By: Stefan Aarnio
Freedomway.ca
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Get Stefan Aarnio's book "Money People Deal: The Fastest Way to Real Estate Wealth" at MoneyPeopleDeal.com!

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The great Zig Ziglar said it best “Money isn’t everything, but it ranks up there with oxygen.”

We live in a world that is ruled by money. Almost everything we do on a daily basis is tied to money in some way. We live in homes that are purchased with money, we drive cars purchased by money, we wear clothes purchased by money and we eat food that is purchased by money. More money can mean a better life, more money can mean fewer problems. Typically when we are asked how much money we want, the answer deep inside of ourselves is always “more”.

Many people struggle and work hard each day to earn more money. The sad thing is, many of these people do not understand what money is. How can you earn more of something that you do not understand? How can you master something if you don’t know what you are trying to master? Sun Tzu the great military strategist said:

“If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.”

The translation of this famous quote from war to money would be: 1) If you know yourself, and understand money, you will never have to worry about money and will always have it. 2) If you know yourself, but do not understand money, you will suffer a loss for every gain you make with money. You will never get ahead. 3) If you do not know yourself and do not understand money, you will lose money whenever you encounter it and will be broke and constantly in debt.

Most people think that money is a from of exchange, or a currency, or a lubricant for life (why scrape through life when you can slide on by?) All of the above definitions are true, but the best definition for money that I have ever seen is:

“Money is an idea backed by confidence” -Ron Hubbard.

The man who works hard for money, works hard for another man’s idea that has become confidently supported by others. Companies become real when investors gain confidence and invest in them. The dreams of great visionaries like Apple by Steve Jobs or Disney by Walt Disney have become concrete once their visions and ideas gained the confidence of others.

Today, brands like apple and Disney have supreme confidence and are worth billions of dollars in stock and revenue. Apple has gained so much momentum it is now the most valuable company in history.

Money only has value, because enough people are confident in the idea of the money itself. In history, sea shells have been used as money, gold, silver, fur, salt, pepper, paper and digital numbers have all been money at one point in time. All of these systems are flawed and none of them have any real intrinsic value. The confidence that backs the ideas is much more important than the actual money itself.

Con men (short for confidence men), throughout history, have been successful at swindling fortunes by exploiting the human weaknesses of others through dishonesty, honesty, vanity, compassion, credulity, irresponsibility, naiveté or greed.

Con men present an idea, create confidence and once those two elements are in place, the victims fall prey to their weaknesses and will transfer their money to the con man who will promptly disappear with a fortune.

There is very little difference between an illegitimate Con Man and a real deal entrepreneur like Steve Jobs or Walt Disney in that they 1) create a clear idea and vision and 2) sell the idea with confidence.

The primary difference between a Con and a legitimate businessperson is that the Con has no real business, asset or investment, while the real businessperson has a tangible business asset or investment. Regardless of the validity of the scheme, the sales process for getting the money is the same.

But how does this affect you?

We all want more money, and since money is an idea backed by confidence, to create money, you must first create confidence. The amount of money you have will directly correlate to the amount of confidence you create.

Self confidence and trusting your decisions is the base of all wealth and is a pre-requisite for attracting money either through sales or through investor capital. Break a man’s confidence and you will also break his bank account. Raise his confidence and you can make him into a god.

Here are 12 Quick ways to raise your confidence:

1)   Get a makeover and create a professional appearance

2)   Keep a physically fit body

3)   Learn to speak well and have a wide vocabulary

4)   Keep well groomed

5)   Show up on time

6)   Have an assertive and firm hand shake

7)   Start small in your business and grow fast

8)   Take on projects that are easy to complete and slowly increase the complexity over time.

9)   Become the expert on your subject; know everything there is to know.

10) Get a coach or mentor to guide you through your studies

11) Share your successes with others, analyze and study your defeats

12) Teach others to sharpen your skills

Thanks for reading,

Stefan Aarnio

By: Stefan Aarnio
Freedomway.ca
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Get Stefan Aarnio's book "Money People Deal: The Fastest Way to Real Estate Wealth" at MoneyPeopleDeal.com!

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Better than a thousand days of study is one day with a great teacher. – Japanese Proverb

When most people get started on the path to "self made wealth", many of us choose one of the following:

1) To become a real estate investor
2) Start a business with an MLM company aka Multi Level Marketing

Both of these paths are very difficult and there is no easy way to success. For myself, I chose to become a full time real estate investor and dedicated all of my resources towards success in my field. In some ways, I envy the people who start with MLM companies because MLMs are:

1) Cheap to start
2) Come with training
3) Have an "Upline" of information (aka coaches and mentors are part of the system)
4) Build a residual income by establishing a team or downline
5) Offer great and cheap personal development programs

When I look back on the resources, time, money, opportunity cost and risk that I spent to get into professional real estate investing, I am astounded at the "startup cost" of the business. In many ways, an MLM would have been safer, cheaper, and faster than becoming a pure real estate investor. Here is why,

Real Estate Investing is:

1) Expensive to start (down payments are expensive and training is expensive)
2) Mistakes are expensive
3) Risk and leverage can crush you
4) No set path for success
5) Coaches and mentors are hard to find

However, as I advance further into Real Estate Investing, I begin to see more similarities between Real Estate and MLM's than differences.

The first similarity is what I would call an information "up-line".

THE UPLINE

One of the biggest mistakes that I made when starting out in business (first music, then debt buying, then real estate) was that until fairly recently, I had absolutely no informational up line. I define an informational up-line as a coach, mentor or teacher who has more experience in the business, a higher degree of success and has accomplished what I was trying to do. Completely ignorantly, I fumbled around in the dark for far too long making costly mistakes. Appropriate coaches and mentors could have prevented 90% of my mistakes, but I was too cheap to hire one.

