I’m astounded when I hear other real estate investors tell me that they don’t read their local, daily paper.
You don’t read your local, daily paper?
Don’t you realize what’s in there?
Information about your local market! Stories on your local economy. Trends in your marketplace. Important real estate data and statistics. Not to mention the classified ads, loaded with people who want to sell their homes (“homes for sale”) and people who want to buy houses, i.e. other investors (“wanted to buy” section).
I know an extremely successful, fulltime investor (30+ years) who shared with me once one of his secrets for finding deals. He admitted that one of his best buying avenues was the classified section of his local paper.
“Hal,” he said, “they all want to sell their house. All in one spot. Cheap. With their phone numbers to boot!”
Now, as this investor would admit, they aren’t all motivated sellers. But, in his 30+ years of experience, there was always at least one motivated seller hidden in the sections, and, usually, there was more than one. When he wasn’t getting deals from other sources, he picked up the phone and, starting from the top to the bottom, made the calls to unearth the motivated sellers.
If these deals are there, right under all our noses, why don’t more folks pursue this approach?
Because it’s hard. It’s not easy. It involves cold-calling. It involves hearing 99 “Nos” before you hear one “Yes”. And most of us don’t want to take the time, or the abuse, to get to that one lead.
But it works. And it’s all right there, for pennies a day, in your local paper.
The second publication I think everyone should read weekly is the magazine Businessweek. I love Businessweek. It will help you to see the larger movements and the big picture of our national, and international, economies. This is highly relevant.
If my local market is trending in one direction, it’s incredibly important (and helpful) to know how this trend relates to our larger economy. Is my market bucking the trend? Ahead of the trend? Behind the trend?
If I’m in a seller’s market, for example, is most of the country experiencing that, too? If the rest of the country is in a buyer’s market, is my market heading there too? If so, should I switch my current investing strategies? Is this a good time to sell, and prepare for a buyer’s market? Etc.
Business week will help you understand the national context of your local market (which you will learn about from your local, daily paper).
Businessweek is invaluable in another respect, too. It focuses on well and poorly performing businesses.
All of us, no matter what the investing strategies we employ, should seek to run our real estate investing activities like a business (as opposed to a sloppy hobby, an experiment, or a “wing and a prayer” get-rich-quick scheme). One way to learn how to do that is by reading about other businesses, and other managers, who seek to do the same with their own enterprises. You can learn a lot by their mistakes and successes.
Personally, I curl up with my Businessweek with a pen in hand and mark the heck out of every page. I read the articles with these questions in mind:
How can this information help me in my businesses?
What can I learn from these trends, successes, and mistakes, and apply to my businesses?
Take notes. Make connections. Jot down ideas. You’ll be surprised how a story on Intel and semi-conductors can be highly relevant to your landlording activities, for example.
Read your local paper daily for the local knowledge it can give you, in addition to the other benefits. Read Businessweek to stay on top of the national trends, and to learn about the successes and failures of other businesses. They are two cheap, quick ways to keep your finger on the pulse of your local and national economy. Any real CEO would have it no other way.
Sunday, June 21, 2009
Triple Your Income in the Next 12 Months
We all have choices in life. We can spend our lives making a living or we can choose to make some real money. Unfortunately, most people choose to make a living. They don't take time and spend their lives walking over the dollars to get to the dimes. Most real estate investors are no different.
Oh sure, you've decided to either increase your income on a part-time basis or you've quit your job and taken the full-time plunge. So what! All that means is you've decided to take control of your own financial future and make things happen. I'm proud of you if you have made that choice. But wait! Before you pat yourself on the back and your head swells up like a basketball, answer this question: Are you running your business with blinders on?
I mean are you so narrowly focused on one little piece of the business that you're letting the real money fly right on by? Most people get started in real estate and learn one or two ways to make money. Then they spend ten or twenty years doing the same stupid things over and over. Oh sure, most make good money and others do exceptionally well. But what saddens me the most is, in all my years of training in this business, I've only seen a handful of sharp entrepreneurs really grasp the big picture. Most are so content making a good living that they miss the most profitable part of the business.
Let's look at the big picture and what you can do to triple your income in the next twelve months.
Four Ways to Profit
There are four basic ways to profit as an investor. The way to make the most money the fastest is to use all four. Don't get so narrowly focused on one that you miss out on the real money.
* Wholesaling
* Retailing
* Lease Options
* Creating No-Qualifying Financing
Of course, these ways have several offspring and variations, but these are the big four (assuming you're not holding for the long term). Even if you are, your exit strategy will fall into one of the big four unless you exchange or die.
Wholesaling
Wholesaling is finding bargains and quickly passing them on to bargain hunters. The house usually needs to be rehabbed and the buyer is willing to do the rehab. The buyer then retails to the consumer or lives in it. The plan is to find the bargain, tie it up with a purchase contract, then quickly sell. The profit comes from doing a simultaneous closing with the buyer who brings to the closing a few thousand dollars more than you agreed to pay the seller. Many of my students make over $20,000 per month doing nothing but wholesaling.
Retailing
Retailing is getting these same houses fixed up and sold to owner/occupants through new financing. Most beginners look at investing through this window. Conventional wisdom says the way to make money is to either buy, fix, and resell or to keep and rent. If you've ever heard me speak, you know how I feel about conventional wisdom. It's almost always wrong. However, in this case I agree, there is real money in retailing and renting. But you see, here is something you'll never learn from conventional wisdom that can only come from a battle-scarred warrior who's learned the hard way. This one lesson alone could make the difference between success and failure. Do not do any repairs or become a long-term landlord your first year in business. How does that stack up to conventional wisdom? You've been told by all your real estate courses and investor buddies that the best thing to do is rush out and buy a rental property or a fixer-upper. You know what? Even though that's the last thing I want you to do, I'd still prefer it to doing nothing.
However, before you do, let me briefly make my case and see if you agree with me. First, let's look at why you want to do either. Your reason for buying and selling a fixer-upper is to make some cash within the next few months. If that's your objective, why on earth would you want to begin with the hardest way? And believe me, it is. Retailing is a lot of work and takes time. A lot can go wrong, especially for a beginner. You have to buy the house, raise the money, hire a contractor, and then the hard part--find a qualified buyer. If you attempt this without the proper training, I assure you you'll get those battle scars I mentioned earlier. What's my problem with rental property in the first year? The answer is simple: you're not ready yet. The only real reason to own rental property is to build wealth. The real money is in the equity. But what's your rush? The first lesson I learned in my early days was:
Take care of today's cash flow needs before worrying about getting rich. Let's get the bills paid and get out of debt before we start building an empire. "I'll create a cash flow I can live on in my early days as a landlord." If you think this is the case, take a current landlord to lunch and ask him/her where all the money goes from rentals. You won't like the answer. I suggest you wait. Learn the ropes before you take an ugly seminar. Give yourself a year to learn the which components make a good "keeper." Find out how and where to buy properly. Get a feel for the business. If you don't, your education will come from all those investors who bought incorrectly and are trying to sell you their stupid mistakes. You'll learn the ropes all right. Unfortunately, one might be tightening around your neck. This lesson holds true whether you retail a house or rent it. Both are good reasons for getting in the business, but neither is a good place to start.
