Business - Raising capital - videos from planHQ

I use planhq.com for my business planning and found it to be an excellent tool, was on their blog today and found these great videos on raising capital, essential to know if you want to get rich.

Part one takes you from the groundwork you need to do BEFORE starting discussions, through to the introduction and how to gain initial trust


Part two walks you through doing the deal, from convincing investors this will be a mutually beneficial relationship, through to negotiating the deal and avoiding 11th hour surprises.






Part three explains some common and easily fixed ‘things to avoid’.

ISLAM - Will help rid the world of poverty

May Allah forgive me for not spending enough in His path and may Allah give me the ability to spend much more.Ameen. This video and others like it really make me feel guilty about the life of ease I live, I wish i could help so much that it makes a difference, I live in one of the most disparate countries in the world when it comes to wealth, just a stones throw from an area filled with millionaires you can find dire poverty, As a Muslim it is unacceptable that a neighbour can go hungry while we have food on the table, may Allah make me realise this and help me fulfill my goal of becoming the best muslim philanthropist of our time and may Allah make us all realise that we have to start now.

Expectations, desire and the power of thought

I am currently reading Think and Grow Rich: The Landmark Bestseller--Now Revised and Updated for the 21st Century, the book is centered on the fact that thoughts translate into reality as it is the thoughts that come first, the book does discuss a lot of other concepts that go with this in order to "transmute" thoughts into reality.

I found this discussion very much related to the hadith qudsi which goes to the effect that Allah treats a person according to the person's expectations from Him. This is very much related to yaqeen and Imaan. Napoleon Hill also mentions such states as essential for success in his book, i.e. having "faith" that one's desires and plan to achieve them will result in fruition.

As a Muslim there is a state of mind or rather heart referred to as ihtisaab, which means roughly to do an action with complete conviction that whatever is promised for doing it will be granted by Allah Subhanahu Wa Ta'aala. This ties in with having good expectations from Allah, couple that with the a'maal that has been given to us through our Prophet (SAW) and we have a sure recipe for achieving wealth and success. As an example it is related in ahadith that whoever recites Surah Waqiah in the evening will never be afflicted by poverty, this is so powerful we don't even realise, the fear of poverty is a major stumbling block in achieving success, so many people dwell on this fear and live with a poverty mindset that it then becomes their fate. By acting on this amal with ihtisaab, i.e the conviction that what Allah has promised will come to pass ones fear of poverty can be totally eradicated and one can develop a mindset away from poverty which then because if one's expectations from Allah will transmute into reality, Alhamdulillah I myself have realised the wonderful effect of reciting Surah Waaqi'ah every evening, besides the barakah I have seen in my wealth I have absolute conviction that as long as Allah grants me taufeeq to continue this practice I will never be afflicted by poverty. Allahs promise is never broken.

With regard to he book itself i would caution readers not to take the chapter on sex and its relation to success too seriously, i can see where the author is coming from with regards to the powerful emotions associated with it though i would rather take the lessons that he describes regarding how many have become unsuccessful because of their overindulgence in it in wrongful and harmful ways. As a practitioner of Acupuncture and Chinese Medicine it is interesting to note though that overindulgence in intercourse does lead to a weak mind and willpower both of which are essential for the achievement of one's goal and purpose in life. The rest of the book presents a concept not easy to pick up if one is reading such books for the first time, in fact as a primer to this book i would read this book first;

The author is a fellow South African, not that i am really nationalistic, he one of the best motivational speakers in the world at the moment and I have to say his book really inspires me to break my mental barriers and push myself to achieve what otherwise i wouldn't even have dreamt of achieving, he has many Muslim friends who no doubt have had some influence on his thinking as well.

Bottom line is thoughts are important, yes, they do tend to transmute into their reality, napoleon says it nicely: "Thoughts have a tendency to clothe themselves in their physical reality", really powerful, negative thoughts bring about negative consequences, positive thoughts bring about positive consequences,

Its interesting also that when Shaytaan will be blamed by his followers on the day of judgment he will reply that he is not at fault as he only whispered the thought in the heart of the wrongdoer. I'm sure now you can see how powerful thoughts are, may Allah guide us to fill our minds with thoughts of khair and goodness and protect us from evil thoughts. Ameen.