"The only way to know the right steps to take is to study with those already taking the right steps. Douglas Vermeeren"

MLM's are smart businesses because many of them come with an up-line of information. The up-line shows you the ropes and teaches you how to achieve success in the business. In real estate investing, I have paid some obscene fees to coaches and mentors to correct my past mistakes and take my business to the next level. What is even crazier than the fees I pay are the results. Although the fees are high, the results are always worth it. If you are in real estate investing, and don't have an "up-line" to help you on your path, I would suggest that you get one immediately. Of course, your "up-line" will have to be paid somehow, so consider paying a fee or give them equity in a deal you are doing. One of the reasons why I love real estate is that it is a blank canvas, whatever you wish to create, you can create. The possibilities are endless.

A mentor is someone who allows you to see the hope inside of yourself – Oprah Winfrey

THE DOWNLINE

In multi level marketing, there is an up-line of experienced mentors to help you in the business, and of course, you have a downline underneath you to push you to higher levels of success. In real estate investing, you must build a downline as well. The downline, in my opinion, is everyone on your team who helps you build a passive income. These people are:

1) Your contracting teams
2) Your wholesalers
3) Your bird dogs
4) Your realtors
5) Your property managers
6) Other investors who invest in you and refer business to you

I have made it my mission to adopt the Coca-Cola philosophy and "pay everyone who touches the product". Anyone who refers business to me, whether it be realtors, bird dogs or other investors, will always get paid in cash or equity because these people make me income, and mostly passive income. It's my job to be the up-line and train everyone on the team to work together, work efficiently and work the way I want them to work. I must educate them so that they can be the best team members possible and help me achieve success.

THE SUMMARY

The more I study the business of real estate investing, the more I see that real estate is the same as an MLM company. If you are not yet started in real estate, I would recommend joining an MLM for the training to learn how to run a business. More investors fail to become professional investors because of a lack of soft skills in general business. Many investors know how to do deals (real estate is very primitive), but have no idea how to run a business. The skills you can learn by joining an MLM are priceless. I chose to bi-pass this education and paid a much higher price for my skills. Looking back, having an MLM business on the side would have saved me a lot of time, money and effort. If you are in real estate today, make sure you have an up-line and build a profitable down-line - It's imperative to your success.

Thanks for reading,
Stefan Aarnio
Freedomway.ca
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https://twitter.com/stefanaarnio
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Get Stefan Aarnio's book "Money People Deal: The Fastest Way to Real Estate Wealth" at MoneyPeopleDeal.com!

P.S: Please share this article if you found it enjoyable!

By: Stefan Aarnio
Freedomway.ca
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Today I received a magazine in the mail that read on the cover “Why Canadian Real Estate Will Plummet 20% and Stay Down For Years”. After seeing the title, I immediately stopped what I was doing, put my schedule on hold and had to read the doom and gloom article.

Canadian real estate is such a broad term that it is impossible to make a general statement about it. Canada is the second longest land mass on the planet after Russia and we cover so many square kilometers that for all intensive purposes, comparing Vancouver to Toronto to PEI to Winnipeg really makes no sense. The Canadian cities are so spread out and so independent of each other that each market is influenced by a completely different set of forces.

The article claims that Canada will plummet 20% and only mentions speculative real estate in Vancouver and Toronto. More specifically, when “experts” talk about Canadian Real Estate, they mostly focus on the Toronto Condo market, which has been red-hot with record sales of 28,000 units and another 240,000 units to be built in the near future.

Detached homes in Toronto were seeing buyer mania with buyers bidding $100,000 over asking price for a detached home. When cheap, dumb money enters a market, idiotic buyers will pay $100,000 over asking for a single detached home in Toronto.

… But what is Cheap, Dumb Money?

Cheap, Dumb Money is cheap because interest rates are at an all time low. Money has never been this cheap in history, so buyers make crazy decisions that they normally wouldn’t. Along with being cheap, the money is also dumb because it comes from someone who is ignorant and uneducated about the market making a speculative play on a piece of real estate. In investing, when cheap, dumb money enters a market, it’s time to sell. When the dumb money is leaving the market, it’s time to get in. In investing, being smart is easy - just do the opposite of what the stupid people do!

When we compare Canada’s real estate to the USA’s markets, Canada has been steadily climbing since the early 2000’s while the US took a nosedive in 2006. Many uneducated people think that Canada and the US are so similar and so connected that Canada is due for a crash as well.

However, what we don’t consider is that the US did not really have a housing crash. What the USA had was mass mortgage fraud. The prices that homes in the US sold for in 2006 were completely fictional and fraudulent prices that shouldn’t have happened in the first place. Cheap, Dumb Money entered the US market via NINJA borrowers (No income, No Job, No assets) and suddenly clerks working at Safeway could own 5 brand new homes in the suburbs where they were planning to “flip” them for a profit. Everyone was speculating with Cheap Dumb Money and prices went insane. The banks underwrote mortgages on completely insane lending standards and lots of fraud happened. The US market crashed because mass mortgage fraud occurred. The low prices we see today in the US are very low compared to the fraudulent prices that were paid in 2006, but they are in line with construction values and rental values in many ways. Real Estate in the USA right now is worth a value closer to the intrinsic value of the actual property and that makes the US market a good place to buy right now.

In my home market in Winnipeg, I write 5 to 25 offers a week and have to acquire a property every 15 days to run my business. I am seeing a divide in the Winnipeg market that has been red-hot for quite some time. Some sellers think that their house is red-hot and needs to sell for an insane valuation; other sellers think that real estate is going down right now and will settle for less. The market is fragmented between those who think the mania that went on in Winnipeg for the last 2 years will continue forever and the realists who think that the market is correcting.

For myself, I think that real estate in Winnipeg will correct in the next 12 to 24 months, and that is only because Winnipeg has been hot for so long. Cheap Dumb Money has been running around in the Winnipeg market for far too long and things have been selling for prices that don’t make sense. It’s not that Real Estate in Winnipeg is “going down” or “getting worse”, it’s just that the mania has to stop. We will likely see less bidding wars, less homes selling over asking price and less insanity in the market.

