Ok, here’s what happened! - Posted by George (NoVa)
Posted by George (NoVa) on June 17, 1999 at 17:54:46:
AJ,
The tapes and books help adjust thinking. I could write a book on what has happened in the last six weeks, but I don’t think there is room on this server for it. Let’s suffice to say that all the little bits and pieces of information in the Kiyosaki colloction started falling in place. I will only hit the highlights.
One of the Kiyosaki tapes is about raising money. I listened to it, talked to my accountant, and decided on a plan of action (should something come along). I talked with a couple of different people and have found a partner (with some money).
There is also a tape on REI. He talks about multi’s and why they are good investments. He makes sense in his approach. Another tape is on the mindset of traders. He discusses mind sets (don’t get emotional about money - winning or losing) and always know where you are.
All of these tapes helped to open my mind to the possibilities. I had been doing some L/O’s (which are profitable) but realized that I was an “S” and it wasn’t taking me where I wanted. I decided to keep an open mind and look for opportunity, not properties. I answered an ad that read: 10 units, fully rented, positive cashflow. $550,000 with $100,000 down.
As it turned out that property was a strip mall, and it had sold. The person I was talking to said he was a developer, and he came across these all the time. He asked me what type of property I wanted. I told him, I wasn’t real fussy about the property, I was looking for cashflow!
He hesitated for a moment and then asked, does it have to be real property? Without hesitating, I said no!
It seems that this developer had been building and setting up shopping centers for 30 years. He was skilled in finding anchor stores and then finding ancillary stores to backfill the rest of the center.
One of the trends that he noticed was that most food stores are either upscale, or wharehouse type stores and didn’t cater to the local markets they were in. He developed an idea for creating a chain of food stores that had a flexible model. His goal was to develop or renovate 50 shopping centers with his new model.
Here is how the deal works. He needs some cash to get these stores up and running. Aproximately half a mil each. He is selling 10% interest in each store for $50,000 and sells up to 70% of each store.
The investment breaks down like this.
$15,000 that is used to do a market study of a particular store location. That study takes 45 days. At the end of the study, a final go/no go decision is made on the location. On a go, we provide the additional funds and start the build out which takes 90 to 120 days.
Once the store is open, rebates from the food industry then are used to refund the investor’s money. Each store should produce $300,000 to $500,000 in profits each year. Or $30,000 to $50,000 for my partner and myself.
I have spent 6 weeks checking this guy out(his accountants, lawyers and management team). He has the backing (financial and otherwise) of a nationally know wholesale food distributor, and has some very creative support from other industry sources. During that 6 weeks, I also watched 9 of the 14 stores he’s planning on for this year, sell out. I have seen some of the heavy hitters in the area jump in, and I now see that he might not need investors after the fourth store opens on July 10.
In the analysis, it seems that the only thing that really is at risk is the study money. Everything else is secured.
My accountant (he’s also buying into a store) helped my partner and I finance our part (two stores). And the best part is the positive cashflow from my L/O’s is paying the debt service. Also because we are using corporations and LLC’s to transact this deal, there is no record on my credit report. So, I’m still looking for that positive cashflowing apartment building!
Robert Kiyosaki opened my eyes to the possibilities through his books and games.
These are the kinds of deals that he discusses in his books and tapes. And I realize that I have stumbled into something that was out of my league just a few weeks ago, except that I kept my mind open and listened to what was being offered and how I would make my money. I have fallen into the midst of some “dealmakers”, and if I keep quiet and listen, I just might learn something.
And yes, they all think like Kiyosaki.