Create Profits For Real HYIP - Invest in Real Estate

In the previous article we discussed creating a real HYIP based on betting. It's a very risky activity and I want you now to think about something much less volatile.

This is part Six of the series of articles about creating a real HYIP. If you have not read the previous articles from this series, you need to do this before to proceed:

- The HYIP Business - Is It Really A Hopeless Situation?
- The Real HYIP Can Exist
- Creating A Real HYIP - Set Your Basic Concepts
- Generating Profits For Real HYIP - Invest in Trading
- Create Profits For Real HYIP - Invest in Sport or Financial Betting

Many of the investing gurus will tell you that there is no safest investment than Real Estate. How does this sound when the property prices in USA are dropping like crazy? Probably you think the gurus are mistaken, but the fact is they can't go wrong. The property prices can go down in a short (or not so short!) period, but longer term they always grow.

And a time of a market panic is the best time to buy. But I am not going to talk about catching the market moment here. This is not a sustainable model for a high yield investment club. Why? Because you want a strategy which works smoothly all the time.

The most important thing to remember is that you won't go wrong with buying a property as long as it is not overpriced. The property always remains a property.

The question is how you can profit from it. Let's explore the opportunities.

Make Profits By Renting And Selling

This is the simplest and the first method which comes to people's minds. You buy a property and give it for rent. You take the rent payments, but at the end the property is still yours. And in most cases its price even goes up.

Depending on the market conditions a residential property can be rented for a monthly fee which is about 0.5% - 1% of it's total price. That makes 6% - 12% ROI per year. Better than banks, but not hot at all.

The figures can be better if you invest in commersial property, but still won't be very hot.

The better time in the business comes when you are about to sell the property. Obviously you should not do this when the market is in bear stage. Keep giving it for rent until the conditions change. In normal market environment the property prices raise with different rate in different countries, but almost always beat the bank rates.

Now here is the key:

If you choose a propery in a growing region such as Asia or East europe you can add up to 20% increase of the price per year. And this 20% is on top of the 6% - 12% that you are taking from the rent. How does 25% per year sounds to you? Not bad.

But there is a lot more to be done than that.

Leverage Your Real Estate Investment

If there is anything that the banks are always ready to lease money for, it is real estate. It's very, very easy to get a mortgage for a good property and you can do it even if it is in building stage.

The only thing you need to make sure is that the mortgage payments are lower than the sum of the rental payments you get plus the increase of the property price.

Let me give you an example with a property in East Europe. Here you can buy a nice two bedroom flat for $100,000.

You need to have at least 20% of this amount, i.e. only $20,000. The rest $80,000 you can get from the banks for just 6.5% yearly interest.

You must choose payment terms which allow you to pay equal parts on the principal.

Let's get 3 years as an example. From such a property you can take $500 rent monthly. This means for 3 years you have $18,000 of your investment returned to you.

Wiht a 25 years loan you need to pay to the bank for these 3 years around $25,000.

A conservative prognosis for the raise of the property price of only 15% per year means that you will be able to sell the property for $150,000 at the end of the third year.

You will have to pay another $64,000 + some small fee to the bank in order to cover the entire debt at once, so lets say the total $65,000. So you sell the property for $150,000, give $65,000 to the bank and you are left with $85,000.

So you have:

Paid
$20,000 initially
$25,000 debt payments
------
$45,000

Received
$18,000 from rent
$85,000 pure profit from the sale
-------
$103,000

This means $58,000 profit or 129% compounded pure profit for 3 years (or close to 32% profit each year). And this is on conservative estimation of only 15% raise per year. Now that is not bad at all, is it?

Just to show you an example, if the raise was 20% you would have sold the property for $173,000 and thus made $108,000 or 180% compounded profit for 3 years (equals to 41% yearly profit).

Do you see how powerful your real estate investment can be if you leverage it? Heck, this works even if you invest only your own funds, now imagine what will happen if you invest other people's money by creating a HYIP.

