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Let’s begin easing you out of
the pits. I mean, comfort zone!
I’m going to slowly and methodically
give you as many little sparks
and insights to the relatively
simple ways that ordinary people
use real estate to achieve extraordinary
results.
Stories are the best spark plugs.
They let you casually observe
from a safe, secure and understandable
view point. I will write to answer
most of the questions that I feel
I myself would ask if I was reading
what you are about to read.
I want you to know something from
the very start of this report
and that something is this: I
care about you and I sincerely
mean that. I really do want you
to move to a new comfort zone,
one that is pleasurable and free
from fear. A place where you realize
you have the power to achieve
greater things than you currently
can imagine.
It’s possible for you to start
being a more powerfully directed
purpose-driven individual who
is well organized and on track
to higher achievement. You will
change and grow, slowly and steadily
with every page you read. With
every thought and insight you
gain, your desire and courage
will grow as well.
Napoleon Hill wrote one of the
greatest books of all time. It’s
called “Think and Grow Rich.”
The essence of that book, the
secret it reveals time and again
is this: you must develop a burning
desire.
Don’t put this book down thinking
the previous statement is cliché
and that you already knew that!
I am simply leading you to my
next point, the next point being
is – your desire needs a starting
point. So to start developing
desire, my secret is you must
have a purpose. Why do you want
to pursue real estate? I know
what you’re thinking: to make
money, to have security, to feel
useful and appear successful.
Good points. I agree you can have
all of that and more if that is
what you desire.
Now here is something that comes
before any of those things you
desire. What is the purpose of
all those things? Purpose, purpose,
purpose…you need to first define
purpose before you get the things.
My purpose, or so I thought early
in my career, was to move up to
a nicer house and have my first
house become my first rental property.
When I moved up to the next one,
I quickly learned as soon as I
rented it out, I was in some way
responsible for creating happiness
and security in the life of another
person that was of no relation
to me.
It soon was evident to me how
the choices I made in choosing
that first property either would
help me or hurt me in my quest
to succeed in the real estate
investment business.
All of it is cumulative, everything
you do and how you do it adds
up. It compounds itself and it
either makes your life easier
or more difficult. I am going
to give you experiences that you
can learn from that will make
your life easier; I am going to
show you how. That is my purpose.
The book that gave me the unknowing
courage to take my first steps
in real estate was a book called
“How I Turned $1000 into $3 Million
in real estate in my spare time”
by William Nickerson. He was a
master storyteller and by osmosis,
after reading his book, I found
myself gravitating towards the
real estate classified section
of my Sunday paper.
Eventually I leapt and my life
had changed. It was an FHA foreclosure,
a two-bedroom, one-bath home with
a built-in, screened-in pool,
with a Jacuzzi and a built-in
sprinkler system. I bought it
for $46,000 and used the HUD 203K
rehab program to fix it up. I
spent $16,000 to update and make
repairs. They then gave me one
loan for a total of $62,000. It
took me three months to complete
it and I was in; I had done it!
My life changed, I learned, I
took the leap. From then on I
had confidence. I had already
had my first home but now I had
two. Well, I was in the Coast
Guard and wouldn’t you know, three
months later we moved. Uncle Sam
took me out of St. Petersburg,
Florida and dropped me in Kodiak,
Alaska, for my next tour of duty.
Well guess what? I was armed with
ambition, courage, confidence
and just enough knowledge to be
considered dangerous, so I bought
a duplex as soon as I came ashore
on Kodiak Island. Now I had three
dwellings and my relationships
and responsibilities were growing
with my new tenants counting on
me to provide a clean, functional
and pleasing environment for them
to exist in.
It looked like this: My mother
rented my first house and an elderly
couple rented the second one and
my duplex came with an existing
tenant who was a hospital administrator,
so I was lucky. I was able to
ease myself into the role of landlord
without getting burned early in
my career. I now had two houses
and a duplex in the span of about
one year. My brothers and some
other family members took notice
and were pretty well dumbfounded.
They couldn’t figure out how I
had, all of a sudden, become a
real estate wizard.
It felt good to make that change
in so short a time.
I got that from reading a book!