For myself, I am very happy about this, but I am a professional. Whether the market goes up or down, I’m happy; I can make money either way. All that this means for me, and for you, is that Canadian Real Estate in many markets will be easier to buy in the next 12 months than it has been in the past. Negotiating will be easier, getting discounts will be easier and for myself, the business will become more fun (I love to buy).

Stefan Aarnio
Freedomway.ca
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By: Stefan Aarnio
Freedomway.ca
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Beauty is in the eye of the beholder, and so is value.

Everyday, we, the human race, wakes up and chases value until we drop dead from exhaustion at night.

It doesn't matter if you are Donald Trump sitting on a multi billion dollar real estate portfolio or monk in a temple. We are all chasing value.

The real question is, what is value and what is valuable?

Of course, value is highly subjective and can be very hard to determine.

I always find it interesting to see how excited people are to buy new clothes. Shopping malls are filled with rabid people who are frantically purchasing new garments to wear and 6 months later the clothes that they purchased will be donated to charity or thrown away.

The value of the clothes goes from "I will sacrifice my financial health to wear this" to absolutely "I will never wear this piece of garbage again".

The same thing happens with electronics. The day that apple releases a new iPhone or iPod, people are camping out overnight to get their hands on the new gadget and will pay a mortgage payment to own it. 6 months later, the same people are giving the old iPhone to their dog or are using it as a coaster on a coffee table because the newer, thinner model came out.

But what about investments? Real estate? Houses?

What is the true intrinsic value of a house?

Most middle class people will say "our house is our biggest asset"!

Most middle class people will have nearly all of their net-worth tied up in their home.

But what is the house actually worth? What is any house actually worth?

The truth is, all real estate is actually worth $0. Land and buildings are completely worthless.

If you would like to see the true value of land and buildings, drive to Detroit where you can buy a city block for $1 and nobody wants to buy it. People who live in detroit would rather have a $1 Taco at Taco Bell than own the liability of a city block.

Land, real estate, houses, and buildings only get value when there is a USE for it and an END USER. The end user places his or her subjective value on the Real Estate and that is where values come from.

There are more people who want to live in Manhattan than Detroit. That's why Manhattan real estate is worth so much more than Detroit.

At the end of the day, Real Estate is only worth what the end user is willing to pay. However, one metric I have been using more and more of lately is dollars per square foot.

When comparing two similar properties, dollars per square foot is one of the best ways to measure the current and future value of the property.

For example, in Winnipeg right now, many houses trade in the $200-$250 per square foot range. If you can make a purchase at $100 per square foot in an area that is trading at $200-$250, you have an opportunity for profit.

Construction in Winnipeg for a new build is approximately $200 per square foot, so if you can purchase for less than $200, you are getting the house cheaper than it would be to build. Likewise, if you pay $270 per square foot, you are paying more than it costs to build.

When analyzing retail single family homes, dollars per square foot is an excellent metric for intrinsic value of the property.

BUY ON INTRINSIC VALUE, SELL ON EMOTIONAL VALUE

One of the easiest ways to profit in any market is to:
1) Buy on intrinsic value and
2) Sell on emotional value

There is always profit in markets that have irrational buyers. Irrational buyers means that irrational amounts of money are floating around looking for irrational products.

For example, the neighborhood River Heights in Winnipeg is a desirable neighborhood where people will pay irrational amounts of money to get their kids into the local schools. In River heights properties trade for $200-$250 per square foot, prices that are well above cost to build.

However, in up and coming parts of town, there are "rational" buyers who will only pay prices that less than construction prices. These areas will trade at $150-200 dollars per square foot.

The key for profit is to buy with on an intrinsic value, pump the value and sell to an emotional, irrational buyer. The irrational buyer is unconcerned with what they are actually paying. They WANT the product and perceive that they NEED it. If you have a business, you want irrational buyers. Irrational buyers are consumers who allow you to create massive spreads in your products and grow your business.

Do what you can to attract irrational buyers. When you capture these buyers, take great care of them, and they will take great care of you.

Thanks for reading,
By: Stefan Aarnio
Freedomway.ca
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By: Stefan Aarnio
Freedomway.ca
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https://twitter.com/stefanaarnio
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Remember: Please share this article if you found it enjoyable

What do the world's top athletes, actors, and salespeople all have in common?

They are the three highest paid positions in the world.

No one makes more money in a JOB than actors, athletes and salespeople; and contrary to popular belief, Actors, athletes and salespeople have much more in common than the average person may think.

What stands out to me when I think of top Actors, Athletes and Salespeople is that each of these top level positions requires more than 10,000 hours of practice to compete at the top level of performance.

All of these positions are PERFORMANCE based and at the starting level, the pay is absolutely ZERO.

Ask yourself, when was the last time you hired a rookie actor to entertain you? The answer is likely never.

When did you last hire a rookie Athlete to endorse your product or service? Likely never.

When was the last time you paid a fat commission cheque to a rookie salesperson who doesn't know how to sell? Likely never.

However, when was the last time Nike hired a PRO athlete do endorse it's products? Everyday.

When was the last time that Disney or 20th century FOX hired a PRO actor for a production? Everyday.

When was the last time a top level sales performer cashed a huge commission cheque for dominating his or her market? Everyday.

There are people making obscene amounts of money in these positions everyday. However, most people perceive these roles as feast or famine.

Why not feast everyday?

Most parents will encourage their young children to be Doctors, Lawyers or Accountants because they can grow up and earn a high guaranteed rate of pay.

Parents overlook actors, athletes and salespeople as REAL jobs because these positions are perceived as "risky". Of course, all parents generally hate risk when it comes to their children.

Many people attribute success in acting, athletics or sales to politics, luck, good looks, genetics or connections.

The truth is, success in Acting, Athletics and Sales takes all of the above, but most people overlook the hard work, preparation, hours of study, and persistence that separate the top from the bottom.

Success is a science that needs to be studied and engineered on a daily basis. However, most people are too "busy" to bother studying success.

For myself, I have become a student of success early in life and have achieved marginal success in acting and athletics. However, I have achieved professional success in sales by becoming a national sales leader very quickly after entering the field.

What made me different?

What makes anyone different?