You can go even further if you buy old properties and recover them or if you find underpriced properties. There is really so much to do with real estate that I need to write a whole book only for that. If you are interested to learn more on this matter I can recommend you take a look at the following books:

• FLIP: How to Find, Fix, and Sell Houses for Profit by Rick Villani, Clay Davis, and Gary Keller


• Real Estate Investing for Dummies by Eric Tyson and Robert S. Griswold


• Commercial Real Estate Investing 12 Easy Steps to Getting Started by Jack Cummings

I guess you had enough of real estate for now. Do you already have more ideas for investing business than you can handle? Don't give up, I am not over. See you next time!

Generating Profits For Real HYIP - Invest in Trading

This is Part Four from the series of articles about creating a real high yield investment club.So far in these series we covered the basics of creating the real HYIP and setting up your business plan. If you have not read those articles, please do that before to proceed:
- The HYIP Business - Is It Really A Hopeless Situation?
- The Real HYIP Can Exist
- Creating A Real HYIP - Set Your Basic Concepts

Most of the online investment programs at the moment are or claim to be based on forex or other form of financial trading - for example stocks, futures or options. Why is that so? One of the most important aspects is trading's potential profitability. The financial markets are highly volatile which gives the speculants opportunities to buy and sell with profits many times in short period of time.

Returns of 100% or more per year are not unheard in the trading world. Additionally, the trading can be done by a single human or even a software system - i.e. it does not require big investments and business planning itself.
The main problem of setting up an investment program based on day trading are the huge risks the trading brings. You can gain a lot but you can also lose all the money before you drink a cup of coffee (well, figuratively said).
Before rushing to create a HYIP based on risky trading you must have a long time proven trading strategy. We have seen enough of these HYIPs which were honest, but created by inexperienced traders who are trying to learn trading by risking other people's money. This is not a sound model to follow. If you want to create a long term business you must find the right balance between risks and profits.
So what, you should start learning forex right now? Maybe. Maybe not. Let's explore your options to generate profits from trading:

Trade Yourself
Most real HYIPs have started this way and failed.Who would start a program and trade themselves? Every experienced trader who achieves good result can get large investors for managed accounts or close other large private deals. No good trader would decide to deal with $100 investors, work with e-currencies and handle all the overload of running a HYIP. Usually only inexperienced traders try raizing funds this way.
If you are an experienced trader with a long time proven record and still want to start a program, you must find someone else to handle all the business aspects. Probably you'd better forward these articles to him or her and concentrate on your trading. Don't try to be a hero and do everything yourself.
If you are not experienced trader with long time proven record, then forget the self-trading option. You can still start a HYIP based on trading, but you should not be the one who will trade the funds.

Hire Trader(s)
Probably the most business sense makes to hire someone working for you. If you can get a trader or traders working exclusively for your investment club, you can market a service that can't be received elsewhere. Such a program can be a huge money maker and turn you into millionair in short time.
The problem is that the good traders will ask for a big investment to trade especially if you want them to work exclusively for you. This amount starts from at the very least $100,000 and usually will exceed $1,000,000. If trader is ready to work for you with less funds, then he probably is not good.
If you are ready to make a big initial spend and hire a good trader, you will have to perform a serious check on their background. You do not know someone whose results are too volatile, neither you want a beginner. It's probably more appropriate to think about this option only after you have had some success with your investment program and have collected large funds from your investors.

Use Managed Accounts
This is one of the easiest setups for a real trading program. The traders who offer managed accounts will trade your money without having access to withdraw them. Only you will be able to make deposits or withdrawals and thus your risk of being scammed is zero. The traders of managed accounts usually take 25% - 40% of the profits. On top of that you'll have to add your management fee. Probably the first question which comes to your mind is then who would join your program and pay extra fees when everyone can join the managed account directly? There are two main reasons for your investors to use your services:
The minimum investment. Most managed accounts require at least $10,000 minimum and most often it is $25,000. Even if your investment program has high minimum as $1,000 it will be still attractive
You can diversify. The idea behind such a program is to distribute parts of members money in several managed account services. Thus you will diversify the risks.The main problem with this option is to find good managed accounts with proven track record and high ROI. HYWD does its best to find good managed accounts so you'll be able to read about them on the site.