Back to the big picture. I would like to see you in the business, not just the junker or rental side. You must expand your horizons; take off the blinders. There's more to life than cheap, ugly houses.
Lease Options
Lease options deal with pretty houses in lovely neighborhoods in all price ranges. They have nothing to do with contractors, raising money, and taking big risks. They're fast, relatively easy, and produce just as much money, or more, as retailing houses. Most investors let these go by because junkers are all they can see.
No-Qualifying Financing
Another solution is creating no-qualifying financing. Between these two you can literally do many times the deals you're currently doing and probably not need to generate any more leads. Most of your income should come from pretty houses. The big money is in the art of creating Multiple Offer Strategies, not fixing houses. That's why you're shooting yourself in the foot every time you let a potential pretty house deal go by because you never learned how to capitalize on it. Your job is to take information you get from the seller and create as many solutions as possible to solve his/her problems and create a profit center for you.
When you do this, you'll be in the top 1/2% of those who qualify as "transaction engineers." In the process you'll eliminate your competition. In fact, you could easily make $250,000 per year from their leftovers. So, get out of the box and see yourself as an entrepreneur who truly understands the business, not just a rehabber or a landlord. I don't care how hard you work at the wholesale and retail business, you can never reach your full potential. You must expand your horizons to learn and practice the pretty side--the profitable side.
You Won't Get Rich with Junkers
No matter how good you get with junkers, you'll never make more than 30% of your potential. There are three reasons. The junker business revolves around low-price properties, while the pretty house business has no upper price cap. In fact, I prefer the higher prices. It just stands to reason when you deal in bigger dollars, more of them will be left over for you. When you get paid from wholesaling or retailing, you get one check and you're out. Not true for lease options and no-qualifying financing deals. They create multiple streams of income that keep coming in, whether you're still out there working or not. You do the job once and get paid over and over. There are more pretty houses than ugly ones. Obviously, the part of the market that provides the biggest supply of houses warrants the most attention. When you learn to capitalize on the big supply, not just the uglies, your income will skyrocket. Yes, I know it sounds like I have something against the junker business. But that's not true. I love to make something pretty from something ugly. I began and prospered in junkers and still work them to this day. But I grew up...
Taking Off the Blinders
Several years ago I discovered the rest of the story and took off my blinders. I'm only suggesting you do the same. It's just a marginal shift from what you may be doing now. If all you want is a good income and you're happy in your comfort zone, then please don't let me disturb you. I'll allow you to settle with whatever failure rate you want. It's your life, your family, and the income you're willing to accept. At least you have the freedom of running your own business and you're the boss, right?
What the heck, you're making more than you did in your old job. When you get out of bed in the morning you're already at the office. No traffic hassles, no time clocks and no lay-offs. Look, you can convince yourself you're doing great. Maybe even your family and friends are fooled, but not this old war horse. I have too many students making too much money to accept anything less. If you're not growing, you're dying. Is it time to get to the next level and start treating this as the extremely profitable business it is? If you've been dealing in junkers for a while, the answer is yes. Become a transaction engineer now. It will take a while to learn the business, but it's worth it.
Oh sure, you've decided to either increase your income on a part-time basis or you've quit your job and taken the full-time plunge. So what! All that means is you've decided to take control of your own financial future and make things happen. I'm proud of you if you have made that choice. But wait! Before you pat yourself on the back and your head swells up like a basketball, answer this question: Are you running your business with blinders on?
I mean are you so narrowly focused on one little piece of the business that you're letting the real money fly right on by? Most people get started in real estate and learn one or two ways to make money. Then they spend ten or twenty years doing the same stupid things over and over. Oh sure, most make good money and others do exceptionally well. But what saddens me the most is, in all my years of training in this business, I've only seen a handful of sharp entrepreneurs really grasp the big picture. Most are so content making a good living that they miss the most profitable part of the business.
Let's look at the big picture and what you can do to triple your income in the next twelve months.
Four Ways to Profit
There are four basic ways to profit as an investor. The way to make the most money the fastest is to use all four. Don't get so narrowly focused on one that you miss out on the real money.
* Wholesaling
* Retailing
* Lease Options
* Creating No-Qualifying Financing
Of course, these ways have several offspring and variations, but these are the big four (assuming you're not holding for the long term). Even if you are, your exit strategy will fall into one of the big four unless you exchange or die.
Wholesaling
Wholesaling is finding bargains and quickly passing them on to bargain hunters. The house usually needs to be rehabbed and the buyer is willing to do the rehab. The buyer then retails to the consumer or lives in it. The plan is to find the bargain, tie it up with a purchase contract, then quickly sell. The profit comes from doing a simultaneous closing with the buyer who brings to the closing a few thousand dollars more than you agreed to pay the seller. Many of my students make over $20,000 per month doing nothing but wholesaling.
Retailing
Retailing is getting these same houses fixed up and sold to owner/occupants through new financing. Most beginners look at investing through this window. Conventional wisdom says the way to make money is to either buy, fix, and resell or to keep and rent. If you've ever heard me speak, you know how I feel about conventional wisdom. It's almost always wrong. However, in this case I agree, there is real money in retailing and renting. But you see, here is something you'll never learn from conventional wisdom that can only come from a battle-scarred warrior who's learned the hard way. This one lesson alone could make the difference between success and failure. Do not do any repairs or become a long-term landlord your first year in business. How does that stack up to conventional wisdom? You've been told by all your real estate courses and investor buddies that the best thing to do is rush out and buy a rental property or a fixer-upper. You know what? Even though that's the last thing I want you to do, I'd still prefer it to doing nothing.