I had the very fortunate experience of being coached by a veteran salesman who had sold kirby vacuums door to door for years: 

If you can show up at someone's house unannounced and sell them a vacuum that they do not need or want then you can sell anything. If you can do this consistently over many years, you are a sales professional.

Unfortunately, most salespeople today, namely realtors, don't know how to sell kirby vacuums. In some ways, the study of sales is a lost art-form.

I had a great respect for my veteran coach; he showed me how to engineer success in sales and create a science out of the mysterious "sales art-form".

My coach was a left-brained engineer who was NOT a natural salesperson. Most natural sales people are right-brained, conceptual, outgoing people (the exact opposite of an engineer). In many ways, my coach was a greater teacher than most because he was NOT naturally gifted in the field. He had to learn, practice and prepare for success on a daily basis. Since he had learned to prepare every day for decades, he taught me how to PREPARE for success on a daily basis and manipulate my results.

PREPARATION: HOW TO STACK THE ODDS IN YOUR FAVOUR:

The first thing my coach taught me to do was write down the following:

LESSON #1

actions = money
money does not equal actions

What he meant by this statement was that if we analyzed our daily actions, we could find which actions made money and which ones didn't.

In sales and in business, actions equals money.

However, the opposite is not true. Money does not equal actions.

If you tell someone to make $1,000,000, often they cannot figure out which actions generate the money...

Money is not an intrinsic motivator and should never be used to motivate a sales person - or any person for that matter.

If you figure out how much money you want to make, and figure out which actions make money, you can reverse engineer the amount of actions required on a daily basis to create the dollars desired.

For example, 50 phone calls (actions) will generate 10 conversations which will generate 2 meetings which will generate 10 meetings a week. 40% of the meetings will results in a sale valued at an average sale of $20,000... 4 average sales a week will generate an average of $80,000 a week.

If I consistently made 50 calls a day, annually I would generate $4.16 Million dollars for the company, of which I would get 3% or $124,800 annually. If I made 50 calls a week for 52 weeks, that totals 13,000 calls. $124,800 annually divided by $13,000 calls is $9.60 per call JUST FOR DIALLING THE PHONE.

All I needed to do was:

1. Be prepared on a daily basis
2. Call 50 people a day
3. Book 2 meetings
4. Conduct 2 meetings
5. Close 4 per week

The actions that drive the whole model are CALLS. I could directly control my income by the number of CALLS I made. 

CALLS = ACTIONS = DOLLARS

If most people legitimately collected $9.60 per number DIALLED on a daily basis, I guarantee that most people would be dialling numbers until exhaustion.

Years ago, some scientists hooked a rat up to a button that released dopamine (a pleasure drug released by the brain). The rat would push the button consistently until it would die of exhaustion. The rat wanted the dopamine so badly that it would sacrifice it's well being to get the pleasure-drug. As humans, we are exactly like the rat. When we earn money, dopamine is released. If we know that dialling the phone generates money, in theory, we would be dialling the phone until we drop dead... correct?

Incorrect.

In reality, we do not dial the phone until we die of exhaustion because:

Average people hate sales, they are scared of sales, they freeze and won't pick up the phone.

They freeze because they have not associated dialling numbers with pleasure (aka dollars).

The average person thinks that they make money when they CLOSE a sale, however, they actually EARN money when they dial phone numbers.

CLOSING IS AN EFFECT
DIALLING IS A CAUSE

Life is CAUSE and EFFECT.

To get an EFFECT, we must create a CAUSE.

No matter how good of a salesperson you are, you cannot close every sale. This is a fundamental truth of sales. However, you can always make another call or dial another number. Control your actions, because actions are the only things you actually control. If you control your actions, you will become the master of your results.

The most important action in the business of sales is calls. Every time we call, we increase our probability of winning. It's like buying another lottery ticket, except the lottery ticket is free and has much higher chances of success.

Sounds too good to be true, but it isn't.

If we understand the science of success in sales, then why would athletics or acting be any different?

All fields take preparation and can be reverse engineered into daily actions that compound over time.

The trick is to understand which actions create results that move us forward and move us backward and waste our time.

To obey the 80/20 rule. 20% of our actions create 80% of our results. We must find the 20% and ONLY do the 20% to increase our success.

In the sales example, my coach taught me that CALLS were the 20% that drove the business. Without calls, you may as well go home.

Take a moment to think about your business or your job and find your 20%. Which actions bring you your results? How can you do more of these actions? How many dollars do you make per action?

Know these numbers inside and out and the next level of success is yours to be had.

Thanks for reading,
Stefan Aarnio

Freedomway.ca
facebook.com/stefanaarnio
https://twitter.com/stefanaarnio
http://ca.linkedin.com/in/stefanaarnio

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By: Stefan Aarnio
Freedomway.ca
facebook.com/stefanaarnio
https://twitter.com/stefanaarnio
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In life, there is no such thing as a guarantee.

Everything we do always has an element of risk, however, we do not consider every day things like driving to work or crossing the street to be “risky”.

Today I googled “the definition of risk” and this definition came up from thefreedictionary.com:

risk  (rsk)

n.

1. The possibility of suffering harm or loss; danger.

2. A factor, thing, element, or course involving uncertain danger; a hazard: "the usual risks of the desert: rattlesnakes, the heat, and lack of water" (Frank Clancy).

3.

a. The danger or probability of loss to an insurer.

b. The amount that an insurance company stands to lose.

4.

a. The variability of returns from an investment.

b. The chance of nonpayment of a debt.

All of the definitions above involve some form of loss, hazard, suffering and an element of variability, probability or chance.

What I find to be interesting about risk is that every single person I meet has a different subjective definition.

Often, when I am discussing risk with another investor, I will ask what their personal definition of risk is.


More often then not, investors will define risk as the chance or probability that he or she loses on an investment.

This definition is sufficient, but I find it to be a very unsophisticated definition of risk.

Robert Kiyosaki says that intelligence is the ability to make distinctions. The more distinctions we can make, the more intelligent we are.

