Frank, Frank, Frank… - Posted by HR
Posted by HR on December 22, 1998 at 23:53:38:
It is amazing you did not get slammed harder by the people who have already posted. It says a lot about their character that they reasoned with you, instead of blasting you. Because Frank-- they could have blasted you. You are SO wrong.
Let’s look at a few of your points. First, do you understand what no money down means? No money down means none of your own money goes to the seller. The seller does get money: the banks, your partners, your credit cards, etc. But you don’t take cash out of your pocket (that you may or may not have) to finance the deal. Sure, you are usually still personally liable for the debt; yet, if you buy the right property for the right terms or price, then carrying a debt you put no money down to create is not a big deal. These deals happen all the time.
Let me give you a personal example. I have equity in my home. I’ve arranged with a bank to have an equity line of credit. The bank will currently charge me 10%. I plan on buying property for around 30-50K, renovating for 10-15K, and selling with at least a 10K profit. Let’s say I borrow 65K. I’ll owe $650/mo (loan =1%monthly). And then repay at the end of 6-8 months when I rehab and sell.
This was a no money down transaction. I didn’t use a dime out of my own pocket. I used my credit, and the equity in my asset, to fund the deal. And I did take on risk that I would be able to renovate, sell, make a profit, and repay the loan. I’ll take that risk because I trust what I know and have learned from CS and many others.
Yea, you may be thinking, but you have an asset with some equity! Yes Frank, I do, and I created that equity through renovations. My wife and I took out a loan for 150K, put down $15K, bought the house for 130K, and used 20K for renovations. Last month it appraised at 255K. I now have a bank loan up to 105K. All my deals will be no money down.
I’m not saying this was easy. Finding the right house took 9 months of driving neighborhoods. Interviewing, hiring, coordinating, (and firing) some of the crews was tough. But it was exciting, too. And I’ve never made 100K faster!
If you really want an education about re, join your local Real Estate Investment Association (reia) group. There you will meet flesh and blood players who have made lots of $ in re and done many no $ down deals. If you really want to make an informed decision about all this stuff, you owe it to yourself to check it out.
But you are not going to go, are you Frank? Let’s be honest: you don’t believe in all this stuff. People can reason with you all you want, you disbelieve us. Perhaps we are CS spies. Perhaps we are deluded and are so whipped up into our own desperate delusions, we are not able to see the truth you offer. Holding on to these re morsels are the only opium we poor, suffering souls have left…
Frank, I’ll give you this: you have big kahunas to denounce re investing (a la CS) on a re investing board. Since you can dish it out, Frank, I assume you can take it as well. So here it is: there is an air of arrogance about your post, Frank – you, the enlightened graduate student, with your keen intellectual acumen, are going to help all of us less educated souls see the error of our ways. We need to give up this folly, and work harder, and get more traditional education. Like you. Then we can improve our lot.
Let me suggest to you, Frank, that it is perhaps you who are wrong…
I do agree with you on many things: CS uses all the traditional hard sell techniques, he preys on peoples desperate fears and hopes, he could care less about me personally, his students (I suspect) confuse cash flow with income and net worth with property value, lots of con artists exist that use similar methods, most “get rich quick” methods don’t work, etc. etc. etc.
It’s just that you are wrong about two very important things, Frank: real estate is the greatest, proven wealth builder of all time. And – surprise, surprise – CS system actually ain’t a bad beginning course for $180! I woulden’t do deals with just the CS system; but, hey, I did the deal described above and I didn’t have CS or anyone else at the time! (If I only did, I could have made even more money and fewer, costly mistakes).
Perhaps, Frank, it is you who are wrong. Can you accept that, if it is true? I’m not being flip with you, Frank. I just don’t know that you are ready to accept the truth.
Have you noticed this yet, Frank? That the smartest people you know make far less then others with average (or below average) educations? Why is that?
This post is getting way too long. Honestly, Frank, I don’t think you are ready to accept the truth that more education and hard work are NOT the path to financial security. What IS the path is having one’s own successful business, and rei, as a home based business, is the best of the best. I posted to you because I can relate to you: I had your attitude, I used to believe in and went to much traditional education (all boys New England prep school, Yale undegrad, Tulane grad, working on Tulane Ph.D before dropped out to pursue re and build wealth)I used to believe that hard work would make me enough money until I saw how my successes made others rich while I still lacked, and I used to make fun of CS until I stumbled onto something: namely, the wealth building power of re through the renovation of my own home.
The truth wasn’t hard for me to accept: $ is $. When you make money at this Frank, you laugh at those who say it can’t be done. I just doubt you are ready to accept the truth; it would mean too many cognitive and behavorial changes that you are probably not ready for.
Let me leave you with this one, final thought Frank: your personality fits the educational system; that’s why you have enjoyably progressed from one level to the next. That system implicitely suggests that success within it will produce success in life. When all you have really known is school, and you are successful in school, it’s normal to feel that you will be successful in life. That’s not the case. Life is less controlled than school. The knowledge it takes to succeed in the real world is different that academia. What you love, academia, is an artifice of a capitalist economy. Capitalism needs good workers: those who show up, work hard, are well educated in their tasks. Education really exists solely to produce good workers: nice bees like you who are specialized in a task, believe in no other way, show up, and work hard. Good boy. Thanks for the service. Here’s a gold watch.
Become a benovolent capitalist instead. Take the wonderful, horrible ride of running your own business, even if only in your own part-time. You’ll make a whole lot more money. Perhaps you don’t need money yet; you will some day. Especially once you have a family and want a house.
Finally, Frank, read these two books: Creating Wealth by Robert Allen and Rich Dad, Poor Dad by Robert Kiyosaki. And – by all means – consider that you might be wrong.
From one overeducated, underexperienced, fired-up, newbie re investor,