And that my friend is how you
are going to do the majority of
everything you do in real estate,
by reading and taking steps towards
duplicating the success of others
in a repeatable pattern. The key
is to understand that you can
do it if you read the right books
and apply the very basic formulas
that are handed to you. There
lies in: Magic Bullets in Real
Estate
This is a common man or woman’s
real estate manual. William Nickerson
never gave me anything so easy
as “Magic Bullets!” So I learned
trial by fire and it has been
very gratifying. I’ve since went
on to collect 17 properties, 23
tenants, 2 real estate licenses
in Florida and Alaska, an assistant
appraiser’s certificate and over
a hundred books on real estate.
I just kept learning and growing
and gaining momentum for the last
13 years. I am still in the Coast
Guard, too, and I work at Alaska
One Realty in my spare time. In
two more years, I will be retired
at the ripe old age of 42. Sounds
like a sort of fairytale, doesn’t
it? Don’t let me fool you. It’s
hard work and I’m still not a
millionaire, but I want you to
have the truth, so I will be honest
with you every step of the way.
I know why I am not a millionaire
and here is why. I would periodically
sell property that was going up
in value and paying for itself
through the rent checks. But being
in the Coast Guard would dislocate
me every four years, so I found
myself selling out in order to
avoid being what is called “an
absentee landlord.”
This is an important lesson for
you. It has prevented me from
becoming a millionaire up to this
point. The lesson is: find an
area on this planet that you could
and will live in, and stay close
to it. Don’t move more than 10
miles from your farm area. The
farm area is where all your properties
are located. Long distance “land
lording” is tough! It can be done
but you lose the ability to control
the situation compared to if you
were there. I’ve served my country
and saved people’s lives, so for
me it has not been in vain. I
have no regrets but if you don’t
have to leave your area of expertise,
don’t!
The networks you build and the
contacts you build, in the process
of “doing” real estate, are so
valuable that when they are no
longer at your disposal, it puts
you at a serious disadvantage.
Not to mention when you move you
have to acclimate yourself to
an entirely different market,
build new trust-based relationships
and start all over again. It’s
like a treadmill you’ll be running
and running, however it gets you
nowhere.
I’ve used it to my advantage.
I have been forced to accelerate
my abilities to rapidly duplicate
my success whenever I am moved,
but it is still an uphill battle.
My point: Don’t move too far from
your farm or your network of bankers,
appraisers, carpenters, tradesman,
real estate, friends, tenants
and so on. Once you have the skill
you can duplicate your success
anywhere you go but if you don’t
have to go…enough said on that!
I like to say, “Don’t sell the
goose to get the eggs.” What that
means is if you need money to
buy more property, use equity
lines from other property to do
it. You will get the same amount
of money or more by using an equity
line as if you sold it. However,
you get to keep the asset and
the money! I go into this in “Magic
Bullets,” so I won’t drone on
here. Just know you don’t have
to sell your property to get the
cash out of them.
So here we are. You know a little
bit about me and you may have
picked up a nugget or two. Let’s
find a few more.
There once was a man who wanted
to buy some investment property,
so what he did was look at growth
patterns. You should do this too,
by going to your city’s planning
and zoning department. You can
see growth patterns and you definitely
want to buy property that stands
in the way of growth.
This is how he used what he learned.
He saw that city planners had
decided that a new artery (highway)
would benefit their city by creating
linkage to another city about
100 miles away, so being a smart
investor he only went as far as
a ten mile limit to be able to
be close to his investment.
Now on average, new growth will
radiate out from existing prosperous
cities in the direction it is
planned at a rate of about one
mile per year. So our smart investor
had a 10 – 12 year plan to cash
out in about 10 – 12 years.
What he did was buy, I believe,
10 acres of commercially zoned
property very cheaply because
there was no demand at the time.
He bought it, fenced it in, put
up some lights and a gate, and
held onto that little bugger.
Now that new highway was coming
his way and the good folks, through
their taxes, were paying to have
it built.
It didn’t take long for the heavy
equipment to start cutting a swath
towards his fenced-in storage
facility and when they got close
enough to him, he started renting
out a secure area for everything,
from road cones to generators
to backhoes. You name it - it
was stored there. This more than
paid his land off.
Now the men and their equipment
eventually moved on further down
the trail but they left a finished
highway behind them. And guess
what? Low and behold, people started
driving on it, and then started
buying property to build houses
on to get away from the city.
