I’m sure we have all dreamed of hitting it big and winning the lottery one day. Everyone has different dreams of how they would spend the money. How would you spend the money if you won the lottery?
For some reason or another I have always thought a little differently than most people. I have discovered that my thoughts tend to be the same as in the book Rich Dad, Poor Dad. Just because you have money doesn’t mean you just spend it on frivolous things.
I have always tried to invest in appreciating assets and use the profits from those assets to purchase the things I want. The same would apply if I were to win the lottery. My plan would be to take the lump sum and invest in real estate. Its best to invest in something people need and use everyday so there is always a demand for what you invested in.
After investing in real estate, I would take the profits to spend on what I want. You never want to spend your seed money if at all possible. You will make more money by investing more than less.
Most people that win the lottery just blow their winnings on non-appreciating assets such as cars, boats, jet skis, traveling and a brand new home or renovate their existing home. My suggestion to those that would blow the money right away would be to take time and invest in your education. You can always hire someone to watch over your money but you still need to watch over that person so they don’t take you to the cleaners and wipe out your bank account.
There are many different ways to invest in real estate. My suggestion would be to invest in either single family homes, apartments or self storage units. I once heard about a report stating that self storage units is the highest form of sale per square footage and are less maintenance. Paying cash for properties is a much better way to bring in larger returns.
Leveraging yourself with many properties leaves you with a larger headache dealing with management. I now understand why it is best to go to free and clear as fast as you can. If I had only listened to my own advice, I would have a few houses free and clear bringing in a nice little income.
How much money do you need to replace your day job? For an example: If you were to buy a 50k home with rents close to 800-1,000 per month, it would take approximately 4 years to return your investment. From there I would buy another property and take the income from both properties to buy more real estate.
Once you have 10 houses bringing in $1,000 per month, (that’s 10k per month) You can blow that each month and never tap into your seed money. Well, that’s my plan if it were to ever happen.