Use Trading Signals
A version of the managed accounts based program is to use forex or other trading signals. In this case you pay a fixed montly fee to receive buy/sell notifications from experienced traders or systems. You trade yourself, but you don't need to have any experience, just have to follow the signals.The trading signal providers usually charge $200 - $300 flat fee per month. This may sound like a lot, but just think what will happen if you trade $100,000 and make 5% monthly ROI. Instead to be charged $1,000 - $2,000 like it would happen in a managed account, you end up paying much less. The larger your member's invested amount becomes, the less you pay percent-wise. And unlike the managed accounts, you don't need to start by depositing any money (except the signals fee) yourself. The hard part is to find good signals provider. There are plenty of them, but not all achieve good results. Again, follow HYWD researches to find good signal providers.Whichever option you choose, you should understand that you are dealing with trading risk. While trading can be very profitable, it (especially the forex trading) is one of the least predictable type of investments. But there is something even riskier and with higher profit potential. Read about it in the next article (coming soon).

Creating A Real HYIP - Set Your Basic Concepts

This is Part Three from the series of articles about creating a real HYIP. In the previous articles I wrote about the history of the HYIPs so far and the few attempts to create a real investment program. We also discussed why there are so many scams and why most people don't believe creating a real HYIP is possible. If you have not read those articles, please do that before to proceed:
- The HYIP Business - Is It Really A Hopeless Situation?
- The Real HYIP Can Exist

Now it's time to take some action.Creating an investment program is a business like any other. You must have an idea what you are going to offer, how much you will have to invest yourself, how will you achieve a good quality of your service and more. Let's actually go thru these items in details:

What is your vision?
What will be your program based at? Are you just going to create yet another HYIP pool or you want to invest the money of your customers in the real financial markets? Are you going to trade yourself or are you going to hire traders? Or maybe you will invest in some real offline business?
What is your vision. This is the most important question you need to answer. Take a sheet of paper or open a text file and write your ideas. For now just write and save them. Later in these series of articles we will go thru several of the best possible options and then you will be able to choose one and actually set your vision and concept. You should not start a program without having your vision written down.

Calculate your initial investment
Depending on your vision you will have to make some initial spends. For example if your program will be based on real estate investing, you need to make at least the first down payment for the first property yourself. If you are going to create a club based on a managed trading account, you need to invest at least the minimum yourself and open the first account. Then add the expected costs for setting up a website, the costs for buying a software which will do the tracking of the member funds, the costs for advertising of your program and for setting up an offshore company if you have not done that yet.

How Are You Going To Satisfy Your Customers
Many HYIPs fail because they are "one man show" and just can't manage with everything. What's your plan? Do you want to create a business which will make you rich or you want to create yet another JOB for yourself? A job that will make your nights sleepless and will consume all your free time? Or a business that can run without your constant presense? I guess you want to create a business. Then don't do it all yourself!.
You will have to plan outsourcing the customer relations, the accounting, the payment processing and the website maintenaince. Do not get upset, this does not mean that you need a real company with staff and office. Certainly one day when you business grows you can set a company with tens of employees, but let's think smaller for now. You can outsource all the tasks by using various services online. You can get everything for cheap and even better - for lower than your own current salary. So if you currently have a job, you don't need to leave it.
Now it's time to try to estimate some of these expenses and write them down. At the end of these series we'll make some sample calculations about everything.