Since the new highway was a straight
shot into town, ten miles out
was breeze.
Well, of course, here comes the
herd and everyone is just populating
the whole darned area. And within
ten years, residential housing
surrounds Mr. Investor, and can
you guess what he’s got? Yep,
a prime piece of commercial property,
10 acres large.
So in accordance with his 10-12
year plan, he sells his storage
facility to make room for the
new office/business park complex
for over $2,000,000. That, my
friend, is vision, and the sooner
you get a clear picture of what
it is that you want to specialize
in, the sooner you can retire
to the islands.
How hard was that? Don’t tell
me you can’t do it, you can! I’m
here to help you. I’m going to
give you secrets no one else dares.
Do you ever wonder why people
won’t tell you the secrets? Of
course you already know this but
I’ll tell you anyway. It is because
they are operating on a scarcity
mentality, as though there won’t
be any left for them. Or if learn
something and act on it, you will
get ahead and have a great life.
Well, misery loves company and
silent oppression is the rule.
Here’s a little story that poor
quality real estate agents won’t
appreciate either but I’m going
to tell it to you anyway. The
reason I can tell it is because
there are some great real estate
agents out there who absolutely
don’t fear what I am about to
tell you and would let you know
it if they were in my position.
Here’s the deal: Some agents want
to be like the Wizard of Oz. They
want to create the appearance
of marketing and transacting real
estate as being technical and
very legal, a deep dark mystery.
Well, it’s not! The truth be told,
you can write a contract on a
napkin and it would stand up in
court. I will emphasize here that
you write on that napkin along
with the terms of your agreement,
“The terms set forth on this here
napkin are subject to my attorney’s
approval.”
An attorney will cover you completely
for around $750.00. Prices may
vary, however that is an average
home transaction. There is a lot
I am leaving out here but my point
is this: If you own property,
you can sell it anyway you want.
“Magic Bullets” will teach you.
Let’s move on.
Exposure is the key to finding
buyers and sellers in real estate.
If a property is priced fairly
and everyone who is looking for
that type of property knows that
it is in the availability pool,
it will be found and the transaction
will proceed as advertised. Price
it right, advertise it properly
and let the lawyer take care of
the details. No commission, just
a flat fee. Period.
Now that I have that off my chest,
I will tell you a story about
Dan, a 21-year old friend of mine,
and his wife and their new baby.
He’s a hardworking guy who does
his work without complaint and
all the other “workers” pick on
him for working so hard. Can you
believe it? The other guys are
so insecure and lazy that they
make fun of a guy who is doing
the work of three men, mainly
of the three who are ridiculing
him. Well, believe me, this doesn’t
go unnoticed by me and I take
him under my wing. Dan wants to
buy a house, so I begin the process
of saving him years of trial by
fire and save him $25,000 at no
charge. That is because he deserved
my help.
Anyway, here is the story: I began
with him by asking him what type
of home he thought he would be
comfortable with and a price range.
He indicated a 3-bedroom for around
$100,000.
Knowing what he wanted and knowing
the area, I was able to take him
shopping for the house he was
looking for. Now I always go after
the “For Sale by Owner” homes
first because I know they won’t
be adding any commission figure
into their price, because they
won’t be paying one. So at 6%
of $100,000 he will get $6,000
more “house” for his precious
dollar.
I also told him besides the “For
Sale by Owner” homes, we would
be looking at oddball discount
companies that help distressed
sellers further part with their
money and property. The mentality
of a seller who uses cheesy companies
to help them sell their property
is pennywise and pound-foolish.
If you’re going to use professionals,
then get a professional.
So off we go. After a day or so,
we have found our house. Sure
enough, El Cheeso Inc. has a sign
on it. The screen doors are flapping
in the breeze, the weeds are dancing
on the lawn, but this house is
indeed a 3-bedroom, 2-bath, 1-car
garage with a fenced yard and
it’s selling for $110,000. Well,
due to the fact that there is
a divorce in progress, and a new
girlfriend who doesn’t like the
place, and El Cheeso Inc. giving
no representation, I negotiate
for Dan and he gets it for $99,000.
What’s so great about this deal
is this exact same floor plan
in another house was for sale
down the street, on the same street,
for $25,000 more.
The moral of the story is good
things come to those who deserve
it, and that is another key to
real estate. You must work hard
so others will take notice of
you and help you succeed.
