You have to Spend Money to Make Money

Let start with a simple question – Can you give me an example of how you have made money without spending any of your own money?

Let’s get the obvious answers out of the way first:

• Inheritance. Good luck to those waiting around lazily to collect someone else’s initial spend to originally make it, not to mention the risk they took.
• Stealing it – Illegal

The simple fact of life is no one ever makes money or creates wealth without firstly spending money to make it happen.  You have to spend money to make money……..but there is a little bit more to it than that which I will come back to later.

My wife and I are about to start with some renovations on our home. Our plans are for significant renovations over 3 stages.  Over this journey plenty of people have offered us ideas and advice about what we should do, plus we had built up our own ideas of what was possible after living in the property for just over 12 months now.  The property is located in a blue chip area where houses are worth up to $4 million.  Our property is around the $1.3 million mark – un-renovated.

Now I’ve been investing in property and studying value both personally and professionally for over 16 years, and as a professionally qualified property investment advisor, a lot of people have commented on the fact that I should know how to add value to a property like this. Well, the short answer to their question is YES – I do know how to add value, but there is a professional person more qualified than I am to add even greater value than I can – an Architect.

So with my initial ideas and drawings I went in search of an Architect to leverage from their professional education, skill and experience (KNOWLEDGE).

We found an architect – $20,000.00 they are charging us.  Now most reading this will think that’s a lot of money for some drawings, ideas and concepts.  Those thinking that are usually people who see money as a cost, not money as a commodity which can be used to make more of it.  Estimated building cost for the 3 stages of work is around the $500,000 to $600,000 mark.  Kick in my research on estimated value of completed project $2,500,000 to 2,700,000.

You see Value = Benefit less Costs.  So a future benefit of adding around $600,000 to $800,000 in value for their professional services – it’s a no brainer!  Sure I would argue with my own skill base and that of some experienced builders and designer friends, we could have maybe added half of that ourselves, yet the professionals with his specialised KNOWLEDGE have made a far greater impact on the result through his design skills and experience, which Jane and I simply could not have dreamed up or envisaged without considerably improving our KNOWLEDGE base, and that would take years!

The same applies to residential property.

It amazes me that some people, especially when it comes to buying and investing in properties, think that reading a couple of books and jumping onto a few chat rooms or talking to mates, where they are told its easy and they can do it themselves is enough to convince them to take the leap themselves without any professional support.

Like Jane and I, if we had done it ourselves, we would have got a fair to good outcome, given we have many years of experience, but through working with a professional who added VALUE and leveraging from their KNOWLEDGE we are going to get a superior outcome and add many more hundreds of thousands of dollars to our wealth base through working with specialists within their field of expertise.

Remember only 10% of us are going to retire wealthy in Australia and only 5% really wealthy.  It’s those of us with a mindset that realises that we don’t have the time to build up years of knowledge required to get the results others achieve, so we leverage from their KNOWLEDGE – education/skill/experience and see incredible value in what they offer. We don’t focus on cost like the other 90% of the population do.

The choice is yours – spending years developing the knowledge yourself whilst make costly mistakes on the journey or leverage from others for superior outcomes, so long as the advice and service they provide has your best interest’s front and centre.

Remember, knowledge is empowering….

PS – Early this month my wife and I celebrated the arrival of our first little boy – Jack.  To those of you who have sent well wishes thank you very much.  We are so thrilled to be first time parents.