Lets work the numbers - Ponte

I said before that I prefer to invest for cashflow when looking at properties. Property is an easy way to get rich at medium speed but its important that the numbers should be right, every property should be looked at as you would a business and when doing so there are some very important things to consider:-

1. Will the business/property give me a profit/money in my pocket from day one?
2. If not how long will it take to reach breakeven point?
3. Do I have enough extra funds to carry the business/property until it reaches that point (where it can pay itself)?
4. In the case of property - is it in an area where i can expect a good rental demand for the property?
5. what are the long term prospects for the property/business?

With regard to the ponte property it will not be profitable from day one when looking at the apparent numbers, the unit i booked costs 750 000 (I'm not saying what currency), the rental expected is approximately 7750, the levy will be about 800 and if i get it fully financed the instalment will be approximately 8200, lets look at that more clearly:-

Rental income from the unit: 7750

levies: -800

Instalment: -8200

Shortfall: =-1250

which is equivalent to 15 000 for the year, so why in my right mind would i take this property, well for one, if i were young which i am i suppose i could fund the shortfall from my other businesses but there is another reason, because the building falls in the urban development zone i can get an accelerated depreciation on this building of 20% of the refurbishment cost (1/3 the price) in the first year and 5% for every year thereafter for 17 years, that would in effect reduce my personal income tax bill as follows:-

1/3 of 750 000 = 250 000

20% of 250 000 = 50 000

considering a tax rate of 35% = saving of 17 500 less the original shortfall of 15 000 leaves me with a positive cashflow of 2500 in the first year.

in the second year my yearly shortfall (with a 10% rental increase) would be -6768 and the tax saving 5% of 250 000 = 12 500 * 35% = 4375 which leaves me with a shortfall of -2393 less the 2500 of the previous year = 107

What this essentially means and why i prefer cash flow positive properties is that they pay themselves.

Creating wealth through property is the easiest and most assured way of becoming rich and financially free, just make sure the numbers are right and your financing is halaal. Some people say they would rather pay cash and i would say to such people that it is okay to pay cash but then you lose out on leverage, if you had the cash why not put down 10% deposit on 10 of these properties and secure yourself an income for the future, as Muslims yes we should be ready for death should it come any moment but that definitely does not mean we should not prepare for the financial safety of ourselves and our families should we live to see it or worse leave nothing behind for them when we leave. One category of martyr in Islam is he who passes away while striving in pursuit of halal sustenance so that his family does not have to ask from others.

May Allah assist us and guide us. Ameen.

(I share this in the hope that others and myself will learn the important lessons of wealth creation and Islam's view on it that we rarely learn elsewhere)

Rap Jumping @ Ponte

Another rap jumping video inside ponte

Picturing Ponte

Another great video on Ponte, now you can see why I really want 10 apartments in this building plus a penthouse. I am going to go through the figures in my next post and how to determine a good investment with regard to cash flow and why you should invest this way.

Rap Jumping Ponte

Found this video of something going on in the hollow of the ponte building mentioned in the previous post.

Ponte building - I want 10!! plus a penthouse

I have a goal to own 10 apartments in the Ponte building in Johannesburg in addition to one of the penthouses within three years. Went to the showday a couple of weeks ago and it just reinforced my goal. The Ponte building is the landmark building of Johannesburg just as every city has its main building, it is probably also the highest and easily visible from all the buildings from far. In the apartheid era when it was built it was the building to have an apartment in, so basically if you were rich and famous you had an apartment there, over time the area became bad and the building got run over by non-paying tenants, crime and drugs, there was a time when everyday a murder would take place in ponte. Last year two developers with real vision bought the building over and are restoring it to its former glory and more, the area itself is also being upgraded in preparation of 2010 and the governments future vision for the city but you have to have the eyes of a true investor to see it. I already have two flats in the area and my property strategy for at least the next five years will see me acquiring more and more properties in the same area Insha'Allah.

