenging, is it requires an almost telepathic cooperation between two people who play as partners against another two people. Each of the players gives clues to the others, by how they bid their hands.
These billionaires figured out very early that the incremental process, which builds wealth over time, is the secret to enormous financial success.
A funny way to look at this is, when Bill Gates goes to the toilet, he makes more money sitting down that the average American makes in a year.
What is the Incremental Process?
The incremental process is the gradual accumulation of wealth over time that does not need the time and attention of the owner of the property. It just happens automatically. It may need occasional adjustments by the owner, but for the most part, it simply continues to operate on its own.
Management
It helps tremendously when a person is good at selecting management for their real estate properties. A good manager is priceless. A bad manager is a total disaster. To benefit from the incremental process a person needs to be very good at selecting good managers for their properties. The owners cannot be in every place at the same time, so they need others to look out for their interests.
Share the Wealth
Find a good manager and try your best to keep them. The good managers make profits every year for the owners of the properties. They may occasionally have some challenges when there is a global economic collapse, such as the one that occurred in 2006.
A good rule of thumb is to take 80% of the profits and use this to support a good manager. Give them a free apartment without the need to pay rent and give them an annual bonus to keep them living there.
It may, at first, sound like 20% of the profits are really a small amount for the owners. However, this is not true. A mere 20% of profits, means money comes to the owners without them having to physically take care of, or guard the properties.
Summary
Real estate is both a business of property ownership and management of people. A terrific manager is a moneymaker for a property owner. The cleverest owners try to find as many of these people as possible. Bill Gates does not have anything to do with running Microsoft at this moment. He concentrates with his wife on charitable efforts, yet the money keeps coming and coming because he was so clever in selecting great managers for his business.
This is how to build a massive real estate portfolio that provides passive income for wealth-creation in two steps: 1) Acquire the properties at a good price, and 2) Select terrific managers to take care of them for you.