For example, there are over 7500 variations of apples in the world. When it comes to apples, I am not unsophisticated and can only name a few variations: red delicious, granny smith, crab apples, and Macintosh. When it comes to apples, I am very unintelligent. A person who can name 100 variations of apples is much more intelligent than I am on the subject of apples.

When I hear a person’s definition of risk, I can immediately find out what their sophistication level is when it comes to business and investing.

My personal definition of risk has changed many times throughout my life. I used to believe in luck, and now I do not. All I believe in is actions performed and numbers. Life and business are a numbers game, if you can produce the volume and hit the numbers, you will succeed every time. There is no luck.

My definition of risk is:

Risk: Take an inventory of the elements that are under your control and compare them to the elements that are out of your control. Then ask yourself: am I ok with this? If you are ok, then proceed with the risk. If you are not ok with the degree of control, then do not proceed.

My definition of risk has two primary distinctions that the average person’s definition does not:

1)   My definition of risk assesses your degree of control in a situation

2)   My definition asses your emotions and how you feel about your level of control

Notice that I eliminate “probability” or “chance” from my definition of risk. In my world, there is no such thing as probability because failure is not an option.


Naturally, there are things that can happen outside of my control, and I must address and mitigate all contingencies before proceeding. Should something outside of my control become an issue, the question is: how do we recover form this position?

In my world, I understand that in life and in business, plans fail, people fail, systems fail, markets fail and what is more important than relying on all these imperfect elements is to understand how to recover and “fix” the failures.

I build failure and multiple contingency plans into my ventures and understand that failure and recovery is part of the game.

In real estate, between 5% and 10% on the balance sheet will be factored in for vacancy on multi family buildings.

Restaurants and traditional businesses will build theft into their balance sheets.

Sophisticated business people understand that failure; loss and recovery are all part of doing business and factor it in to their projections and balance sheets in advance.

My definition understands that there are elements in our control and out of our control. There is no luck; only degrees of control. If you are ok with your degree of control, then proceed with the “risk”.

Of course, there is always that moment where we must “take a leap of faith” and no amount of due diligence can protect us from the elements that are out of our control.

What is most important when entering an endeavor with risk is to ask ourselves “how do we escape if we want to exit?”

For myself, I love real estate because no matter how bad things go, there is always a large tangible asset attached to the venture that can be liquidated to recover my investor’s capital.

Again, we come back to elements under control and elements out of control.

When raising capital from an investor or considering a “risky” venture take them through the following scenarios to asses if the venture is right for them:

1)   The best case scenario – everyone loves this scenario, and it rarely happens.

2)   The realistic scenario – this is the likely outcome

3)   The worst case scenario – this is second most likely scenario

4)   The nightmare scenario – this is as bad as it gets, you don’t want to find yourself in the nightmare scenario.

For myself, I have a low risk tolerance and I always say to my capital partners “if you are ok with the nightmare scenario, then we are ok to do business”

At the end of the day, risk is all about emotions. If we are emotionally ok with our degree of control in the risk and how the nightmare scenario would affect our life, then we are ready for the risk.

If we cannot handle the elements out of control and would not be able to live with the nightmare scenario, then the risk is not for you.

There is a famous saying “nothing ventured, nothing gained” and we must all take calculated risks in our pursuit of success. The question is, after exploring a few definitions of risk, how do you personally define risk going forward?

Your personal definition of risk is extremely important because it will define which risks to take and which ones to avoid. To paraphrase Sun Tzu, know yourself and know your enemy and you will be victorious in every battle.

Thanks for reading,

Stefan Aarnio

Freedomway.ca
facebook.com/stefanaarnio
https://twitter.com/stefanaarnio
http://ca.linkedin.com/in/stefanaarnio

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By: Stefan Aarnio
Freedomway.ca
facebook.com/stefanaarnio
https://twitter.com/stefanaarnio
http://ca.linkedin.com/in/stefanaarnio

Remember: Please share this article if you found it helpful

Retirement for many North Americans is a dream that many people wish to have. The first wave of baby boomers is starting to retire in the next few years, however, many of them are not prepared to stop working.

The definition of retirement is “to take out of useful service” and what happens to so many hard working people is that they die shortly after being “taken out of useful service”.

Working at a job is a a social pursuit that can add purpose and meaning to a person’s life and so many people highly value the social aspect of working.

If a person decides to retire and loses the social environment that they have been in for the last 10, 20 or 30 years, they can suffer a serious blow to their happiness and life can become very difficult.

If you look at human history, there are virtually no examples of societies that have a “retirement” with golf courses, meal plans and retirement homes.

Life spans have been short throughout history and people generally worked until they died. In some cultures, the elderly would live with their children and help out around the home, but they still did a considerable amount of domestic chores and kept “working” without retirement.

Many baby boomers have the vision of retiring on a golf course like their parents did and sadly, I don’t think this will be a reality for most of them. My opinion of the “golf course” retirement is that it has been an anomaly that only one generation in human history has been able to enjoy.

Unfortunately, the “golf course” retirement has been artificially created by the WWII generation before the baby boomers.

The WWII generation financed their “retirement” on debt and fiat currency. Like most debts, they have been able to pass the bag onto their children (the boomers).

Historically speaking, the “golf course” retirement was created early in the industrial age and it was mathematically engineered by highly skill actuaries. They calculated that for every year a person worked after age 55, the worker’s lifespan decreased by a proportionate amount of years.

“67” is the magic year because it the shortest amount of retirement that the company would have to pay. Age 67 is the year that the average worker would statistically die after working until age 65.

What this means was that many retirement plans were designed around a worker working from age 18 to 65 with a 2-year retirement followed by a quick death at 67.

“Retirement” plans were never designed to support people and their families into their 80’s, 90’s and 100’s. These retirements span 20, 30, 40 or even 50 years and they were fundamentally designed to support 2 years.

Most companies with defined benefit plans were betting on their employees dying 2 years after 65. Statistically today in North America, both men and women live to be nearly 80 years of age and the number is climbing as healthcare improves.

