Real Estate Investment – Is It Better Than Network Marketing?

For many years, buying an investment property has been seen as the way to a secure retirement. Once you get your mortgage under control, you use your savings to acquire additional property and rent it out to help cover the mortgage. Then property values rise, and a few years later you sell your investment home for a tidy profit.

Sounds Great, Doesn’t It?

Of course, in Australia, a $400,000 home will yield around $400 a week in rent. Let’s see. If you borrowed all the money, you would be earning $1,800 a month. You would pay $2,300 in interest on the loan, $150 a month in rates, plus 7% or $126 for agent’s fees, and maybe $100 a month for maintenance, providing your house isn’t trashed by bad tenants. Let’s see that makes a loss of $776 a month. I know, you can claim some of that on your tax, but you want an increase in value of 2.5% each year just to break even. Oh yes, don’t forget that entry and exit fees from purchasing and selling the property will set you back around $20,000 as well.

Real Estate Investment Is Risky Business

The reality is that this is high stakes gambling as many in the US and Europe have discovered in the last few years. We hear of the success stories, but not the hoards of people who lost their retirement income when it didn’t quite turn out the way that dark suited gentleman predicted. What if no one wants to rent your property? What if it is trashed? What if it remains empty for a few months? There is a commercial property near here that was but around 10 years ago and has never had a tenant. What happened to that poor investor? If the bank forecloses you will lose more than your investment – much more!

The MLM Model

Here is a challenge. Many high flyers in MLM see it as a low risk, high return investment. It is true that you need a passion for the company and products you represent, but you don’t need $400,000 to get started! You are building an asset that you can sell at a later date. Your monthly outlay is typically a little more than $100 these days, and there is no other financial risk involved.

I made $400 in my third month with MLM, and within a year I was earning over $350 a week, simply by sharing my story and that of the products I represent. At the end of that year, with a small investment, and that monthly order which I could on sell, I was adding over $1,000 a month to my retirement fund. Not losing money as in Real Estate, but making it with minimal risk.

Which Would You Choose?

I make far more than $350 a week these days, and it doesn’t take that much effort to maintain it. My loyal band of distributors love the products we offer, and are busy building their extra $1,000 a month pin money. All this with minimal investment. The risk – zero! Now when I have an extra $100,000 from my MLM income, sure I will look at investments. I just think that building an MLM on the side is a much sounder way than putting yourself in a position where you might lose your house or end up bankrupt.

Think about it and leave a comment on which you would chose and why. Something to contemplate.

 

John Gaydon

Comments

  1. Tell me about it! The real estate world is a scary place these days, but with MLM you have the opportunity to help so many people break free of their job and help them grow their business! I like your blog post – very down to earth. Thanks for always sharing such good content!
    Bonnie Cribbs recently posted..A Big MLM Fringe BenefitMy Profile

  2. John,

    At the very end of your blog post you said something that is often left out of the conversation about MLM’s and online businesses. You said “I just think that building an MLM on the side is a much sounder way than putting yourself in a position where you might lose your house or end up bankrupt. ”

    When you build an MLM company on the side, meaning that you have another source of adequate income to cover all your basic expenses (rent, food, clothing, health, entertainment, etc.), then MLM can be an amazing opportunity to gradually, over time, build a residual income. But it does take time and it does take a lot of work to get it going and to help it build. The same is true for building an online business. But real estate can make people rich, and still offers the opportunity to create wealth – but again, it requires having adequate funds to cover the expenses.

    Warmly,

    Dr. Erica
    Dr. Erica Goodstone recently posted..Overcoming Adversity – What’s Love Got To Do With It?My Profile

  3. Hi John,

    Thanks for the contemplation. I have been doing mlm for a few years now and I love it! It is great to bring in a few hundred extra pounds a month and build a team of people doing the same. I highly recommend the mlm industry.

    But saying that I am also just going through the process of getting a property to let. I have a well known local estate agents that will pay the rent even if nobody is living in the property, so it is their responsibility and effort when it comes to finding a new tenant. The pricing for this management plan is reasonable too. Do they do anything like that in Australia?

    Thanks,

    Aidan
    Aidan Gibson recently posted..Pinterest Is A Must For Internet Presence ***VIDEO***My Profile

  4. That is a great analogy there, I wish I thought of doing that.

    Its true that network marketing, direct sales, or MLM (whatever name you give it) is a very easy an cheap way to start a very profitable business. The problem is that so many people have used the model to take a lot of people to the cleaners. This creates a lot of bad press in the community at large and leaves are business model open to a lot of unjustified attacks. Take Facebook for instance, their new TOS for paid ads excludes MLM ads, we did that by abusing a system.

    More than just comparing this business model to others is needed in order to regain the trust network marketers lost. We need to police our industry and get the scam artists and get rich quick types out of our industry.
    Clint Butler recently posted..Pleasure Yourself And Others Through WritingMy Profile

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