Never Take Orders From Paint

Jack Miller was one of my primary real estate investing teachers. He was a wonderful man and an incredible educator and mentor. It’s hard to believe that he went to heaven almost six years ago. Not a day goes by that he and I don’t have a conversation in my head.

Jack was the type of guy who very much marched to his own drummer. One of his best quotes was: Never take orders from paint.

Let me explain: Have you ever turned onto a street, saw the One Way sign and realized that you were going the wrong way? What did you do – an immediate U-turn, right? That’s what most of us would do. But not Jack! Jack would keep going the way he was going and say, “Never take orders from paint!”

Spend a minute thinking about this. Was Jack right or wrong? Now add this to the equation: Jack spent his whole life not taking orders from paint – both figuratively and literally – and he was a very successful businessman!

On the other hand, I spent most of my life doing exactly what was…

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What Makes the Best Rental Property?

Over the past twenty years, Kim and I have bought a wide variety of investment homes – everything from a one-bedroom, one-bath duplex to a six-bedroom, four-bath McMansion. Experience has taught us what makes the best – and worst – rental property!

Jack Miller said: Everything else in real estate is harder than a house. With that said, Kim and I stay away from townhomes, condos, duplexes and apartment buildings. We’re not saying these are bad investments; it’s just that they require a lot of hands-on attention, and our goal is freedom, not a j-o-b.

When it comes to single-family homes, the most in-demand property is a three-bedroom, two-bath home…with a garage…without steps…on a level lot…in a nice, convenient neighborhood. We call these Walmart houses.

Think of a Walmart house this way: Go to a checkout register at Walmart that has ten people in line. You hold up a picture of your investment property and ask, “Who would like to live in this home?” You want eight out of ten hands to go up. Next – and this is the most important question of all – you ask, “Who can…

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What’s the Better Investment – Gold or Trailers?

A guy called trying to sell me gold. He said that I was a fool if I didn’t use every dime I had to buy his bullion. Knowing that real estate and mobile homes almost always out performed gold, I chuckled.

In total disbelief, you’re probably asking, “As an investment, you’re saying that it’s better to own a mobile home (i.e. trailer) rather than gold?” Yes, if by “better investment” you mean one with a much higher yield!

In 1900, gold sold for about $20 an ounce. This would buy you a tailored suit, a nice pair of shoes and a wonderful dinner out. Today, gold sells for about $1,200 and ounce. This will buy you a tailored suit, a nice pair of shoes and a wonderful dinner out. In other words, gold, over the past 115 years, has held its buying power.

Sure, all the TV and radio commercials claim that gold is an incredible investment, but the truth is gold preserves wealth – it tracks inflation, and inflation is nothing more than an invisible tax! If you seek growth, then you must invest your capital in something like…

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Simple Simon Met a Pieman

A thing that really annoys me is seeing a bum at a busy street corner with a beat-up cardboard sign that reads: Will work for food! Many times, I’ve stopped and offered a day’s pay for a day’s work. Thus far, none have accepted my offer – this is why I use the word “bum.” A bum wants something for nothing.

Last week, I was in Charlotte, North Carolina. On the street corner next to where I was getting gas stood a sixteen-year-old boy holding a sign seeking money. But he and his sign were like nothing I’ve ever seen! His sign combined work with lots of style.

Zeke was his name. He was selling $7 pies – sweet potato or bean. He had a large cooler on wheels next to the sidewalk filled with his pies. And here comes the style part: He was wearing a black tuxedo, white tux shirt, red bow tie and patent leather shoes. He was one sharply dressed dude! I was totally impressed! (NOTE: On our website, you can see a picture of Zeke selling pies.)

Unable to stop myself, I walked over to Zeke, handed him a ten-dollar bill, bought a pie, told him to keep the change, and walked back to my car to top off my gas tank. While filling up, I watched Zeke sell eight more pies in only ten minutes – with each person handing him a $10 bill and telling him to keep the change.

Do the math: Zeke grossed…

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Need a Real Estate Investing Coach?

Do you need a real estate investing coach or mentor? Do you know the difference between the two? I didn’t until I researched this column.

A coach is an expert who trains someone learning or improving a skill – it’s very hands-on. On the other hand, a mentor is a wise and trusted advisor – not nearly as hands-on as is a coach!

Why am I writing this column? Several times a week I get calls from investors asking to be coached or asking how to handle their high-dollar coach who isn’t doing what he/she promised. Bottom line: I’m writing this to help you know what to look for in a coach because there are coaches and then there are coaches!

In 1995, when Kim and I got into real estate investing, coaching wasn’t popular. Instead, we had an old fashion thing called teachers. Our three primary teachers were Jack Miller (God rest his wise soul), Pete Fortunato and Dyches Boddiford. As we got to know them, these three wise men also became our mentors who we could call for deal-structuring advice.