How are you going to redistribute the profits?
I hope you understand you don't need to plan a fixed ROI. However, at the time of creating your business plan, you need to plan your own rewards. There are two main models which are used in high yield investing business:

1. Fixed total return
You can decide to pay out your investors all the profits which your club generates until they reach some fixed total return. For example some programs pay variable ROI until the investor get 275% or 300% total. Then, by the agreement, the investment expires and the member does not get anymore payments unless they invest again.
This method is quite rewarding for the HYIP owner. You won't take any cut of your investors profits, but once you pay them the total promissed ROI their principal starts working for you and you have no more obligations. You can take it out of trade and buy a house or just leave it to make profits for you.
Unfortunately this model have several disadvantages. First the investors don't like these programs too much, because they prefer to be able to compound and have their funds work forever. Second, it is hard to determine from the beginning what exactly to be that total ROI since in the real business you don't know what exactly will be the profits. And third, this means you'll have to wait long time before you start seeing the first results of your hard work.

2. Take a cut from the profits
This is the method I like more and it is very simple. You just get part of the profits for you. This can be somewhere between 10% - 50%. In my opinion you can set 25% cut without annoying your customers. Finally you have created and are managing the wealth machine for them so you deserve to be paid well.In this model if there is no profit or there is a loss in a given month, you just take nothing.

Decide on the payment cycle
Are you going to pay profits daily, weekly, monthly, quarterly or yearly? This depends on your business model. If you invest in real estate or an offline business it may take several months to get the profits from a project. If you invest in Forex, you can eventually calculate the profits weekly.
In my opinion you should never go for anything more frequent than monthly, because processing withdrawals and calculations will be too much pain. On the other hand, if paying once per year you will probably get no investors at all. So monthly or qarterly seems to be the best option.

Public or Private
This is not so important because you can always switch from one to another. Since the HYIPs are considered a gray area of business (even your real and honest one) it is probably better to keep a low profile and create the program private (and offshore!).Once you have your basic concepts set, you can think ahead of setting your killer-business. We are getting close to the most important part - generating profits.

The Real HYIP Can Exist

This is Part Two of The Real HYIP series of articles. In case I am not making any sense to you, please check the first article of this series:
The HYIP Business - Is It Really A Hopeless Situation?
There are thousands of high yield investors out there looking for quality programs but "investing" in scams every day. Many of them are ready to invest big amounts right away - only if they could find a real high yield investment club which actually performs well.I am not the first who thinks about creating a real HYIP, neither you are the first who can make it.

The attempts to create a real HYIP.
The recent history knows some real HYIPs but most of them rare have achieved the ROI they have planned to. Usually such programs are managed by inexperienced traders who have opened an investment fund to learn trading with other people's money.

I can give you just a couple of examples:
JoyFund was a program managed by a commodity trader. Its trading was audited, the admin's DD was releazed, everything was clear - there was no scam in this offer. The program started great with a double digit return per month. And few months later crashed badly. The trader was just gambling with our money.
At the time when NSFG appeared, it was something unseen so far in the high yield communities. It was a program providing not only complete Due Diligence, but also real time mirroring of the trades posted in GoldHorizons forum. Everyone was able to see that those guys really traded and generated such high (again double digit!) returns. But the scenario was the same - few good months, then a lot of bad ones. Even worse, the admins got most of the funds frozen in a Danish bank, because they were not operating legally. How unprofessional.