Here’s a beauty for you. This
is about being in real estate
circles and keeping your eyes
and ears open and often times
your “yapper” closed. This is
the story of Brian and Julie.
Here we have two hardworking souls.
They have been married for 20
years and they have weathered
the storms of matrimony. Julie
works at a real estate office
as an office manager. No real
estate license, but she works
at an office that sells a lot
of waterfront property. So we
are talking about location and
being in the right place at the
right time, and here comes a seller
in the door of the office stating
she is going to sell her older
waterfront home. She is willing
to take $180,000.
Julie tells Brian, they look at
it and sure enough, this pearl
is right on the water. She’s a
gem waiting to be polished up,
so Brian and Julie sell their
condominium and move in. Well,
they aren’t making any more waterfront
property, so Brian goes to work
polishing this jewel up.
Now, they have bought this house
under market value in an appreciating
market. So about one and a half
years later, this property is
worth over $350,000 and still
climbing. Well, Brian is no dummy,
so he gets to know his neighborhood.
He strolls, takes walks and notices,
you guessed it, a vacant, neglected
jewel on an inside double lot.
He tracks down the elderly lady,
who is living with her sister,
through the county records office
and buys the house, including
the extra lot, for a total of
$120,000. Now Brian can walk to
his new “jewel” and he starts
polishing it. The neighbors start
noticing and are amazed at his
deal. He has offers of $180,000,
$200,000 and $60,000 for just
the lot. You name it. Now that
the exposure is there, everyone
wants a piece of it.
Well, this is what Brian did.
He rented his first house out,
moved into the second one and
used plans that I gave to him
to build a third house on the
vacant lot, using the equity he
accumulated from the first house
that went up so much. And here’s
how this thing shakes out: $180,000
for his first house and it’s value
goes up to $365,000; he picked
up the next jewel for $120,000
and he paid cash using the equity
from the first house. Now he takes
out a new mortgage on his second
house for $120,000 and builds
a third. The value at last count
was $815,000 and he owed a grand
total $300,000. That’s a half
million-dollar profit in 5 years!
Now what does this story tell
us? #1 – it says, “work hard”;
#2 – keep your eyes open; #3 –
use equity lines; #4 – don’t sell;
#5 – learn how to be a landlord;
#6 – be in locations that appreciate;
#7 – buy things that are limited
in availability; #8 – know how
to research owners and repair
property; #9 – get your partner’s
help (spouse); #10 – use knowledgeable
friends to help you see potential
(I gave him the plans and advised
him not to sell anything!).
Can you get any more lessons out
of this story? I’m sure you can.
Just read it again and think on
it. Jot down your ideas and put
them to work. Real estate is not
that hard, folks! You can do it.
With a few magic bullets, some
spark plugs and a good mentor
to show you how, you can do it
too!
Let’s you and me talk for just
a minute here, OK! Have you ever
been really good at something
and been able to step back and
see the whole thing for what it
is was? You just know exactly
how to do it and you can see the
end result clearly in your mind
before you start. It’s predictable
to you. It’s almost second nature,
so you are comfortable doing it.
It’s almost become boring to you;
your comfort zone is such that
you can do it in your sleep.
I’ve gotten that way with certain
types of real estate and I see
people everyday that are so afraid
of taking the first step that
they are literally paralyzed.
They make excuses and put it off,
and rationalize and live a quiet
life of desperation. They don’t
trust themselves and as a result
of the unknown they can’t trust
anyone else either. This is a
vicious cycle because the longer
they wait the more it reinforces
their beliefs.
I just want to grab them by the
collar, take them to the bank
and make them tell the banker,
“Pre-qualify me!” Then walk them
out the door and show them how
to do something that will change
their life forever, and that is
to buy the first property, and
then a second. Then their fear
is gone and they grow to be of
service to everyone who is ready
for their assistance.
Let me tell you this: After you
finish reading the rest of this
report and you read the “Magic
Bullets” book, your fears will
be subdued and you will do something
and your life will change. If
you cannot succeed with what I
am intent on showing you, then
something is not right. I believe
your desire would be your major
obstacle, so if that’s the case,
read “Think and Grow Rich” by
Napoleon Hill and come back to
me then.