Here is some info i ripped off the net about the original building:

Originally planned to be 64 stories high but was scaled back due to fire fighting concerns of the council.
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A proposal surfaced in the late 1990s to reconfigure the building into a high-rise prison.
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The tallest residential building in Africa, Ponte City has a hollow core along its entire height.
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The sign at the top of the building is the highest and largest in the Southern Hemisphere.
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The building is not completely cylindrical as it has a flat area on the rear side facing north.
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The top 23 floors have a separate water supply located in tanks on the 31st floor and while lower floors are serviced by council supply.
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The multi-story parkade is below ground at the front entrance and exposed at the rear due to the very steep nature of the site.
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There is a shopping arcade on the 8th floor with 50 shops serving the tenants as well as a pedestrian bridge to the University crossing an adjacent freeway.

and here is info about the new building:-

http://www.newponte.co.za/index.htm

http://www.newponte.co.za/downloads/PonteInMaverick.pdf

I managed to get some photos from the day i went, we particularly liked the "future slick" option and booked a 1 bedroom exec that is depicted in these photos:-

Take a look at the view!!!

Usually I wouldn't be interested in new developments at this stage in my investment plan because the rental is not usually enough to pay off the loan taken out on the property, in the case of this building however, i believe the rentals that can be achieved will be far greater coupled with the tax benefits the government is giving to buy in this area would make it a viable and cash flow positive investment.

I have no idea how to organise the finance but i know Allah will help me Insha'Allah.

Wealth is a fitnah, does that mean don't acquire it?

I read today in one of the muslim forums the familiar ayaat and hadith regarding wealth being a fitnah, I posted my own thoughts there and am repeating in more detail here. Yes, wealth is a fitnah or temptation/test but as i said in the forum so are a persons wife and children as per the verse in the Quran, does this mean that we should not get married or have kids, absolutely not, the verse goes on to mention "fear Allah" not "dont get married" etc. The point I am making is that the object of these warnings are not to stop us from acquiring those same things but rather an admonishment that we should not let these things make us stray from deen, if it can be said that excessive wealth will take a person away from deen then can it be said that excessive children can do the same? quite the contrary, in fact we are encouraged to have more children by our Prophet (SAW) so in the same way it is an erroneous belief that excessive wealth in and of itself will take a person away from Deen, in fact a person can be away from Deen even in poverty and reach high stages while being wealty, much of Islam was spread in the world when the people of other countries experienced the sound business dealings of muslims who travelled to those countries.

In conclusion my point is yes, wealth is a test, just like the world itself is, acquire it in the right way, spend it in the right way and don't let it stop you from practising on your deen.

Book to read - The Richest man in Babylon

I have put up this post in response to the discussion that is currently going on at www.ummah.com/forum with regard to craving wealth, this book is an essential read in understanding wealth creation and also understanding why many will remain poor. Though the book references Babylon and the Jewish community and the author no doubt has links with freemasonry, the lessons are nonetheless essential to learn and a Muslim takes wisdom from wherever he/she finds it, i highly recommend this book for anyone who wants to understand what "rich" is and how to achieve it. I had originally thought i would post the sort of information present in this book in my blog but then changed my mind as these books present it far better than i could here. Instead i will focus on a'maal, the sayings of the Prophet (SAW) regarding wealth, the differences in Muslim wealth creation and other issues such as sharia compliant insurance, finance etc.

Here is the book:
The Richest Man in Babylon

A'maal which have helped me out

Just two years ago I was very dependant on my parents for income, I was brought up in a wealthy home and not realising my parents had spoilt me to the point that i had become weak and needy. Of course I had been studying as well at the time and traditionally in wealthy indian families the parents would support the children while they did this, looking back it would have been better had i been taught independance from a young age and actually this is what the truly rich do, they don't spoil their kids, instead they teach them the rules of wealth and independance, so often we see a child squandering their inheritance away in a very short time only to waste a lifetime of effort, this happens because the child was also spoilt to become weak and needy. Fortunately for myself I decided actively to become independant and set that as a goal for myself, Alhamdulillah Allah guided me to certain a'maal and I believe also to the shouq/desire for reading books on a'maal that attract wealth, and others that teach business, finance and investing. Through this grace of Allah there has been a total change in my life and outlook and i am now actively working towards being able to retire within the next 3 years so that i can spend more time in deeni activities and with my family.