Why would YOU do it?
Why are you reading this article?You might be here just out of curiosity or to gain knowledge in recognizing real high yield investments. But you might be here because you look for a new business ideas. There is a huge business opportunity. The market will gladly accept a quality fraud free investment fund which allows the small guy to earn high yield returns.
Stop thinking as a small HYIP investor, there is much better way to make a lot of money. And you don't need to be a trading genius - some careful planning and eventually a small initial investment on your part is everything that will be needed.In this series I will show you how you can create a real investment program, and even several ways to do it. When you read all the articles, you will know what to do and how to do it, how to become a leader in the high yield investment business and how to avoid the mistakes the others have done.
If you do not mean to create a HYIP, you should still keep reading. You'll gain a priceless knowledge to recognize the real offers from the scams without doing "DD".But back on the topic. Let's make some basic calculations to see how much the admin of the real HYIP can earn.Even the cheapest HYIP scams easy attract several thousands of dollars in investments. Each of the more complicated fraudient investment schemes (like PIPS, IT4Us, FXIG, Studio Traffic etc) has stolen between 10 and 100 millions. Imagine what could you do if you create a honest program.Let's start small. Let's see what can happen if you collect only $500,000 capital from your investors (that is other people's money). If your program can achieve 50% yearly ROI - which is on the lower side of our targets - this means that you have $250,000 profit to redistribute.You, as an admin, can take 20% from the profits and everyone will be happy! Using my conservative estimation this means you can easy make $50,000 per year with a honest and legit business which does not require big investments on your part.Now imagine what happens if you have $5,000,000 invested and can achieve 75% per year. (want help? - you'll make $750,000 per year just for yourself). And this all can be managed by you alone or with the help of a fairly small team.

The Real HYIP is A Business
Like every business, it needs a clear concept. Unlike the other big businesses however it does not require you to have a lot of funds, neither to have hundreds of employees. You can start alone and later when you grow to add a team to help you.The most important part is to have a plan.In the next article I'll give you some guidelines how to create a plan and clear vision for your own high yield investment program.

Warren Buffett or Mensa Investment Club? You Decide..!

By David Van Knapp

You’ve probably heard of Mensa. It is a society that limits its membership to people with IQ’s in the top 2% of the population. Mensa was founded in England in 1946. Nowadays “Mensans” are found all over the world and in all walks of life. The only requirement for membership is an IQ in the 98th percentile or better. Mensa has over 100,00 members, about half of them in the USA.

It turns out that Mensa has an investment club. Wow. That must be one heck of a way to make money, right? The smartest people in the world making investment decisions.

Well, not so fast. During the 15-year period 1986 to 2001, the S&P 500 had average annual returns of 15.3%, but the Mensa investment club’s performance averaged returns of just 2.5%. Let’s see, that would be 84% worse than the index.

How could this be? An amusing article by Eleanor Laise (”If We’re So Smart, Why Aren’t We Rich?”) details the smart-but-undisciplined investment approach that reduced Mensa’s returns to fiasco status. In brief, the investing “strategy” of the club relied on trendy tech stocks, horrible timing, and over-reliance on charting. The “strategy” was constantly changed. Some stock picks were taken straight from Internet message boards. One member described the approach as “buy low, sell lower.”

As Warren Buffett has said, “Investing is not a game where the guy with the 160 IQ beats the guy with 130 IQ….What’s needed is a sound intellectual framework for making decisions and the ability to keep emotions from corroding that framework.”

Mensa’s performance reminds one of another notorious group of smart people who managed to blow up so badly that their mistakes threatened the world’s economy. That would be hedge fund Long Term Capital Management (LTCM), which melted down in 1998. Founded by experienced economists, traders, and future Nobel prize winners, and aggressively run with the aid of finely tuned computer models, LTCM had to be bailed out by the Fed, which pulled together Wall Street’s leading banks to underwrite the bailout. The LTCM incident is wonderfully documented in Roger Lowenstein’s book, “When Genius Failed.”

Where is a copy of “Sensible Stock Investing” when you need it?

Why did these two groups of brilliant people fail as investors? Put simply, they were overconfident, inconsistent, and blind. All at the same time. In other words, their failures were not caused by lack of conventional IQ-type intelligence. Their failures were caused by lack of investing intelligence.

In 1996, Daniel Goleman wrote “Emotional Intelligence: Why It Can Matter More Than IQ.” It provides a framework for understanding how really smart people can make really dumb decisions. He wrote, “As we all know from experience, when it comes to shaping our decisions and our actions, feeling counts every bit as much-and often more-than thought….Passions overwhelm reason time and again.”