I saw a statistic the other day that said that between Obamacare, social security and medicare, the United States has 80 Trillion dollars of unfunded liabilities. The amazing thing is, 80 Trillion dollars is more money than the entire world’s money supply.

No one can pay this liability, not even the USA with it’s unprecedented money printing abilities.

The USA could print their way out of the problem, but would completely devalue their currency into oblivion in the process.

Many of the pension funds, retirement funds and mutual funds that the Boomers are relying on for retirement are all invested in the paper assets that are extremely vulnerable to market fluctuations.

Furthermore, these assets are all timed to liquidate at the same time. The baby boomers are the largest demographic in North America and in other parts of the world as well. These people will be selling their large family homes at the same time (in specific suburban sub-markets), liquidating their stock portfolios and will begin systematically withdrawing from the markets in 2016.

What happens when everyone reaches his hand into the cookie jar? Although there should be, there are not enough cookies in the jar for everyone and some of us won’t get a cookie. The stock market works like this and when everyone wants to sell, values deflate and many people will not get their full (inflated) value on their assets.

When the baby boomer garage-sale begins, who will be in line to absorb these large suburban family homes, stock portfolios and other assets?

My prediction is that the younger generations, namely the echo boomers, will not have the purchasing power to absorb their parents’ assets. There has been a large shift in the middle class and the entire middle class workforce has migrated from North America to Asia.

As well, the purchasing power of the echo boomers has been damaged by long term no-value university programs and many do not enter the work force until mid twenties or later.



Furthermore, many echo boomers are loaded down with student debt racking up into the hundreds of thousands.

It is common for students nowadays to leave school with a houseless “mortgage of student debt”.

What is most unfortunate is that these students cannot go bankrupt to get out of their debt obligation.

I don’t have a crystal ball to predict how these demographics, fundamentals and laws will pan out, but there will be chaos and chaos brings opportunity.


If you are a savvy investor, you will be able to find some serious bargains on assets in both Canada and the USA.

However, if you are on the other side of the equation and expecting to retire in the next few years, you may need a back up plan to hedge against your current investment portfolio.

I don’t want to preach doom and gloom; I prefer to be optimistic about the future. However, we are set up for a perfect storm in the next few years and I truly believe that we will see a major transfer of wealth.

It’s up to you to get educated on the things I have written about in this article and do your best to prepare for the perfect storm… Otherwise, it may be better to die at 67.

Thanks for reading,

Stefan Aarnio

Freedomway.ca
facebook.com/stefanaarnio
https://twitter.com/stefanaarnio
http://ca.linkedin.com/in/stefanaarnio

P.S. Please share this article if you found it helpful

By Stefan Aarnio
Freedomway.ca

Remember: Please share if you found this article helpful!

Photo: The iconic, Slash from Guns and Roses.

"A rock star is the intersection between who you are and who you want to become" -Slash, Guns and Roses.

Years ago between the ages of 16 and 22 I focused heavily on my dream of becoming a "rock star". I wrote songs, put a band together, promoted local rock shows, created websites, sold merchandise and focused on the dream of "rockstardom."

Looking back on the things that I loved about the concept of  becoming a "rock star" was:

1. To be recognized
2. To perform at a high level in front of an audience
3. To have my own business
4. To be in control of my own future
5. To have creative control of my art-form
6. To travel the world
7. To have passive income
8. To build a collection/portfolio of work
9. To earn a nice living
10. To be free from answering to a boss or a J.O.B.

When I look at my life today, at age 26, I have achieved all of the above and I no longer have a band.

I have a theory that we never really love music, art, dance, poetry, fine food, travelling or anything else that we are passionate about...

Instead we love the FEELINGS that we get from experiencing music, art, dance, poetry, fine food, travelling etc.

Rock music doesn't matter, what matters is the feelings we get from the music.

Although I "quit" pursuing the "rockstar" dream at age 22, I have achieved all 10 of the things I wanted in Music from Real Estate instead.

The work doesn't matter, what matters is the feelings that come from the work.

You don't need a band to be a rock star: you do, however, need a BRAND.

The concept of a rockstar really is a concept from the 1970's. Bands/musicians like Led Zepplin, The Rolling Stones, The Who, Jimi Hendrix, Jim Morrison etc. embody the glory of rockstardom.

When we translate the 1970's concept of a Rockstar into today's market of 2012, there are virtually zero universally recognized modern rock stars.

A list that I was reading for fun the other day was the "30 richest drummers in the world" when measured by net worth.

What interesting about the bands/drummers on the list was that NONE of them started after the year 2000. Most of the bands/musicians on the list are from the glory days of rock'n'roll in the 1970's and the rest are scattered throughout rock history. A select few became famous in the 1990's at best.

Many people have said throughout history that "rock is dead" and I would agree; especially when we examine a list like the one above. 

Although "rock is dead", living life as a rockstar has never been more alive.

The only difference between the rockstars of today and the rockstars of the 1970's is that the rockstars from the 70's all had bands. 

The rock stars of the new millennium have BRANDS instead of bands.

I believe that it is much more important to build a brand than a band/business because a successful brand can be attached to a business very easily ie: Gene Simmons of KISS has attached his brand to 100's, if not 1000's of products and is able to spawn dozens of businesses and licensing deals. KISS is a brand that has made more money than The Beatles and will likely continue to do well after all of the KISS members are dead.

Elvis, Marilyn Monroe, and Jimi Hendrix are all examples of excellent brands that make approximately $50 Million dollars per brand annually, even though the "rockstar" behind the brand has been dead for years.

A modern example of a "rockstar" would be Mike "The Situation" from MTV's Jersey Shore.

All of the reality TV stars on Jersey shore are devoid of talent, however, they are highly visible and have a well defined brand with broad appeal. In 2010 alone, Mike "The Situation" made $5 million dollars just off of endorsements and other deals.

The formula is simple, create a great brand, attach a business, rinse and repeat.