Back to the question: Do you need a real estate investing coach? I think a good coach will help you learn about investing much quicker than if you went at it on your own. More importantly, an experienced coach will keep you out of the pitfalls that swallow up most…

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How Do We Fund Our Deals?

Since we don’t use banks, how do we fund our deals?

Do banks have money to lend? Think carefully – this could be a trick question! Don’t banks “borrow” the money they lend from their depositors? And why do depositors keep their money in the bank? Because it’s the safest place to keep it, right? But is it really?

What interest rate is your bank paying on savings these days – 0.3%? And what is the current rate of inflation…something like 4%?

Here’s a broad-brush picture to help you understand what’s really happening. You put $10,000 in the bank earning 0.3% interest. One year later, your nest egg has grown to a whopping $10,030. But let’s not forget about inflation. In reality, after you factor in inflation, the actual buying power of your $10,000 dropped by 3.7% to $9,630! What – you LOST money?

Inflation is called the “invisible tax.” You can’t see it, but you sure can feel it every time you walk in a store!

Sure, the days of banditos like John Dillinger, Baby Face Nelson and Pretty Boy Floyd are long gone, but they were replaced by something far more sinister:…

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When Deal Making, Don’t Rely on Email

This has been a very painful, lesson-filled week! Because of a single misunderstood email, I lost a nine-year friendship with a couple that I love very much. In addition, I was booted out of a real estate investing mastermind group that I had been a part of for nine years. Ouch!

I “said” one thing in my email but they “heard” something completely different.

What does this have to do with investing? Everything!

These days, too many real estate investors rely far too heavily on websites, emails and text messages when they’re constructing deals or working through tenant problems. Listen up: Real estate investing is a face-to-face people business – not a computer business! Nothing takes the place of meeting with a seller and asking Pete Fortunato’s famous question: Why are you selling such a nice house like this? Hearing and seeing how a seller answers this question is everything – itis the backbone of deal making!

If you rely on emails, here’s a demonstration of how easily a potential deal can…

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Surprise In-home Inspections

About 35% of Americans – for a wide variety of reasons – don’t own their home. Instead, they rent.

With millions of citizens willing to fork over money to live in a clean, affordable home, in a nice, quiet neighborhood, why aren’t more people real estate investors? And by real estate investors, I mean LANDLORDS! (Remember: flippers and wholesalers are business people and speculators, not investors! If they stopped flipping, their income would immediately drop to zero. Plus, the government taxes the tar out of their profits!)

You gotta admit, the title landlord sounds pretty cool. And getting monthly mailbox money is really neat. And least we not forget, the government doesn’t steal what a landlord earns like it does from W-2 and 1099 wage slaves.

So why aren’t more Americans landlords? Easy answer: Tenants! Have you ever heard a landlord-tenant story that had a happy ending?

Want the stone-cold truth? Can you handle the truth? Kim and I have owned and managed rental property for more than twenty years. In all this time, we’ve…

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How to Make a Written Offer

Last Saturday, I took thirteen real estate investors from the Chattanooga Real Estate Investors Association out door-knocking. Before heading out, we discussed how to make a written offer to a seller.

The group had a number of concerns: 1) How do I find a property’s fair market value? 2) How do I discover market rents in the area? 3) How do I make a written offer right there on the spot?

Took 13 investors out door-knocking and we made 4 written offers!
Took 13 investors out door-knocking and we made 4 written offers!

The first thing to remember is that an offer is different from a purchase contract. A purchase contract is often a formal document written in legalese that no one – especially the buyer and seller – understands. On the other hand, an offer can be written in plain English on a Post-it note that makes sense to everyone! (NOTE: On North Georgia REIA’s Facebook page, you’ll see three of the written offers I made in Chattanooga.)

Randy Shelley is an investor who lives in that area. We spent the day knocking doors in his subdivision. Though he already knew the fair market values and approximate rents for his neighborhood, I asked him to not share this information with us.

Instead, we talked to ten homeowners. From them, we learned that most properties in the subdivision sold for between $175,000 and $185,000, and houses rented for around $1,200 per month. When we compared these numbers to Randy’s, we discovered our numbers were…

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Prepping For The Foreclosure Auction

This week, Kim and I have been knocking on the doors of homeowners who face losing their homes at April’s monthly foreclosure auction.

Many folks are shocked to learn that we actually knock on an owner’s door. I’m often asked, “Aren’t you worried about getting shot?” After 20 years and thousands of foreclosure doors, no, I’m not worried about getting shot. Fact is, experience has taught us that most people facing foreclosure couldn’t be nicer and really appreciate the what’s-gonna-happen-next information we’re able to offer.

How many houses do we plan to bid on at Tuesday’s auction? None. So why are we out working foreclosures? Because the cheese has moved, and the best deals are now found buying properties pre-foreclosure, not at the auction.

With real estate investing, the cheese is always moving! For example, from 2003 to 2006, the best deals were found buying properties pre-foreclosure. Successfully bidding on the steps was difficult because of the…

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