However, before you do, let me briefly make my case and see if you agree with me. First, let's look at why you want to do either. Your reason for buying and selling a fixer-upper is to make some cash within the next few months. If that's your objective, why on earth would you want to begin with the hardest way? And believe me, it is. Retailing is a lot of work and takes time. A lot can go wrong, especially for a beginner. You have to buy the house, raise the money, hire a contractor, and then the hard part--find a qualified buyer. If you attempt this without the proper training, I assure you you'll get those battle scars I mentioned earlier. What's my problem with rental property in the first year? The answer is simple: you're not ready yet. The only real reason to own rental property is to build wealth. The real money is in the equity. But what's your rush? The first lesson I learned in my early days was:
Take care of today's cash flow needs before worrying about getting rich. Let's get the bills paid and get out of debt before we start building an empire. "I'll create a cash flow I can live on in my early days as a landlord." If you think this is the case, take a current landlord to lunch and ask him/her where all the money goes from rentals. You won't like the answer. I suggest you wait. Learn the ropes before you take an ugly seminar. Give yourself a year to learn the which components make a good "keeper." Find out how and where to buy properly. Get a feel for the business. If you don't, your education will come from all those investors who bought incorrectly and are trying to sell you their stupid mistakes. You'll learn the ropes all right. Unfortunately, one might be tightening around your neck. This lesson holds true whether you retail a house or rent it. Both are good reasons for getting in the business, but neither is a good place to start.
Back to the big picture. I would like to see you in the business, not just the junker or rental side. You must expand your horizons; take off the blinders. There's more to life than cheap, ugly houses.
Lease Options
Lease options deal with pretty houses in lovely neighborhoods in all price ranges. They have nothing to do with contractors, raising money, and taking big risks. They're fast, relatively easy, and produce just as much money, or more, as retailing houses. Most investors let these go by because junkers are all they can see.
No-Qualifying Financing
Another solution is creating no-qualifying financing. Between these two you can literally do many times the deals you're currently doing and probably not need to generate any more leads. Most of your income should come from pretty houses. The big money is in the art of creating Multiple Offer Strategies, not fixing houses. That's why you're shooting yourself in the foot every time you let a potential pretty house deal go by because you never learned how to capitalize on it. Your job is to take information you get from the seller and create as many solutions as possible to solve his/her problems and create a profit center for you.
When you do this, you'll be in the top 1/2% of those who qualify as "transaction engineers." In the process you'll eliminate your competition. In fact, you could easily make $250,000 per year from their leftovers. So, get out of the box and see yourself as an entrepreneur who truly understands the business, not just a rehabber or a landlord. I don't care how hard you work at the wholesale and retail business, you can never reach your full potential. You must expand your horizons to learn and practice the pretty side--the profitable side.
You Won't Get Rich with Junkers
No matter how good you get with junkers, you'll never make more than 30% of your potential. There are three reasons. The junker business revolves around low-price properties, while the pretty house business has no upper price cap. In fact, I prefer the higher prices. It just stands to reason when you deal in bigger dollars, more of them will be left over for you. When you get paid from wholesaling or retailing, you get one check and you're out. Not true for lease options and no-qualifying financing deals. They create multiple streams of income that keep coming in, whether you're still out there working or not. You do the job once and get paid over and over. There are more pretty houses than ugly ones. Obviously, the part of the market that provides the biggest supply of houses warrants the most attention. When you learn to capitalize on the big supply, not just the uglies, your income will skyrocket. Yes, I know it sounds like I have something against the junker business. But that's not true. I love to make something pretty from something ugly. I began and prospered in junkers and still work them to this day. But I grew up...
Taking Off the Blinders
Several years ago I discovered the rest of the story and took off my blinders. I'm only suggesting you do the same. It's just a marginal shift from what you may be doing now. If all you want is a good income and you're happy in your comfort zone, then please don't let me disturb you. I'll allow you to settle with whatever failure rate you want. It's your life, your family, and the income you're willing to accept. At least you have the freedom of running your own business and you're the boss, right?
What the heck, you're making more than you did in your old job. When you get out of bed in the morning you're already at the office. No traffic hassles, no time clocks and no lay-offs. Look, you can convince yourself you're doing great. Maybe even your family and friends are fooled, but not this old war horse. I have too many students making too much money to accept anything less. If you're not growing, you're dying. Is it time to get to the next level and start treating this as the extremely profitable business it is? If you've been dealing in junkers for a while, the answer is yes. Become a transaction engineer now. It will take a while to learn the business, but it's worth it.
Tips For Developing Real Estate Technician Skills
If you're a serious real estate investor, one of the best things you can do is work towards becoming knowledgeable in what we call Real Estate Technician skills. To review, a real estate technician is someone who understands the legal documents and flow of paperwork that accompanies a real estate transfer, or more technically, a conveyance.
There are many types of transfers: Legal title, equitable title, a real estate interest like an option, a leasehold transfer, assignment (transfer) of note or some other contractual interest. A real estate technician also has the knowledge to draft basic real estate documents like deeds, notes, assignments, options, and a host of other documents. The technician will use his own research and the aid of various legal form software to handle his documents, but he always is smart enough to have a knowledgeable lawyers or title company professional to review his work, especially in the early phases of his experience.
The Power of This Skill
You may wonder why learning this stuff matters. Here's why: You are in a much better position to understand distressed real estate opportunities when they appear. You'll be much better at sizing up the deal, like pronto quick. Many distress deals involve time deadlines. I've done deals in as quickly as 2 days. Also, there's a very hidden profit center in the fact that many on the low-end properties you come across have old liens that can be negotiated away or left on the property to see what happens. This game is not for amateurs or the uninitiated. There truly are hidden secrets.
Title Searching
Another skill a technician should be able to employ is title searching. When buying and selling distressed properties, being able to quickly and thoroughly check out a title is critical. If you come upon a fantastic deal, you should have the knowledge and checklist for checking to make sure the title is as the seller has represented it. Of all the different phases of being a technician, this area is the one that probably requires the most knowledge and double-checking. If you misinterpret the title search or just plain miss a lien, it can get ugly. I make it a point to use this on the little junker houses, and not for the big money deals like buying a large piece of ground or apartment complex. In these cases, definitely hire someone who has experience and an insurance policy if they screw the deal up. In any case, if money is involved and your not comfortable with the process, get a pro to research your title and make sure his or her results match yours. I have already done a quick search to make sure the deal really is as the seller said, then I sometimes hire out a second search to confirm my search.
Form File
My first tip is to start collecting forms and real estate documents. Set up a small form file in a file drawer. Have one for each of these categories: Deeds, notes, options, leases, assignments, mortgages and trust deeds, and miscellaneous forms. These forms can be filled out or blanks.