Up and coming musical rockstars have lost most of their power, especially rock'n'roll musicians because there is no longer any centralized distribution for music: Traditional radio is fragmented and listenership is down, Satellite radio is highly fragmented, online music is highly fragmented and no one has really figured out how to properly monetize and control the internet. Television is more fragmented than ever and channels like MTV do not feature music or music videos anymore.

Creating a rock star brand is not as easy as showing up on American Band Stand or the BBC as it once was because of all of the fragmented channels.

Modern musicians (especially rap musicians) are focusing more on building great brands and attaching satellite businesses to their back-end. Some examples I can think of immediately are:

1. Lady Gaga,
2. Jay-Z
3. Kanye West
4. Beyonce
5. 50 Cent

The brand is greater than the band.

Both music and business are trending towards brands in the modern economy.

All of this information may be great if you are in the music/entertainment industry, but what does this mean for you and your business?

All of this information means the following:

1. Brand value is more important than ever, focus on creating a visible, high quality brand at all costs. Brands can be monetized later if they are built properly.
2. Visibility is more important than ever. Find a niche, become visible and become the leading expert in the niche.
3. You don't need talent or a band to have a great brand. Consider Mike "The Situation".
4. Focus on monetizing the "back end" of your brand and not the front end. Modern musicians like Kanye West look at their music as a "commercial" for themselves and make money on the back end NOT the front.
5. Build a great brand and diversify your back end as much as possible. No one has a crystal ball and we never know what the next trend is going to be. Have a mother brand with a diverse portfolio of back-end businesses (think of Virgin, Richard Branson's brand with 400 companies under it).

Thanks for reading,
Stefan Aarnio
Freedomway.ca

P.S. Please share if you found this article helpful!

By Stefan Aarnio
Freedomway.ca

Remember: Please share this article if you find it helpful!

Image: Would you rather have half a watermelon or a whole grape?

According to Robert Kiyosaki, there are 4 types of people in the world: Those who want to be liked, those who want to be comfortable, those who want to be right and those who want to win.

• People who want to be liked are motivated by what others think of them. They don't want to "rock the boat" and want to be everyone's friend.
  
• People who want to be comfortable are motivated by their comfort level. They don't want to be pushed outside of their comfort zone and want to remain in complete control of their comfort.
  
• Those who want to be right are motivated by winning arguments and asserting their authority over others. These people will win an argument and don't mind losing a friend in the process.
  
• Those who want to win are motivated by "winning" and getting what they want in life above all else. These people will lose an argument to win in the long term.
  

Each one of us wants to be liked, comfortable, right and win, but the question is, which of the 4 types motivates us the most?

In negotiation, business and deal-making, success depends on our desire to "win". Creating win-win situations is the most important skill in negotiating or deal making.

• When negotiating with people who want to be liked, these people will give up key positions just to maintain their likability. This makes people who want to be "liked" bad negotiators, but easy to make deals with.
  
• When negotiating with people who want to be comfortable, they will never give up positions of comfort and this makes them harder to make a deal with.
  
• When negotiating with people who want to be right, they will argue over non-critical points until they kill the deal.
  
• When negotiating with people who want to win, they will do whatever it takes and give up any position just to win the position they need in the negotiation. These types of people make the most effective negotiators.
  

Mark Cuban has used the following line on the hit TV show Shark Tank many times "What would you rather have? Half a watermelon or a whole grape?"

When negotiating or making a deal, we need to ask ourselves, are we willing to sacrifice some of the things we want so that we can end up with a watermelon and not get stuck with a grape? Negotiation is always a"push and pull" process where the objective is never to obliterate the other side. We have to create win-win situations so that both sides end up sharing a large tasty watermelon.

Unfortunately, we all have personality traits and qualities that can inhibit our ability to negotiate effectively.

We all have the ability to be great negotiators and great deal makers, but unfortunately we also have many opportunities to be deal-killers.

I have identified 11 questions you can ask yourself to find out whether you are a deal maker or a deal-breaker.

13 DIAGNOSTIC DEAL-MAKING OR BREAKING QUESTIONS:

1. Is your personal profit on a single deal worth more than the lifetime value of the relationship with the other side? Yes or no?
   
2. Do you take more value than you give? Yes or no?
   
3. When doing a deal, do you try to get something for nothing? Yes or no?
   
4. When negotiating on key points are you looking at the big picture or just the minor details? Are you focused on the forest or the trees?
   
5. Do you need to win every point of a negotiation? Can you give in on less important points?
   
6. Do you care what the other side gets as long as you get what you want?
   
7. How many deals have you done this year?
   
8. Are you easy and pleasant to deal with? Or are you hard and tough to deal with?
   
9. Do you go back on your word? Is your word your bond?
   
10. Will you try to kill a deal that you are not a part of? Will you try to disrupt or block someone else's deal?
    
11. When great opportunities come up, do you get called first to participate? Or do you get called last or not at all?
    

13 ANSWERS FOR DEAL-MAKING OR BREAKING QUESTIONS:

1. Lifetime value is always worth more than personal profit on a single deal. Networks and relationships are always worth more than a single deal. If you are too focused on transactional profit, you may be a deal-killer.
   
2. If you take more value than you give, you are a deal-killer. Deal makers always give the other side much more value than anticipated. Think value, not price.
   
3. If you try to get something for nothing, you are a deal-killer. Nature is based on inputs and outputs, it is impossible to get something for nothing in this world.
   
4. If you are obsessed over the small details of a negotiation and fail to see the big picture, chances are you are a deal-killer. The best deal makers can see the big picture and find flex on small details.
   
5. If you need to win every point in a negotiation, you are absolutely a deal-killer. You are also probably a painful person to deal with.
   
6. You should not care what the other side gets, as long as you get what you want. Someone will always get more than you. Focus on what you want and forget about the other side. This is key in deal-making and in life. Happiness comes from getting what you want, not getting what the other guy gets.
   
7. If you are not doing as many deals as you would like, you are likely thinking like a deal-killer and not a deal-maker. It might be time to change our mindset.
   
8. The number one personality trait for top negotiators and deal makers is personality. If you are not a pleasant and easy person to deal with, then you are likely a deal killer. Personality is #1.
   