Let’s get back to real estate
education, shall we? Do you know
who the largest commercial real
estate owner in the U.S. is? It’s
McDonalds Corporation. Yep, and
on top of that, they also have
the most valuable locations for
their type of business. The research
they do on demographics and traffic
counts is unparalleled!
If you were ever going to open
a fast food restaurant, just put
it near a McDonalds. You would
survive just on the volume of
people who flock or pass by the
location that McDonalds has already
decided meets all the critical
data to support their restaurant
business. Your restaurant, if
you had good food and service,
would flourish. Just sell something
a little different than McDonalds.
That’s leveraging someone else’s
expertise in evaluating a location
for a certain type of real estate.
Now that is a principle and principles
are like natural laws. A natural
law always works in every situation
in its own way. It’s like gravity
– it always works! Here on earth,
anyway.
So in real estate it doesn’t matter
what type it is, whether it’s
commercial, residential, industrial
or recreational. Look for signs
that serious market studies have
been undertaken by major operators
and buy things that can flourish
in the presence of those concerns.
For instance, let’s use Home Depot
as an example. If Home Depot decides
to build on a site, every residential
lot within a mile of that new
center will be bought up as soon
as the Home Depot commits to build!
Why?
Because smart investors know that
Home Depot has done the market
study and the area will be a prosperous
one.
On top of that, it will provide
jobs, it will pay taxes, it will
provide materials to actually
build the neighborhoods with,
and people will shop there once
their houses are built. The same
goes for Wal-Mart, Lowe’s and
other smart business concerns.
You may or may not have noticed
this but take a look the next
time you are driving around. Here
is what you should see. As you
drive into cities from the suburbs,
you’ll notice donut shops, gas
stations with convenience coffee
centers, bagel shops, and etcetera,
on the side of the road that people
travel to on their way into the
city to go to work. These are
morning activity business centers.
Now on your way home, out of the
city, you will see restaurants
that cater to the evening meal
crowd: KFC, Taco Bell, Subway
and Pizza Hut. That’s because
people don’t go there for breakfast.
They get it on their way home,
outbound from the city at night.
If you put your restaurant on
the wrong side of the road, you
could be making a huge strategical
error. Think!
Location, location, location as
they say, are the 3 most important
things in real estate. That is
a very true statement. With residential
property, that boils down to safety,
security and convenience. So buy
homes in good neighborhoods, cul-de-sacs
preferably. No noise or through
traffic, no escape routes for
thieves, and a private setting,
where kids play in the street
without getting run down.
Security = close to hospitals,
police and fire protection for
obvious reasons.
Convenience = stores, gas stations,
restaurants, small businesses,
parks and recreation and access
to major highways to circulate
or evacuate if necessary.
You might get a great deal on
a piece of properly but if it
takes you a half hour to get a
loaf of bread. What kind of resale
will that great deal offer? Another
great deal may back up to or face
a busy street. That’s often a
poor choice as well…noise, pollution,
the loss of privacy and curb appeal
are all factors here.
The two best types of property
to buy are:
1. Property that no one else knows
is for sale! Why? Because you
have no competition.
2. Property no one wants! You
just have to figure out why people
don’t want it.
If you can turn that lemon into
lemonade through some problem
solving, that
jewel may just shine because you
used the right magic polish.
In real estate, you get paid when
you solve problems. That is a
fact!
Here is a golden nugget for you.
If you do this, it will catapult
your real estate investment career.
I guarantee you will gain more
insight to real estate by doing
this one thing than just about
anything else you could possibly
do. The golden nugget is this:
Take a real estate appraisal course.
It will fly by, a few weekends
and it’s over, but the perspective
and the information you gain from
the class is priceless. It gives
you vision, ideas and understanding.
You will have an edge over every
other investor who has not done
it.
I had an instructor, who by some
stroke of luck, I was privileged
to be taught by. His name is Steven
V. and he is truly a genius. This
guy could make millions if he
applied himself to real estate
investment but he chooses to teach
and give back to others in that
way. He is very comfortable in
life and money is a by-product
for Steven. When I finished the
class, I had appraisers wanting
to hire me to go to work. Now
I don’t want to work as an appraiser.