I have found two books very useful on the subject of a'maal and i would recommend to you as well, the first is A'maal e Quraani by Sheikh Ashraf Ali Thanwi (Rahimahullah). I will post the particular a'maal later but i definitely suggest getting this book, it has many other a'maal from the quraan and does not focus on sustenance actually, there is another book: "How to repel poverty" by Mufti Muhammad Shafi Sahib. The information in these books is priceless. If you cannot source them contact me and i will tell you where to get them from.

Wassalam

Still promoting the fed

You would think it would be common knowledge now how the fed brings about booms and busts and parasitically destroys the wealth of all who dont understand it. I am reading the complete idiot's guide to market timing and the author does quite a good job of praising the fed, well take a look at this video and see what you think because i definitely don't agree with his praise:

http://mises.org:88/Fed

its quite an old video but nonetheless essential in understanding the hidden system behind financial matters. Of course i dont agree with their conclusions as to the solution, i would rather understand the system so that i can profit from it and then spend on the upliftment and betterment of those who do not understand and profit from it.

Keys to wealth creation (2)

Anyway, back to wealth creation, it is very simple actually, most people dont realise that due to the very strong influence of western culture and values on our way of life we are actually involved in a process of wealth destruction without even knowing it.

Many of us are neglectful in the A'maal (good actions) which attract sustenance and also those that repel poverty, our expenses go on increasing and we dont attempt to build or buy any assets with the little time, energy and money that remains.

The biggest attractor of wealth is timely performance of Salaat so this is the first thing one should work on, not for wealth but knowing that while attempting to do it for the sake of Allah a side-benefit would be easier sustenance.

In expenses, note that i said control expenses, not reduce them, its easy to reduce ones expenses, but my intention is not to make people misers, rather take a close look at your expenses, your credit card bill, monthly instalments on your new car, your mortgage payments, or maybe you didn't regard these as expenses? this may bring about a paradigm shift because you will have to realise these are expenses, your own home is not an asset, it is a liability that takes out money from your pocket every month, that money is an expense, even if you dont owe anything on the house, there still are expenses, so am i saying get rid of your house?, no, just start looking closely at your expenses. First thing in controlling your expenses is start putting away 10% of your income every month for investing, for buying/building assets, you might say that what you earn is just sufficient to tide you through every month, but you will notice that if you started doing this you would be none the poorer at the end of the month, as soon as you get it, out some away, don't touch it until you are ready to invest it, don't blow it on some impossible dream either, wealth creation is a long term process, nobody gets rich in a get rich scheme besides the schemers.

Then keep your eyes open for assets, things that put money in your pocket.

Can't decide, rent, buy, stay put

Just sharing some thoughts here, i often find it difficult to make decisions and naturally the best thing to do at that time is make istikhaarat or mashwera so this is a bit of mashwera (consultation) and im going to do istikhaara later. I recently moved to Cape Town from Johannesburg and currently living in an apartment that is part of a larger shopping mall development, there is a dentist in the complex who has a fairly large room fro subrental which i thought would be convenient to use for my own private practice (I am an acupuncturist by profession) and also for my medical supplies business, i spoke to the dentist earlier and he is asking 3 times more than i expected, so that has putten me in a fix, before coming i did plan to find a house, purchase it and use for the practice and business as this is an excellent way of getting into the long term benefits of property ownership while at the same time fulfilling my needs for the business and practice which in turn would pay for the property. Thing is that i may be passing up a great opportunity as there is a massive amount of traffic at the mall, thats what goes on in my head often and the other thing is the convenience factor, i just have to walk downstairs to the business and practice. On the other hand though is the fact that a medical practice is not as reliant on location, location, location as other retail businesses are, people tend to seek you out and i have experienced this in joburg where i had patients coming from quite far off, so thats the dilemma, i suppose writing this blog itself helps to clarify it for me, why pay the same in rent as you would if you bought your own place and not suffer any loss in your income anyway, of course it would mean that i wouldnt be able to walk to my business but maybe that will keep me more focused while i am there?