Start Asking Questions
Make a list of all the real estate legal type questions you don't understand and start asking more questions at your real estate closings. Ask the title agent or lawyer how such and such works, so that you begin understanding the process. Ask what if questions. Be careful when asking other investors or even governmental employees who don't know what they're talking about. Recently I spoke with one investor who bought a house at a state sheriff sale; one of the deputies gave him wrong information on lien property and it probably is going to cost him about $40,000. Dumb. Don't play in the major leagues if you're still learning the rules of the game. Investors are notorious for not knowing what's going on too! Be doubly careful when one of the old-timers from the investment club or barber shop says it can't be done!
Small Book Collection
Invest a few dollars in the next couple of years buying real estate law books for your state. Also, purchase a Black's Law Dictionary. This is almost a must. The dictionary will help you translate the hidden code in the legal garble. Our book, The Hidden Secrets of a Real Estate Technician is another book you should consider having since it is the only book on the market for real estate investors that explains the conveyancing and legal documents around real estate. This book is truly one of a kind. Very detailed compared to much of the rubbish on the market.
Learn Basic Legal Research
This is an important skill that you can master. I wouldn't ask you to get into reading a lot of court citations, but there are numerous shortcut methods to quickly and easily learn your state's law on a matter. In a very brief nutshell, there are state bar practice manuals that in many cases provide a nice review of the topics in questions. Typically, they have one on judgements and liens that should get you started along with using your Legal Dictionary. Tip: if you're not ready or can't afford to buy a legal dictionary yet, a good quality (large and comprehensive) dictionary will typically provide the legal meaning for a work. Some legal words have a non-legal meaning; therefore, the dictionary will give you both meanings, regular, and legal.
In summary, this isn't an arena for amateurs or simple-minded folk. Get started by getting a small file started. Ask other investors for forms. Attend meeting at investment clubs. Ask lots of questions even if you think there dumb or basic. Invest some money in some books (Avoid the overpriced, rip-off course that costs thousands). Visit the courthouse and ask the clerks to show you the basics of finding who owns a property and check out how much they paid from the deed. Check out a prospective deal you are buying by trying your own search, and then get your title company to research the title again. Compare results. I decided many years ago to learn this information and it's some of the best time and money I spent. I've saved several thousand in document prep fees and when I have used a lawyer I was able to clearly understand him and supervise to boot!
There are many types of transfers: Legal title, equitable title, a real estate interest like an option, a leasehold transfer, assignment (transfer) of note or some other contractual interest. A real estate technician also has the knowledge to draft basic real estate documents like deeds, notes, assignments, options, and a host of other documents. The technician will use his own research and the aid of various legal form software to handle his documents, but he always is smart enough to have a knowledgeable lawyers or title company professional to review his work, especially in the early phases of his experience.
The Power of This Skill
You may wonder why learning this stuff matters. Here's why: You are in a much better position to understand distressed real estate opportunities when they appear. You'll be much better at sizing up the deal, like pronto quick. Many distress deals involve time deadlines. I've done deals in as quickly as 2 days. Also, there's a very hidden profit center in the fact that many on the low-end properties you come across have old liens that can be negotiated away or left on the property to see what happens. This game is not for amateurs or the uninitiated. There truly are hidden secrets.
Title Searching
Another skill a technician should be able to employ is title searching. When buying and selling distressed properties, being able to quickly and thoroughly check out a title is critical. If you come upon a fantastic deal, you should have the knowledge and checklist for checking to make sure the title is as the seller has represented it. Of all the different phases of being a technician, this area is the one that probably requires the most knowledge and double-checking. If you misinterpret the title search or just plain miss a lien, it can get ugly. I make it a point to use this on the little junker houses, and not for the big money deals like buying a large piece of ground or apartment complex. In these cases, definitely hire someone who has experience and an insurance policy if they screw the deal up. In any case, if money is involved and your not comfortable with the process, get a pro to research your title and make sure his or her results match yours. I have already done a quick search to make sure the deal really is as the seller said, then I sometimes hire out a second search to confirm my search.
Form File
My first tip is to start collecting forms and real estate documents. Set up a small form file in a file drawer. Have one for each of these categories: Deeds, notes, options, leases, assignments, mortgages and trust deeds, and miscellaneous forms. These forms can be filled out or blanks.
Start Asking Questions
Make a list of all the real estate legal type questions you don't understand and start asking more questions at your real estate closings. Ask the title agent or lawyer how such and such works, so that you begin understanding the process. Ask what if questions. Be careful when asking other investors or even governmental employees who don't know what they're talking about. Recently I spoke with one investor who bought a house at a state sheriff sale; one of the deputies gave him wrong information on lien property and it probably is going to cost him about $40,000. Dumb. Don't play in the major leagues if you're still learning the rules of the game. Investors are notorious for not knowing what's going on too! Be doubly careful when one of the old-timers from the investment club or barber shop says it can't be done!
Small Book Collection
Invest a few dollars in the next couple of years buying real estate law books for your state. Also, purchase a Black's Law Dictionary. This is almost a must. The dictionary will help you translate the hidden code in the legal garble. Our book, The Hidden Secrets of a Real Estate Technician is another book you should consider having since it is the only book on the market for real estate investors that explains the conveyancing and legal documents around real estate. This book is truly one of a kind. Very detailed compared to much of the rubbish on the market.
Learn Basic Legal Research
This is an important skill that you can master. I wouldn't ask you to get into reading a lot of court citations, but there are numerous shortcut methods to quickly and easily learn your state's law on a matter. In a very brief nutshell, there are state bar practice manuals that in many cases provide a nice review of the topics in questions. Typically, they have one on judgements and liens that should get you started along with using your Legal Dictionary. Tip: if you're not ready or can't afford to buy a legal dictionary yet, a good quality (large and comprehensive) dictionary will typically provide the legal meaning for a work. Some legal words have a non-legal meaning; therefore, the dictionary will give you both meanings, regular, and legal.
In summary, this isn't an arena for amateurs or simple-minded folk. Get started by getting a small file started. Ask other investors for forms. Attend meeting at investment clubs. Ask lots of questions even if you think there dumb or basic. Invest some money in some books (Avoid the overpriced, rip-off course that costs thousands). Visit the courthouse and ask the clerks to show you the basics of finding who owns a property and check out how much they paid from the deed. Check out a prospective deal you are buying by trying your own search, and then get your title company to research the title again. Compare results. I decided many years ago to learn this information and it's some of the best time and money I spent. I've saved several thousand in document prep fees and when I have used a lawyer I was able to clearly understand him and supervise to boot!