The field of Behavioral Finance lifted off about 30 years ago. It is devoted to finding out how people really act when making financial decisions. Consistent with Goleman’s thesis, Behavioral Finance has found that investors are often influenced by emotion, and that therefore they make illogical, inconsistent, and ill-informed decisions, despite their best intentions to act in their own self-interest.

It turns out that humans, no matter how “smart” we are, are hard-wired with several tendencies that don’t help very much when investing. Our judgment gets skewed. Some of these common traits include:

• Loss aversion: Holding illogically onto a hopeless investment, hoping that it will come back. People do not want to admit having made a mistaken investment. They want to avoid regret over the loss-so they just don’t book it. If they are arrogant enough, they not only refuse to admit the investment is a loser, they double down their bets while the doomed investment is tanking. (That’s what Long Term Capital Management did.)

• Selling winners too soon: Locking in profits to create a feeling of victory. Ta-dah!

• Forgetting that the real goal of investing is not to justify decisions you made that got you to where you are right now. This can lead you to focus on the past rather than evaluate your investments on their future potential. In short, arrogance about your previous decisions convinces you that “the market is wrong” and you will eventually be vindicated.

• “Preferential bias”: Difficulty in changing an opinion once the opinion has been formed. This causes incoming data to be processed selectively, with supportive information favored and contradictory information downplayed or even ignored. The end result is reduced objectivity. (Both LTCM and Mensa probably did this.)

• Constantly changing tactics, following what’s hot (emotionalism), rather than sticking with a sound long-term strategy. (Mensa did this. It adjusted its “strategies” quarterly-meaning that they were not strategies at all, just short-term, flip-flopping approaches.)

The Sensible Stock Investor needs to be as rational as possible, because over time, the stock market tends to reward rational decisions. The market tends to move stocks towards their intrinsic values. For example, if you paid too much for a stock, over time the market will reduce your returns from that stock or even turn them into actual losses as it brings the price of the stock back to what it is really worth. Regretting the loss, failing to accept the sunk cost, holding onto the loser too long, and/or failing to look ahead rather then back obviously do not help you make the best decision in this situation.

Fortunately, we humans can counteract some of our right-brained emotional tendencies by using our left brain to create tools and processes to increase our “investing intelligence.” Such tools and processes include:

A fact-based system for evaluating whether a company is a good company.
Calculating a well reasoned number as a fair price for its stock.
Resolving never to make snap judgments on fragments of information or hot tips.
Writing out your investment goals.
Honestly assessing your appetite for risk.
Designing a strategy that is likely to lead to achieving your goals without making you uncomfortable as to its risk.
Sticking to-perhaps automating-your well-laid investment plans in a disciplined fashion, ignoring short-term “noise” in the market.
Resisting the urge to “do something” all the time.
Reviewing and updating your approach annually as your life situation changes and you learn more about investing.
Systematically reviewing your holdings-that is, performing a reality check-with your eye always on the future.

The studies in Behavioral Finance clearly show that it is not your store of market knowledge nor your traditional IQ that are most likely to determine your success as an investor. It is whether or not you let your emotions dictate your actions. In the end, you want to apply your intelligence and objectivity to overcome self-defeating emotional tendencies in your investing. That will help make you a Sensible Stock Investor, no matter what you may score on standardized IQ tests.
If you would like to learn about a stock investment approach that that uses the common-sense strategies reflected in this article, please consider purchasing “Sensible Stock Investing: How to Pick, Value, and Manage Stocks.” Click on this link to go directly to the book’s page on Amazon.com: http://www.amazon.com/gp/product/059539342X/sr=1-1/qid=1155381420/ref=sr_1_1/002-5852738-5260830?ie=UTF8&s=books . Or click on this link to learn more about the book and its sytematic approach to investing: http://www.SensibleStocks.com
Thank you.

Dave Van Knapp, author, “Sensible Stock Investing.”
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