9. If you go back on your word, you are a deal killer. Integrity is extremely important in making deals. Get this fixed immediately if it's a problem.
   
10. If you try to disrupt someone else's deal because you are not in it, you are a serious deal killer. Avoid this at all costs. Allow commerce to happen and opportunities will flow towards you.
    
11. If you do not get called first for a deal or business opportunity, chances are, you are a deal-killer. Work on your negotiation and your personality skills to increase your chances of getting the best opportunities first.
    

Neogitations, business and life are all very simple games. To quote Zig Ziglar "You can get everything in life you want if you will just help enough other people get what they want." Effective negotiation is a skill that revolves around people and people skills. If you can eliminate the 11 ways to kill a deal above, there is no reason why you can't sell more, transact more and have better more fulfilling relationships.

Thanks for reading,
Stefan Aarnio
Freedomway.ca

P.S. Please share this article if you found it helpful!

By Stefan Aarnio
Freedomway.ca

Remember: Please share this article if you find it educational!

Photo: Soldiers in the Afrika Korps with an 88mm gun.

A wise man once said "wars are won by legs, not by arms".

One interpretation of this quote is: battles are won by distance covered, not by physical strength exerted in one battle.

By covering more distance, smaller armies throughout history have been able to wear down massive opponents and take victory over large distances.

Atilla the Hun was able to wreak havoc on the much larger roman legions by having a fast, small, elite, mobile force. 

Erwin Rommel and his Afrika Korps were able to beat the british into the submission in World War II with a small elite, mobile force.

Lawrence of Arabia employed similar tactics in the pre World War II era that have evolved into modern day guerrilla warfare.

There are two commonalities between Atilla the Hun, Erwin Rommel and Lawrence of Arabia. All 3 men employed the following into their strategy and tactics:

1. Speed
2. Distance

In the days of the Roman empire, business and war were synonymous - there was no separation between business and war. Business was war and war was business. Men in Roman society became wealthy through the spoils of war and later in life would venture into real estate, trade or politics. This is why books like  "The Art of War" by Sun Tzu are found in the Business section of the book store and not the War section. The same principles that apply in warfare also apply in business.

Speed and Distance are just as powerful on the battlefield as they are in the boardroom and let me elaborate on why.

In business, speed wins. First mover advantage, speed of implementation, and velocity of money are all concepts that revolve around speed. In business if you have a chance to be fast or slow, most of the time it is better to be fast.

In business and warfare, distance is just as important as speed. Strategically, we need to have a short position, a medium position and a long position. Whether we are building a company or managing an investment portfolio.

Our ability to win over distances whether short, medium or long is imperative to success.

Strategies that are effective in short positions may not be effective in medium positions and medium positions will not offer the same advantages as long positions.

In business, we need to have an effective mix of 3 types of strategies to be effective over distances and become a leader in the market.

In my past businesses, I focused too much on "long" positions and neglected my short and medium positions.

I would load up my real estate portfolio with long position buy-and-hold cash flow real estate. In my music business, I would pour my time, effort and energy into producing a long term brand strategy and forget my short term strategy. In my debt buying business, again, I had a long term cash-flow strategy but no short or medium position.

These businesses were aggravating, painful and hard to grow because there was no short or medium strategies to generate the cash needed to properly grow and expand.

This summer I began to study JT Foxx. JT Foxx is a very successful real estate investor who has transacted over 500 deals in five years, partnered with some very large money partners and currently owns a huge speaking and coaching business.

JT has very good business acumen and I noticed that he has weighted his business transactions around short positions and the "shortest ways to make money".

The 4 Shortest Ways to Profit

1)   Flipping real estate - Flipping real estate has always been one of the fastest ways to make money in history. Real estate allows an investor to make huge leveraged gains with little or no work and if you do your homework, real estate can be turned in 30-90 days with little to no effort. If you're in real estate, this should be a strategy used often as part of your portfolio and overall strategy.

2)   Local marketing/branding other people - Selling marketing and branding services to local businesses is a very fast way to make large profits. Most business people have no clue about marketing and branding and will pay large sums of money to learn marketing and branding techniques. This is especially apparent in Real Estate Investing and Internet Marketing. Where there is pain, there is profit and branding/marketing is place where many entrepreneurs feel lots of pain. Many companies make large fast profits by relieving this pain.

3)   Public speaking - Donald trump charges $250,000 an hour to speak in public. Raymond Aaron and Tony Robbins have both made over $1,000,000 in an hour giving speeches. Most people would rather be dead than to be speaking in front of an audience. However, this is one of the fastest, most lucrative endeavours for an individual if executed properly. There is enormous leverage in public speaking and tons of branding opportunity. Consider the value of this avenue for a short term strategy in your business. This strategy can be offered for free (just for branding value and lead generation) or it can be monetized - who doesn't love options?

4)   Joint ventures - This year I built my company from the ground up using none of my own money because I used joint ventures to build it. Joint ventures are the fastest, highest leverage business tool available. Only 2% of entrepreneurs know how to use Joint Ventures and this gives savvy entrepreneurs an advantage. Credit Card companies and fortune 500 companies derive major profits from Joint Ventures while small entrepreneurs try to do everything themselves. Whenever I am missing a resource, I will source a JV partner; "why try to own everything?" I have become a specialist in Joint Ventures and I am never low on resources because I know how to create favourable deals for everyone. Some greedy entrepreneurs don't like Joint Ventures because they have to give up a percentage of their business for access to extra resources. In the words of Mark Cuban; "Would you rather have half a watermelon or a whole grape?"

After learning the 4 "shortest ways to profit", I began to re-think my business. I have began restructuring it and adding short and medium positions to my long positions and have begun to find balance. Today my business is healthier than ever and my strategy going forward is more sound. I recommend you review the "4 shortest ways to profit" and plan to implement at least one of the 4 strategies into your business in the next 60 days.

Thanks for reading,
Stefan Aarnio
Freedomway.ca

P.S. Remember to share this article if you found it useful!