Three Essential Ingredients
Over my twenty-plus years of investing, teaching and writing in the field of real estate and discounted mortgage investment, I've come to some conclusions as to what is required for success. Countless times I have wondered why two seemingly capable individuals have totally different experiences. One is very successful and one is caught in the "paralysis of analysis." One approaches investment like a pitbull on acid and another is frozen by fear. One is enjoying prosperity and sipping on exotic wine and the other just "whines."
What is the difference? Why do some get so caught up in the education drug that they fill their garage with home study courses, but can't fill their car with gas? Over the years I've watched the "winners" and what makes them successful. I've struggled trying to please and educate the "whiners" encountering primarily frustration - until I found the key about 12 years ago.
As I've incorporated the three elements I identified into my seminar trainings, the success ratio of my students has skyrocketed. Most of the world and seminars focus on the least important element only. A few make some attempts to address the second element. You are fighting a forest fire with a squirt gun if you don't deal with the most important third element.
"If you think education is expensive, try ignorance"
Education is the first element and 10% of what is needed for success. I would never underplay education and I don't regret the 30-40 thousand I have spent in cold hard cash on education. Proper education gives you the tools and can help with confidence and creative options and solutions. Education is not enough. You can take every seminar or home study course on discounted mortgages and not make a cent.
A Team and Resources
This second element is at least twice as important as your education (20%). At first you will need a team to cover your weaknesses and inadequacies. Once you have the knowledge and experience, you need a team to multiply your efforts and use your talents to their best and most profitable abilities. When a proper team is in place, your liabilities are covered and you will not be as likely to be paralyzed by fear. (Who should be on your team and how to build it, is a topic for another article.)
"I see only the objective, the obstacle must give way"
Napoleon had an attitude of success. He had "Intention." Any great leader or business person has this essential ingredient. It goes way beyond listening to PMA (positive mental attitude) tapes and motivational seminars. No doubt, there is some value there. For many, they can also be frustrating, self-defeating and counter productive because it is only a part of what is needed.
You have to address several factors in addition to thinking more positively. Your conscious mind and attitude are only the tip of the iceberg. Try to move or steer an iceberg by grabbing a hold of the tip. Not possible, but exactly what people try to do mentally and emotionally.
Other elements are far more important. These are "limiting beliefs", "emotional blocks" and "self-defeating behaviors." Deal with these and life will change. Prosperity can flow, relationships will be abundant and you will realize your dreams.
Limiting Beliefs
"Argue your limitations and they are yours forever."
Limiting beliefs are beliefs imposed by your "un-conscious" mind. You don't have a lot of control here, they just are. Some are easier to spot like "I'm not a good singer" or "I'm no good at public speaking" or "Big dogs want to eat me... and little ones will try too." Other limiting beliefs affect all areas of your life, especially financially. Finances reflect all your beliefs about self-worth and scarcity in your life and the world. You can choose to believe in "Economic alchemy" or in "allocation of scarce resources."
You won't make a penny over what you feel you are worth or deserve. You may not be conscious of these types of beliefs but there is a way to learn what they are, where they came from and how to alter them.
Emotional Blocks
Stephen Covey made a couple statements that summarize this area well:
* All sin is outward manifestation of inner turmoil.
* Unexpressed emotions never die, they just manifest themselves in uglier and uglier ways.
* If you try to strangle an emotion, it struggles for life. If you let it live, it dies in the birth process.
The emotions, both the ones you term good as well as the ones you would consider bad that are in a sense stuck inside you influence your every action and all aspects of your life.
Self-Defeating Behaviors
Actually, self-defeating behaviors are just a manifestation of the other two factors. Becoming aware of and dealing with these behaviors can aid you in identifying beliefs and blocks that stand between you and success. You can fight the behavior or identify the root. Fighting the behavior will not in the long run make much of a difference. The roots are the simple key and easy to deal with.
Goals Can be Extremely Self-Defeating and Useless
Once you deal with the areas we just talked about, then the "iceberg" is easy to steer and success can be yours. You can learn to set goals properly. Very, very few know how to do this.
Most "goal" educators set you up to fail. There is a powerful way to look at goals and in particular "INTENTION" that makes a major difference and works. Never set a goal again that you are not absolutely certain you can and will achieve. Just don't do it. Don't set it if you aren't willing to do what it takes.
By the way, if you aren't aware of your purpose and values, it is nearly impossible to set proper goals. You are fighting an incredible battle if you set a goal in conflict with these inner beliefs that you do have.
What is the difference? Why do some get so caught up in the education drug that they fill their garage with home study courses, but can't fill their car with gas? Over the years I've watched the "winners" and what makes them successful. I've struggled trying to please and educate the "whiners" encountering primarily frustration - until I found the key about 12 years ago.
As I've incorporated the three elements I identified into my seminar trainings, the success ratio of my students has skyrocketed. Most of the world and seminars focus on the least important element only. A few make some attempts to address the second element. You are fighting a forest fire with a squirt gun if you don't deal with the most important third element.
"If you think education is expensive, try ignorance"
Education is the first element and 10% of what is needed for success. I would never underplay education and I don't regret the 30-40 thousand I have spent in cold hard cash on education. Proper education gives you the tools and can help with confidence and creative options and solutions. Education is not enough. You can take every seminar or home study course on discounted mortgages and not make a cent.
A Team and Resources
This second element is at least twice as important as your education (20%). At first you will need a team to cover your weaknesses and inadequacies. Once you have the knowledge and experience, you need a team to multiply your efforts and use your talents to their best and most profitable abilities. When a proper team is in place, your liabilities are covered and you will not be as likely to be paralyzed by fear. (Who should be on your team and how to build it, is a topic for another article.)
"I see only the objective, the obstacle must give way"
Napoleon had an attitude of success. He had "Intention." Any great leader or business person has this essential ingredient. It goes way beyond listening to PMA (positive mental attitude) tapes and motivational seminars. No doubt, there is some value there. For many, they can also be frustrating, self-defeating and counter productive because it is only a part of what is needed.
You have to address several factors in addition to thinking more positively. Your conscious mind and attitude are only the tip of the iceberg. Try to move or steer an iceberg by grabbing a hold of the tip. Not possible, but exactly what people try to do mentally and emotionally.
Other elements are far more important. These are "limiting beliefs", "emotional blocks" and "self-defeating behaviors." Deal with these and life will change. Prosperity can flow, relationships will be abundant and you will realize your dreams.
Limiting Beliefs
"Argue your limitations and they are yours forever."