3 keys of wealth

These are the three keys for wealth:-

1) Doing such A'maal which attract sustenance and repel poverty
2) Controlling ones expenses
3) Building/Buying Assets


I wanted to put this here succinctly as they can be expanded upon later. The formula is simple, and i heard once that for complex problems there are simple solutions while for simple problems there are complex solutions. Join me in the coming posts while i go into detail on these three keys, i dont intend going into extreme detail on business practices, stock trading, real estate investing etc. but rather want to detail the "how to get started", the methods and principles and guide you and me both to relevant resources for the rest of the information that is needed once a path is chosen. Remember that the underlying theme here is that it is okay to be rich and the moment you accept this and dont feel guilty about it is the moment your outlook to life, Islam and money will change.

Why you should be rich?

I was reading Virtues of Trade by Shekh Zakariyya (Rahimahullah) and came across the well know hadith that to earn is fardh (i.e compulsory) after all the other fardh obligations (salaat etc.), with the further explanation that it is no longer fardh once a person has an income by which he can pay his/her expenses, through rental property or inheritance for example. On first reading this one would think that the encouragement is towards not becoming wealthy but when you examine it closely and think about the definition of wealthy then you realise it is exactly the definition of wealthy and the acquirement of it that is being encouraged.

One of the greatest benefits of having a passive income that comfortably exceeds ones expenses (i.e being wealthy as per my definition) is that one is able to devote oneself to islamic devotions and actions including such varied things as prayer and other ibaadaat, spending time with family, visiting ones relatives, travelling in the earth and admiring Allahs creation, spending on ones relatives, the needy and on other good causes , taking time to learn deen etc. To do this in any considerable way means one of two things, either that a person has so little expenses that it does not require much time to acquire the necessary income or that a person has enough income to cover his/her average or above average expenses.

Now taking either scenario into account it is important to consider that the income being achieved is not really passive income and the person is working for money instead of having money work fo the individual. We work for money either by having a job or being a solo act, money works for us when we have a business that runs itself and/or we receive income from investments, i.e for example shares, rental properties etc.

So if one were to in addition to working, put aside money to buy/build a business, buy income generating shares and/or purchase other assets that produce passive income a time would come when working/earning would no longer be fardh and you could spend your entire time in ibaadaat or coninue working if you like as it would be your choice and you would have the freedom to do so.

I see so many people around me who are good muslims, working hard day in and day out and the fact is that they cannot continue until death in this manner and sooner or later they or those they leave behind will face difficulties or relying on someone else to pay their expenses. Remember that in Islam we are encouraged to be independant and as much as there is encouragement towards austerity the warnings regarding leaving enough inheritance for ones family and being independant are too often neglected.

Just moved house

Salaam and Hello, just moved from Johannesburg to Cape Town, drove down yesterday (1400kms!) but eveready to increase wealth and improve on my passive income, the move brings a fresh perspective and some relief from some issues that were worrying me in jhb, i had a "mortgage" there on a home that was not really expensive but fact it was taking money out of my pocket every month, fortunately i managed to sell it and now i am free from that bondage, which is what mortgage actually means i.e bondage to death. See your own home is always a liability, those of you who have read Rich Dad, Poor Dad by Robert Kiyosaki will know where I am coming from and if you haven't i suggest you do, it's standard reading if you want to understand the simple truths of wealth, so back to your own home, always a liability, always takes money out of your pocket, is it better to rent then? you migth ask, i say it depends, i am renting now and paying half of what i was paying on the mortgage for a place that is just as sufficient for my current needs, so that leaves me with the other half to invest for passive income. The plan is to increase my passive income so that it will soon be enough to pay for own place automatically. I have two other properties but they are beauties, they both put money in my pocket and my plan for this year is to get another 48 more. So stay with me for the year and you might learn something, i know i will...