I just want to think like one
and that is why I took that four-weekend
course. That class taught me more
than both of my real estate licensing
courses combined. The reason for
that is real estate classes deal
with state laws, contracts, regulations
and ethics. Appraisal focuses
on evaluating real estate and
that is what you want to learn
as an investor.
A real estate license can actually
hold you back from being a savvy
investor and here’s why: #1 –
You have to announce to every
seller that you are an agent.
It’s an ethics rule and a disclosure
law. Well, now the seller is on
guard for all kinds of reasons
and you waste precious time overcoming
negative reactions. #2 – When
you go to sell your real estate,
the same things apply but add
to that scenario the fact that
if you make large profits on property
that you sell, people can come
after you, saying you took advantage
of them because of your expertise.
And they win!
So you don’t need to go to college
for 4 years and you don’t need
a real estate license. What you
do need is a guy like me to convince
you to go to appraisal school
and read books like the one you
have now.
Then go out and do it, using a
lawyer to protect you every step
of the way. Again, here is a good
point to make. Simply weave into
every agreement or offer you make
the following statement: This
entire agreement is subject to
my attorney’s approval. I can’t
stress that enough. That’s one
line of text. That covers it all.
It gives you time to investigate
deals. It protects your interests
and keeps you from getting burned
in this business.
Here are a couple more beauties
that I use to protect myself and
you should too. These are used
with initial purchase offers:
1. Willing to pay X amount of
dollars or appraised value, whichever
is less. (That says, “I’m only
going to pay so much but if the
appraisal is lower than
what I offered, than I am going
to get it for the lower price.
I don’t get
burned!) 2. Subject to my partner’s
approval. (My partner was always
my wife, and if she
didn’t like it, the deal was null
and void, cancelled, over, kaput,
finito.)
Now nothing says my partner wasn’t
my dog, so if there’s no fire
hydrant, well the deal could be
off.
Those are examples of escape clauses
that could be abused to the point
of being called “weasel clauses.”
Don’t be a weasel! They give you
a short period of time to have
the option to buy something first
with the right to cancel the deal,
contingent upon something or someone
else’s decision.
I use them to protect myself and
to get a little time to do my
research on the property. Don’t
use them to unfairly tie a seller’s
hands. Be fair and try to move
quickly when you do employ them.
What you are doing is creating
a short time, zero-cost option
to buy real estate. Here is a
little trick and I don’t use it
very often but it can be used
in a fair manner so I will give
you the nugget. When you write
an offer to purchase property,
on the top line of the contract
is a line that indicates who the
buyer is. On that line in certain
cases, I will write my name plus
the words or assigns, like this:
Buyers: Dan Auito or assigns
What that word “assigns” does
is this: it allows me to sell
by assigning my right to buy the
property to someone else. Dirty
dealers will take advantage of
people with that word if they
can get away with it.
Here’s where I would use it. In
real estate, a lot of bargain
hunters look for distressed property.
You know, the fixer-uppers, the
abandoned, condemned, fire-damaged
stuff. I go a step further and
look for distressed sellers such
as death, divorce, relocation,
but a lot of times I don’t specialize
in that type of property.
That’s OK because if it’s a steal
and I get it for 40 – 50% off,
I will assign it to someone who
does deal in that type of property
and make a profit by assigning
it.
I’ll always ask the distressed
seller if that is a problem and
if it is, I will buy it outright,
then flip it but it costs more
to do that. So I’ll explain this
to the seller and get their permission
to use it. I don’t slip it in
on them. You will have a miserable
existence if you practice real
estate by deceit. Natural law
will crush you; play fair! Purpose,
passion and desire cannot be achieved
or acquired by deceit. That’s
a quotable quote. I hope you remember
it.
Let’s get on with another story.
This illustrates another fine
example for you. This story is
about a family who had business
interests outside of real estate
investing and as a result of the
successes of their other businesses
they had fairly large sums of
money to play real estate like
a monopoly game. Power can be
dangerous in the wrong hands!
So here we go. This flush with
cash family sees an opportunity
to take advantage of an overlooked
or left alone market. That market
is the old-fashioned trailer park,
or shall we say Mobile Home Park.
Anyway, the way most mobile home
parks came into existence was
this: Usually a man of integrity
and strong work ethic coupled
with a love for his fellow man
would buy a piece of land suitable
to the placement of mobile homes.
As people moved in, he and his
wife would welcome them and the
neighbors would greet them and
the community would become established.
