Re: wanna be investor - Posted by Bill Gatten
Posted by Bill Gatten on April 03, 1999 at 22:51:39:
Just remember that “Something for Nothing” always costs more than everything else. I know that well, because my (now reasonably successful) business was built on air (we were originally going to call it “BOA Enterprises”… “Built On Air”… but the snake allusion didn’t work for my wife, Gail).
In the beginning we didn’t have enough to buy a whole pack of gum at once (we rented it a stick at a time… flattened it out, trimmed it up, re-wrapped it and returned it when we were through with it).
The sole reason we succeeded in RE investing was because we bit our respective lips, and splurged on a course from the best Creative Financing Teacher EVER (someone that some of the reeeeeal old CRE folks may have heard of)…Paul Simon…the creator of the original “Equity Share” concept.
The course was 14 hours long, and I listened to it all the way though at least 25 times (I finally memorized it, and started doing equity share seminars myself).
The one thing that us got me off the sticky place (that place where you know you can do it, but you’re afraid to), was a comment that Paul made in his course. It was something like: “If you don’t have no money (his double negative, not mine), that don’t need to matter much… you just have to work harder; and if you don’t have no credit neither… way’el (“well”) then…you REALLY have to work harder. I’m paraphrasing a little here and trying for that Midwest used-car salesman twang he has/had.”
With that, we set out calling FSBO’s, SFR Income Property Don’t Wanters, Fixer-Upper-Abandoners, tin sheds, lean-to’s, etc. until we were blue in the face (well, I was anyway, Gail’s complexion remained remarkably unchanged throughout it all).
Then finally (about two weeks and 100 calls later), we located some guy whose OTBF (“Over the Barrel” Factor) was higher than ours. He thought he’d found a pair of real dummies… willing to take over all of his payments on a $225,000 property, as well as cover all mtce, repair, upkeep, property tax and insurance… on a property with no equity, no yard, cracked plaster and a bathtub falling into the kitchen through the ceiling).
By following the instructions in the course, we ran a No Down, No Bank Qual. ad, and within a week we had a buyer (one of several, out of dozens of responses) whose OTBF was even higher than ours. The poor guy had just reclaimed his defunct business after a BK, a nervous break down and a prolonged stint in a mental facility…not to mention a plethora of 60, 90 and 120 day lates, charge-offs and two auto repo’s (not an exaggeration).
We agreed that if they’d fix everthing that was broken, we’d put him and his wife (Mr. and Mrs. “F”) in as our equity partners. We charged them $5,000 more than our closing costs, and $250 per-month more than our payments, and ended up selling the property five years later in the midst of a terrible down-turn in the California Real Estate Market. We didn’t make a dime on appreciation (and neither did they), but we made $5,000 up front, $15,000 in pos. cash flow, a little on the Depreciation write-off, and some in the equity build-up in the loan. They (the F’s) ended up a couple thousand ahead, and because of their tax write-off, lived in the house (their very own home) for thousands less than they would have paid, had they continued renting instead.
End of story Jason. Do it. You could do a lot worse than buying Carlton Sheets, believe me!
'Course you might do a lot better too… Ahem!).
Bill