My definition of wealthy

After all that here is mine: when ones income from sources that a person does not have to work for oneself, is substantially more than ones expenses, at a level that a person is able to fulfill their dreams the person is now wealthy. So basically if a person only wants to live in a cosy hut that they own, only eat dates and water with a total expense of $5 a month and has a source of "passive" (dont have to work for it) income of $6 from renting another hut for example this person is now wealthy, agree? Of course most of us, myself included would prefer a seaside mansion, some fancy automobiles, a wad full of cash, a couple of holiday homes, three private jets, a helicopter, 24 servants and the ability to spend wherever it is good so we would need a little more than $6 of passive income. Passive income, it reverberates in my mind, money without working, the quintessential ingredient for wealth, an ever filling purse, a golden stream of coins pouring into ones pocket (aka bank account or wherever else you prefer to stash) that makes it necessary to spend and okay to spend and good to spend so that more can enter ones purse so more can be spent, invested, gifted, multiplied.

Rich Muslim?

Assalaamualaikum to my muslim brothers and sisters and a warm welcome and Hello to those who have not yet embraced, Rich Muslim is a blog dedicated to my life of pursuing the acquisition of wealth without the stigma that wealth has attracted in most Muslims' perceptions of it. Strangely it seems that money and muslim dont mix too well in the minds of many adherents and this blog tracking my activities, thoughts, business ventures etc. hopes to dispel some of the myths surrounding this phenomenon and hopefully will show how to become rich and still be a fantastically good muslim.

In fact, our faith has already shown us the methods and means of doing so but instead we have adopted the way of the world around us which in fact only leads us into poverty and debt, there are three essentials for becoming a wealthy muslim but before i get into that i will describe myself a bit and discuss first what it means to be wealthy, i.e what is the definition of wealth?

I am a natural medicine pracitioner by study but a businessman and investor by nature, my father and almost entirely family is involved in business in some way or the other though as is the norm these days my parents encouraged me to study and I also wanted to myself. I eventually chose the study of Chinese Medicine and Acupuncture and travelled to Australia to obtain my degree in the subject, dabbled a bit in business while i was there (it was a failure, but my first lessons in business nonetheless) and when i completed returned to my home country of South Africa. Thats where I am now and this is the stage for my road to wealth, halal and pure. I am married with one child.

Can't give up too much more of my identity unfortunately though in this blog the message is more important than the one delivering it. So back to "wealthy", how much is it? how would you define it, what is the tipping point that makes a person rich, which dollar/pound/rand/riyal/dinar/rupee is the one that differentiates a "poor" from an "average", an "average" from a "rich", difficult isnt it?, being a millionaire when the word was coined (excuse the pun) meant something entirely different to being a millionaire now, in Zimbabwe everyone is a millionaire because a loaf of bread costs a million dollars (zimbabwean dollars that is). So what is wealthy then, perhaps it is what and how many "assets" a person owns, lets take a look at this one, two problems here, much of what you see in the form of "zeenah", i.e adornments, cars, houses etc is not really the property of the apparent owner but rather the bank that financed it, not saying this is wrong or right, i have a car and some properties that have been financed, just questioning the definition of "wealthy", and if they are "fully paid", does that mean a person is wealthy? lets take an example, lets say i find a poor person roaming the streets and gift to that person a beautiful expensive car and home, that person is wealthy now right? not really i think, if they dont have any income to support those gifts they are useless, of course they could sell it and collect the cash, live on it until it ran out, does that make them wealthy then? This discussion may be becoming long winded so let me introduce some basics here, every person no matter how frugal or saintly has expenses, it is the nature of the world that to live means you have expenses, if you have no expenses you are dead, trust me, of course it may be that you are not paying for them but that is a different matter, the fact is that in order to live we must consume. When this is put up against ones income there are three scenarios, there are those whose income and consumption/expenses are the same, these are usually the poor in society, they live from hand to mouth, whatever they earn is immediately used for expenses, food being the priority. The second group are those who consume more than their income, i.e their income is less than their expenses, this is usually the middles class and makes up the majority of the world we look at for direction and inspiration, your typical american/south african/australian/european family, wherever banks exist and loan money to finance cars, houses etc, people will be in this class, they borrow money to buy items thay cannot afford and go increasingly into debt with very few ever getting out. The third group are those whose income exceed their expenses, these maybe the rich, it all depends on your definition, they are not necessarily the best off but at least temporarily they are better off than the other two groups, it all depends on how they achieve their income and how they utilise the excess.