Limiting beliefs are beliefs imposed by your "un-conscious" mind. You don't have a lot of control here, they just are. Some are easier to spot like "I'm not a good singer" or "I'm no good at public speaking" or "Big dogs want to eat me... and little ones will try too." Other limiting beliefs affect all areas of your life, especially financially. Finances reflect all your beliefs about self-worth and scarcity in your life and the world. You can choose to believe in "Economic alchemy" or in "allocation of scarce resources."
You won't make a penny over what you feel you are worth or deserve. You may not be conscious of these types of beliefs but there is a way to learn what they are, where they came from and how to alter them.
Emotional Blocks
Stephen Covey made a couple statements that summarize this area well:
* All sin is outward manifestation of inner turmoil.
* Unexpressed emotions never die, they just manifest themselves in uglier and uglier ways.
* If you try to strangle an emotion, it struggles for life. If you let it live, it dies in the birth process.
The emotions, both the ones you term good as well as the ones you would consider bad that are in a sense stuck inside you influence your every action and all aspects of your life.
Self-Defeating Behaviors
Actually, self-defeating behaviors are just a manifestation of the other two factors. Becoming aware of and dealing with these behaviors can aid you in identifying beliefs and blocks that stand between you and success. You can fight the behavior or identify the root. Fighting the behavior will not in the long run make much of a difference. The roots are the simple key and easy to deal with.
Goals Can be Extremely Self-Defeating and Useless
Once you deal with the areas we just talked about, then the "iceberg" is easy to steer and success can be yours. You can learn to set goals properly. Very, very few know how to do this.
Most "goal" educators set you up to fail. There is a powerful way to look at goals and in particular "INTENTION" that makes a major difference and works. Never set a goal again that you are not absolutely certain you can and will achieve. Just don't do it. Don't set it if you aren't willing to do what it takes.
By the way, if you aren't aware of your purpose and values, it is nearly impossible to set proper goals. You are fighting an incredible battle if you set a goal in conflict with these inner beliefs that you do have.
There’s More to Building Wealth than Clipping Coupons
We talked recently about the wealth formula: Spend less than you earn and save the difference. Initially, you may have to cut back to “find” the money to save. Start there if you must. The next step is to learn how to invest your money powerfully. Recently, I took my stepdaughter to the bank to open her first savings account. We agreed that every week; for so long as she was living under our roof, she would take 50% of her pay check and deposit it into a savings account. Then I explained the power of compound interest to her and how her principle would grow each and every month.
Have you seen interest rates, lately? It’s sad. The bank was offering 1% interest on her savings. Of course, at that rate, no one is going to get wealthy. What kind of rates of return do you get on your investments? Mutual funds pay about 5%. A little better, but not very impressive. The stock market yields about 12% over time. That’s a little better. But there are much faster ways to grow your wealth than that.
Tax liens, for example yield 16% - 24% and are fully secured by the U.S. Government. Active trading can return 30%-50% - so can real estate investing. I’ve done pre-construction deals that brought 50%-100% rates of return. And of course, if you leverage yourself by using OPM (other people’s money) your rates of return go through the roof. You’ve got to start learning about what’s available “outside the box” in terms of investments. High returns don’t have to mean high risk. Like most things in life, a little bit of prudence greatly increases the safety factor. There is no way to build wealth that is 100% risk –free. But you can learn to effectively manage your risks and keep them to an acceptable level.
Have you seen interest rates, lately? It’s sad. The bank was offering 1% interest on her savings. Of course, at that rate, no one is going to get wealthy. What kind of rates of return do you get on your investments? Mutual funds pay about 5%. A little better, but not very impressive. The stock market yields about 12% over time. That’s a little better. But there are much faster ways to grow your wealth than that.
Tax liens, for example yield 16% - 24% and are fully secured by the U.S. Government. Active trading can return 30%-50% - so can real estate investing. I’ve done pre-construction deals that brought 50%-100% rates of return. And of course, if you leverage yourself by using OPM (other people’s money) your rates of return go through the roof. You’ve got to start learning about what’s available “outside the box” in terms of investments. High returns don’t have to mean high risk. Like most things in life, a little bit of prudence greatly increases the safety factor. There is no way to build wealth that is 100% risk –free. But you can learn to effectively manage your risks and keep them to an acceptable level.
The Very Last Resort: Bankruptcy
Over the last ten years, consumer debt has doubled in the United States prompting 1.6 million Americans to file for bankruptcy in 2004 (USA Today). President George W. Bush has signed the biggest rewrite of US bankruptcy law in a quarter of a century, making it harder for debt-ridden Americans to wipe out their obligations. Bankruptcy is at an all-time high right now because people see it as an easy way out. I know first-hand the appeal of this "easy way out." In Rich Dad’s Prophecy, I explain how in 1979, I was thirty-two years old and struggling to keep my business above water. My rich dad taught me a valuable lesson about taking responsibility for my actions and fulfilling my obligations.
My rich dad said, "Take responsibility for your actions. Avoid bankruptcy at all costs." My nylon and Velcro surfer wallet business had taken off faster than expected. In only a few years, we were a big company with a sales force of over 380 independent sales reps in the United States alone. The problem was that we had a world-wide product, but we were a small-time company with a young, incompetent management team. When success and incompetence meet, disaster is not far away. I was up to my ears in mistakes, buried by my own personal incompetence.
I had always thought of myself as a good, honest person... yet under pressure, the character that emerged was the person who betrayed those that trusted me. I was about to default on paying my employees and their payroll taxes. I was using my employees’ money to keep the company afloat. My rich dad had been my teacher since I was nine years old. He was a very loving and caring man, but when he was angry... he was not a polite man...
"Why don’t you face the truth? You and the three clowns you call partners have mismanaged your business... you don’t know what you’re doing... you’re incompetent... and worst of all, you don’t have the guts to admit any of this. You guys are pretending to look like businesspeople... but when I look at your financials, you boys are either crooks or clowns. I hope you’re clowns... but if you don’t make some changes, you clowns will become crooks."
"There is nothing wrong with admitting you’re incompetent. But there is plenty wrong with lying and pretending you know what you’re doing. Lying and pretending you know what you are doing is a bad habit. If you want to be rich and successful, you need to learn to tell the truth quicker, ask for help quicker, and be more humble. The world is filled with arrogant poor people, educated and uneducated… people who cannot admit they do not know something. The world is filled with people who go through life pretending they are smart… and that makes them stupid. If you want to learn quickly, the first step is to admit quickly you do not know something."
