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Saturday, July 20, 2019

There is a big difference between income generation and being wealthy

Ateneo Professor on Entrepreneurship

Rizal Philippines
July 20, 2019
Image result for being wealthy


I would like to make comments on the mindset of a newly minted millionaire who made a success in real estate marketing with cash flow of about  P1 m +for his brokerage fees.  So this comment is just like the comment of the accountant to Ray Kroc, the franchisor of McDonald's before who got only 1.5% as franchise fee and has nothing to show for the 1,000 or more franchisee he has.  The accountant said that the business model should be to make money on the real estate and not on the food.    The 1.5% is really a drop in the bucket.    The business is in the real estate. Buy the land where the store is to be put up and lease... Lease payments start on day one...  The land when paid off
by the lease can be mortgaged to buy more land.

I recognized this difference about 3 decades ago.  In a subject Management of Financial Institution, I had endless debate with a professor, an officer of a bank who said they were the same.  I am sure he retired as an officer of the bank, and was never wealthy. He had plenty of income, but not wealthy

Lease payments is income, having more land that appreciates is having more wealth.

For this millionaire, I noticed:

1. His mindset is that of a real estate marketer and focus is on the payment for the agents:  offices, vehicles..

2. However it seems to me that he is dawdling on how to be wealthy.  He is engaged in undertaking
     unrelated to his business and which are risky;

3.  Typical of newbies: buy buy buy stuff and signs of success: cars watch gadgets.

How to be wealthy....  You cant be wealthy getting commissions of developer.

He is developer too But he must separate the development company.   For taxation purposes  and strive to be legal and above board


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