January 23, 2020 by Dymphna

From Negative $104,000 to Positive $114,000 – How One Builder Finally Saw the Bigger Picture

It may seem impossible to claw your way back from a negative cash flow of $104,000. But that’s exactly what Peter did with I Love Real Estate.

Everybody faces financial challenges at some point in their lives.

For some, an emergency situation could lead to them having to fork out thousands of dollars. Others might lose money in a bad business deal or see a partnership go up in smoke.

That last situation is what happened to Peter. But he managed to recover and prosper, with help from the I Love Real Estate (ILRE) team.

Creating the Big Picture View

Peter had spent almost his entire career working with properties. A builder by trade, he had his own business, in which he did pretty well for himself.

But like so many in his position, he struggled to see the bigger picture. Peter focused so intently on his building business that he missed the opportunities that sat in front of him.

With his skills, he could become a successful property investor.

Opportunity after opportunity passed him by without him even knowing it. Finally, a messy situation led to him reconsidering his career choices…

The Business Breakup

About five years ago, Peter had a falling out with his business partner. He describes this period of his life much like a divorce. As well as losing a longstanding relationship, he also lost a lot of money.

When the dust settled, he found himself with a negative cash flow of $104,000.

And that was on top of all of the credit card debt he’d accrued over the years.

It was in this situation that he first discovered the ILRE community. After attending a one-day event, he applied to become a part of the Platinum program.

After getting accepted, Peter got to work.

The Strategy That Worked

Peter needed to recover his equity position as quickly as possible. After learning about the concept of manufactured growth with ILRE, he decided that a subdivision strategy would work best for him.

His first project was a little chunk deal that he completed with his son. It generated a small profit, though it wasn’t anything spectacular.

Still, he saw the potential that property investing had to offer.

His second project saw him enter a joint venture with another member of the ILRE community. Together, they bought a house, renovated, and subdivided.

The end result was a $25,000 profit for Peter. That gave him a little bit of cash to help pay off the credit card debts.

Up to this point, Peter’s experience as a builder helped him immensely. He could save money on contractor costs because he could do a lot of the work himself.

His next project didn’t require his skills as a builder.

Instead, it saw him switch his focus to commercial property. He found the perfect property for $715,000 from a distressed vendor. The property already had a DA in place for a set of five subdivisions.

Peter just needed to jump on board and carry out the work.

After conducting his due diligence, he decided that turning the property into a childcare centre would be the best course of action.

He got to work on transforming the building so that it would be able to house 96 children. With childcare costs of $2,000 per head, that meant the project generated $192,000 in its first year.

But the true masterstroke comes from his ability to raise his prices. Each year, the cost per child increases by 6%. That means his income increases by about $100,000 per year as well.

Further deals followed, most with the goal of building his equity back up. But it was that childcare centre that really turned things around for Peter.

The End Result

Peter was in a precarious position when he came to ILRE. With a business that had basically collapsed and thousands of dollars of debt, he was on the edge.

But with our help, he managed to reverse his cash flow position.

Today, he’s generating $114,000 in positive cash flow from his portfolio. 

Better yet, he now has $3.36 million in equity!

Peter is the perfect example of somebody who transformed a negative position into a positive one. Here are the three lessons you can learn from him.

Lesson #1 – Don’t Give Up

Peter could have just decided to declare bankruptcy in his position. While that would hurt him in regards to credit, it would at least give him a fresh start.

Thankfully, he decided to educate himself about property instead. And in doing so, he created a foundation on which he could build his later success.

The key lesson here is that you always have opportunities, no matter how dark things may seem. Don’t lose hope just because you’re in a bad position right now.

Lesson #2 – Look at the Bigger Picture

For years, Peter didn’t even consider how his building experience could help him to achieve more. Instead, he focused on building his business without looking at the bigger picture.

It took a partnership dissolving for him to see the bigger picture.

People who work in fields that relate to property often have an advantage. Maybe you’re a builder, plumber, or even a town planner. In any of these cases, you have knowledge that you can leverage when investing.

Lesson #3 – Life’s Like a Mirror

Peter says that life’s like a mirror – you get back what you put in.

The more you invest in yourself, the more you get out of your investing career. That means you need to educate yourself as much as possible so that you can take advantage of opportunities.

If you go into anything with the idea of doing the bare minimum, you’ll get almost nothing back.

It’s Time to Start Your Journey

Who knows where Peter might be if he hadn’t started his investing journey?

It’s entirely possible that his huge debts and negative cash flow would have swallowed him up. But he managed to turn things around with the help of ILRE.

Maybe you’re in a difficult financial position yourself right now.

If so, property investing and development may help you. That’s assuming that you learn from the right people, of course.