The private owner would dig his
own sewer lines and cut his own
roads and landscape the park.
Maybe put in the clubhouse complete
with a swimming pool, shuffleboard,
pool table and meeting hall. As
time marched on, the residents
bonded with each other and a family-friendly
community took root. Well this
man of integrity had a problem.
Since all of his tenants are his
friends, he is pressured not to
raise the lot rents with inflation.
So the rents over the years are
kept very low in the park and
now this man and his wife are
getting old. Perfect timing for
our investors to come knocking
and offer our private aging park
owner a 2 million dollar price
for his 10 acres of mobile home
lots. This is a once in a lifetime
offer and many park owners cashed
out.
What people didn’t see was these
investors were systematically
and methodically doing this all
over the place and once they cashed
out as many mom and pops as they
could, they lowered the boom.
Now they the investors had control
of many parks in the same areas
and they started raising the lot
rents. You see, they didn’t have
any emotional ties to the residents
and they didn’t live there, so
it was a straightforward business
deal: either pay the new higher
rent or move.
The residents said, “To hell with
you new owner, we are moving.”
“Well, fine, go ahead,” they said.
Now the residents started calling
around to find another park with
low rents but guess who owned
those? Yep, our investors did,
and those lot rents were going
up too. So the mom and pops who
didn’t sell were full and it would
cost on average of about $7,000
to relocate to another park even
if they could find a vacancy.
The old folks who had it so good
for so long were faced with a
new reality and that was that
they had no choice but to pay
up or move, and moving, in many
cases, wasn’t an option. These
investors exploited a complete
segment of the market and made
millions and millions in profit
and continue to do so today.
It wasn’t long after this happened
that you started seeing signs
saying, “This is a resident owned
community.” People eventually
got smart and started buying that
little lot that their trailer
was sitting on and they began
paying association dues for the
clubhouse and security and grounds,
maintenance and road repair. The
good ole days are nothing but
a fond memory.
Life goes on but America did not
change for the better as a result
of these types of people. Their
only purpose was to make money;
I believe they will die alone
and in misery as a result of their
way of life.
So I ask you again, can you be
passionate and put your heart
into investing in real estate
by investing the way our corporate
investors did? I think not. Money
is no good when you get it by
deceitful ways. I encourage you
to work at balancing your objectives.
Lease optioning, flippers…you
are walking a fine line.
Here’s a flip side to communal
living. This story is a happier
scenario, so let’s have a little
joy here. I once lived in Key
West and I lived off base. Well,
I thought I lived next door to
Noah, and it sounded as though
he was building another ark. All
summer long, hammers and saws
seemed to be making some type
of racket, so naturally being
the neighbor I was, I got to know
the man next door. He never went
to work and I asked him one day,
“Don’t you have a job and he kind
of grinned and put his hammer
down and this is Mark’s story.
Mark and his brother were from
the Northeast and they had a 30-room
boarding house for college kids
there, at something like $300.00
a month. That was about $9,000
a month and they made the parents
responsible for the rent payments.
Mark would spend his time with
his family in the Keys for the
nine months that school was in
session. His brother was a local
up North and he took care of the
toilets, faucets, doors and windows.
Yes, they had their very own animal
house going on there, but Mark
factored in the abuse and would
spend 2 – 3 months a year, putting
the animal house back together
while the animals went home for
summer break.
Mark only worked three months
a year and the house (ark) that
he built next to us was a masterpiece;
it was beautiful. He was a master
craftsman and he loved his work
and spent a lot of his time with
his family in a wonderful climate.
Makes you kind of jealous, doesn’t
it? Well, don’t let it because
you can do it, too, but you must
get started. Mark was 45 when
I met him. I believe he was 25
when he got started, so my advice
to you is to get started now!
Dan Auito is a dual-licensed real
estate agent and appraisal assistant.
In addition to being a 20-year
veteran of the United States Coast
Guard, Dan has also founded a
non-profit drug prevention corporation,
a real estate consulting group
and is the author of “Magic Bullets
in Real Estate.” This 300-page
power-packed book (due out in
late Sept 2004) comes with a website
(on line in late Sept 2004) that
further supports its readers.
Please visit with the family at
http://www.magicbullets.com we
look forward to seeing you!
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