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Book Review: Millionaire Maker

A few years ago, when I first started college, I read Rich Dad, Poor Dad. That was a book that I am sure many of you are familiar with. It changes your concept of money. Being a business major, I did find his definitions of words inaccurate, but the point was the concepts. Well, I have just finished reading Millionaire Maker, by Loral Langemeier, and it shares the very same concepts but goes above and beyond Kiyosaki by giving practical ways to create passive income from the assets you already own, and then gives you a kick in the pants to start your own business.

Basically, Loral works on people's financial mindset and takes several calculated risks when dealing with common everyday assets, like home equity, retirement savings, and cash. Instead of letting your home equity sit there and under peform, take some of it and invest in an asset that will give you a much better return, like investment real estate. Loral contends, that with as little as $6000, anyone can find a decent investment property that can create positive cash flow of between $100 and $250 per month; that is between 20-50% for a return!

Further, she considers tax strategies, especially real estate. Did you know that you can depricate real estate investment property over 27.5 years? Well, you can. Did you know that you can get a self-direct IRA that you can invest in nearly anything that you like, including real estate?

I thought of this concept after reading the book. Consider this: If I had $50,000 in my 401(k) with my employer (which I will within five years), I could take that money and roll it into an IRA when I leave the company. If I place it into a self-directed IRA with the intent of purchasing investment properties, I could buy about eight of the properties which Loral speaks about. Technically, I would purchase them under an LLC, and the IRA would invest in the LLC. So, let's say that I am personally (or through a trust) a 50% owner of the LLC, and my IRA holds a 50% stake in the LLC. Through the operating agreement, I could stipulate that all profits flow to the IRA (so there is zero taxable income), and all losses flow through to me. So, I could depricate the property and write it off on my personal taxes, and have all the money go into my IRA! That is very exciting. Then, I could have other income producing entities that would be offset via the deprication losses and my tax liability would still be miniscule!. Brilliant!


Anonymous Anonymous Says:

March 18, 2006 12:47 PM 

Appreciated your review. I'm about halfway through the book. Your breakdown of the IRA/LLC strategy was just in time for me. I tend to turn off to the author's constant "find a team, find a mentor, find an expert, etc." I believe a mindset change is absolutely necessary, however.

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