I was over a million dollars in debt. I had two choices. My rich dad often said to me that inside each of us is a cast of characters. Inside each of us is a kind person, a mean person, a greedy person, a rich person, a poor person, a coward, a crook, a hero, a liar, a cheapskate, a loser, and more. He constantly reminded me that growing up was a process of choosing which person we wanted to become... which person we wanted to draw out of all the cast of characters available. To Rich Dad, a person’s choice of character was far more important than a person’s choice of profession.
"When it comes to money, the world is filled with cowards. Money has a way of bringing out the coward... more than the hero... and that may be why there are so few truly rich people. Money also has a way of bringing out the cheat and the crook in some people... and that is why our jails keep filling up. Money also has a way of bringing out the betrayer... the person who will steal from those that love and thrust them... and when you 'borrowed' from your employees, that is the character you were choosing to become. Crooks and cowards are one thing... but becoming a person who betrays those that trust you is one of the most despicable of all characters available to all of us."
Truth and honesty are not always pleasant and this dose of truth and honesty was very unpleasant... yet necessary. I realized that in my desperation to save my company, I had chosen to betray those that trusted me. This was a deeply painful lesson, a lesson I would always remember. I had two choices. I could continue to be a coward, crook, and betrayer and eventually file bankruptcy, or I could step up to my responsibilities and obligations. I shut the business down and liquidated the remaining assets. I paid all the money I owed to our suppliers, our investors, the government and our employees. It wasn’t easy.
My rich dad later told me, "Although painful, because of the way you chose to handle this business failure, this painful short period of time will someday become the basis of your long-term financial wealth. If you had run and lied, your financial future would probably be a coward’s future... because if you had run, you would have been letting the coward in you determine your future."
My rich dad was right.
If you have gotten yourself into debt...
Take Responsibility
If you have gotten yourself into debt, you need to take responsibility to get yourself out of debt. Get the counseling you need, look at ways to reduce your debt and increase your revenue to be able to pay off the debt that you incurred. Simply put, it’s an act of responsibility.
Determine How You Got There
Take a long look at where you are and how you got there. Be willing and humble enough to learn from your mistakes. Each failure will show you what you don’t know and what you need to learn... and that learning experience will lead to your next success.
Bounce Back
It took you a while to get where you are (in debt/ in deep debt), and it will take you a while to bounce back. Remember that the painful short-term will someday become the basis of your long-term financial wealth.
My rich dad said, "Take responsibility for your actions. Avoid bankruptcy at all costs." My nylon and Velcro surfer wallet business had taken off faster than expected. In only a few years, we were a big company with a sales force of over 380 independent sales reps in the United States alone. The problem was that we had a world-wide product, but we were a small-time company with a young, incompetent management team. When success and incompetence meet, disaster is not far away. I was up to my ears in mistakes, buried by my own personal incompetence.
I had always thought of myself as a good, honest person... yet under pressure, the character that emerged was the person who betrayed those that trusted me. I was about to default on paying my employees and their payroll taxes. I was using my employees’ money to keep the company afloat. My rich dad had been my teacher since I was nine years old. He was a very loving and caring man, but when he was angry... he was not a polite man...
"Why don’t you face the truth? You and the three clowns you call partners have mismanaged your business... you don’t know what you’re doing... you’re incompetent... and worst of all, you don’t have the guts to admit any of this. You guys are pretending to look like businesspeople... but when I look at your financials, you boys are either crooks or clowns. I hope you’re clowns... but if you don’t make some changes, you clowns will become crooks."
"There is nothing wrong with admitting you’re incompetent. But there is plenty wrong with lying and pretending you know what you’re doing. Lying and pretending you know what you are doing is a bad habit. If you want to be rich and successful, you need to learn to tell the truth quicker, ask for help quicker, and be more humble. The world is filled with arrogant poor people, educated and uneducated… people who cannot admit they do not know something. The world is filled with people who go through life pretending they are smart… and that makes them stupid. If you want to learn quickly, the first step is to admit quickly you do not know something."
I was over a million dollars in debt. I had two choices. My rich dad often said to me that inside each of us is a cast of characters. Inside each of us is a kind person, a mean person, a greedy person, a rich person, a poor person, a coward, a crook, a hero, a liar, a cheapskate, a loser, and more. He constantly reminded me that growing up was a process of choosing which person we wanted to become... which person we wanted to draw out of all the cast of characters available. To Rich Dad, a person’s choice of character was far more important than a person’s choice of profession.
"When it comes to money, the world is filled with cowards. Money has a way of bringing out the coward... more than the hero... and that may be why there are so few truly rich people. Money also has a way of bringing out the cheat and the crook in some people... and that is why our jails keep filling up. Money also has a way of bringing out the betrayer... the person who will steal from those that love and thrust them... and when you 'borrowed' from your employees, that is the character you were choosing to become. Crooks and cowards are one thing... but becoming a person who betrays those that trust you is one of the most despicable of all characters available to all of us."
Truth and honesty are not always pleasant and this dose of truth and honesty was very unpleasant... yet necessary. I realized that in my desperation to save my company, I had chosen to betray those that trusted me. This was a deeply painful lesson, a lesson I would always remember. I had two choices. I could continue to be a coward, crook, and betrayer and eventually file bankruptcy, or I could step up to my responsibilities and obligations. I shut the business down and liquidated the remaining assets. I paid all the money I owed to our suppliers, our investors, the government and our employees. It wasn’t easy.
My rich dad later told me, "Although painful, because of the way you chose to handle this business failure, this painful short period of time will someday become the basis of your long-term financial wealth. If you had run and lied, your financial future would probably be a coward’s future... because if you had run, you would have been letting the coward in you determine your future."
My rich dad was right.
If you have gotten yourself into debt...
Take Responsibility
If you have gotten yourself into debt, you need to take responsibility to get yourself out of debt. Get the counseling you need, look at ways to reduce your debt and increase your revenue to be able to pay off the debt that you incurred. Simply put, it’s an act of responsibility.
Determine How You Got There
Take a long look at where you are and how you got there. Be willing and humble enough to learn from your mistakes. Each failure will show you what you don’t know and what you need to learn... and that learning experience will lead to your next success.
Bounce Back
It took you a while to get where you are (in debt/ in deep debt), and it will take you a while to bounce back. Remember that the painful short-term will someday become the basis of your long-term financial wealth.
The Salesman Who Doesn't Believe in His Product
Many years ago I worked for one of those large national real estate brokerage firms selling real estate. This was not my introduction to the real estate business, since I had been investing in buildings and property since 1984. My trainer was an older but highly successful real estate agent. One of the things he shared with me and the other trainee was the fact he had consistently earned over $10,000 per month for the past ten years. He drove a Corvette, was divorced, and owned one property--his residence. If my math is correct, he grossed somewhere in the area of $1,200,000 in ten years. That is right, somewhere in the area of one to one and a half million dollars had gone through his business hands in those working years.
While this individual was a talented agent who had built a nice customer following, I had to ask myself--Why hadn't he ever invested in the great product of real estate? It certainly could not have been an income problem. Even if that excuse were used, we all know 90-100% of a deal can be leveraged. I didn't know for sure, but this skilled agent gave me the impression he didn't have much money. He had income, but very little capital. It could have been that his divorce cleaned him out, financially speaking. Divorce is a major estate and wealth destroyer. (It is worth noting, the author of the book, The Millionaire's Mind, shows most millionaires have been married only once.)
With all of the benefits that accrue to real estate ownership, I am surprised by folks involved in the buying and selling of property on a daily basis who own no real estate. It is an enigma. Let's count some of the benefits:
1. Discounts andinstant equity earned when buying
2. Principle pay down on mortgage, monthly
3. Appreciation--unknown upside potential
4. Rehab and fix-up profits in terms of new equities
5. Forced savings plan (can't sell or tap equity as easy as more liquid investments)
6. Special capital gains and write-off advantages
7. Ability to pyramid gains with 1031 tax free exchanges
8. INCOME: RENTS
9. Ability to grow net worth with no tax unless you sell
10. Easy to purchase with leverage
I recently got an email from a company selling some real estate course. The main selling feature seemed to be his rant against being a landlord. It was almost like landlords are dumb because there are much smarter ways to make money. Again, this seems odd to me. Real estate is one of the greatest investments in the world. Why wouldn't I want to actually OWN it?
Buying and selling definitely has its place. But owning real estate is where you grow equity for the future. Contrary to all of the myths out there--owning real estate is where large estates are created. I am not ashamed to own property. Ownership, i.e., rental income is where freedom comes into being. It won't happen overnight, but give it 5-10 years with hard work, and you will launch yourself into a newfound freedom. I know it's hard for impetuous North Americans to think long term.
Back when I was fresh out of high school, I helped a friend and his family move. They had been renters all of their life. In fact, I estimate they had been renting for at least 25-years when I helped them move from one rental house to the next. The thing I remember is the totality of their life was in that moving truck that day. You see they didn't own any property; other than some worn out furniture and clothing--they had no equity. The sad thing was being long-term renters guaranteed them a life of virtual poverty. The bottom line: When you don't OWN real estate, it is extremely difficult to accumulate any net worth.
I will conclude with this. Years ago at our family business, there was a salesman who worked for one of our suppliers. He serviced our account (sold us Gibson appliances wholesale). He was one of the most honorable and decent guys you could ever meet. He was about 60-years old--about the same age as the real estate salesman mentioned above. He dressed very modestly, drove an average (boring) car. He looked like a regular, middle-class guy. His regular life was being a farmer. He did the sales job just for some spending money and to keep busy. As I got to know him, he disclosed that he owned 48 acres of farmland in a very up and coming area about 30 minutes from our business. THE POINT: The guy is a multi-millionaire--about 2 million. WHY? BECAUSE HE OWNED REAL ESTATE OVER A LONG TERM OF TIME! Real estate salesman who looks rich and who doesn't own his product, or a "poor" farmer? I'll take the farmer.
While this individual was a talented agent who had built a nice customer following, I had to ask myself--Why hadn't he ever invested in the great product of real estate? It certainly could not have been an income problem. Even if that excuse were used, we all know 90-100% of a deal can be leveraged. I didn't know for sure, but this skilled agent gave me the impression he didn't have much money. He had income, but very little capital. It could have been that his divorce cleaned him out, financially speaking. Divorce is a major estate and wealth destroyer. (It is worth noting, the author of the book, The Millionaire's Mind, shows most millionaires have been married only once.)
With all of the benefits that accrue to real estate ownership, I am surprised by folks involved in the buying and selling of property on a daily basis who own no real estate. It is an enigma. Let's count some of the benefits:
1. Discounts andinstant equity earned when buying
2. Principle pay down on mortgage, monthly
3. Appreciation--unknown upside potential
4. Rehab and fix-up profits in terms of new equities
5. Forced savings plan (can't sell or tap equity as easy as more liquid investments)
6. Special capital gains and write-off advantages
7. Ability to pyramid gains with 1031 tax free exchanges
8. INCOME: RENTS
9. Ability to grow net worth with no tax unless you sell
10. Easy to purchase with leverage
I recently got an email from a company selling some real estate course. The main selling feature seemed to be his rant against being a landlord. It was almost like landlords are dumb because there are much smarter ways to make money. Again, this seems odd to me. Real estate is one of the greatest investments in the world. Why wouldn't I want to actually OWN it?
Buying and selling definitely has its place. But owning real estate is where you grow equity for the future. Contrary to all of the myths out there--owning real estate is where large estates are created. I am not ashamed to own property. Ownership, i.e., rental income is where freedom comes into being. It won't happen overnight, but give it 5-10 years with hard work, and you will launch yourself into a newfound freedom. I know it's hard for impetuous North Americans to think long term.
Back when I was fresh out of high school, I helped a friend and his family move. They had been renters all of their life. In fact, I estimate they had been renting for at least 25-years when I helped them move from one rental house to the next. The thing I remember is the totality of their life was in that moving truck that day. You see they didn't own any property; other than some worn out furniture and clothing--they had no equity. The sad thing was being long-term renters guaranteed them a life of virtual poverty. The bottom line: When you don't OWN real estate, it is extremely difficult to accumulate any net worth.
I will conclude with this. Years ago at our family business, there was a salesman who worked for one of our suppliers. He serviced our account (sold us Gibson appliances wholesale). He was one of the most honorable and decent guys you could ever meet. He was about 60-years old--about the same age as the real estate salesman mentioned above. He dressed very modestly, drove an average (boring) car. He looked like a regular, middle-class guy. His regular life was being a farmer. He did the sales job just for some spending money and to keep busy. As I got to know him, he disclosed that he owned 48 acres of farmland in a very up and coming area about 30 minutes from our business. THE POINT: The guy is a multi-millionaire--about 2 million. WHY? BECAUSE HE OWNED REAL ESTATE OVER A LONG TERM OF TIME! Real estate salesman who looks rich and who doesn't own his product, or a "poor" farmer? I'll take the farmer.
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