Congratulations, not on finding this web page, but because you have stumbled on to the way I personally made quite a bit of money. My name is John A. I have been investing in real estate for 20 plus years, almost half my life. I have bought and flipped houses. I have bought fixed up and rented houses. I have tried just about every single family house deal you could try. Around 30 properties have run through my companies. I still have two rent houses, one note I am carrying on a house i sold, three shopping centers, and one single tenant commercial building. So, what makes me different from all the other investment gurus hawking whatever the program happens to be today? I am almost out. I have made my bones and actually really like telling other investors the how and why in my way of thinking. I hope, really hope that some of you will take this book for what it is, just someone who has done this taking the time to show you the ropes.
A millionaire. Even though that is really not all that much money when you think about retiring young, the term still has the ability to make people stop and take note. Becoming a real estate investor and a millionaire is really not all that complicated. You can do this. I did it and I am not the most disciplined guy around. I began this adventure quite by accident. I was enlisted in the Coast Guard. I had to get up every morning, press my uniform and polish my brass and shoes. It was early 1987. We started early and between the commute and uniform preparation I was generally up by around 4:30. after watching the headlines and the weather I would try to find something to watch while ironing and drinking coffee. I ran across and earlier version of what most of you have seen on television. The guy with the inside knowledge. The guy who knows what “they don’t want you to know”. Or the little known secrets of the big investors. It is all the same with one very marked difference. Back in the late eighties the investors, who had made all that money through whatever the program was, looked, well, like idiots to me. Most of these people seemed to be incapable of tying their own shoes. Some spoke such poor English that subtitles would have been helpful. Well I like to think that I am a little smarter than some people. Not most people to be sure, but some. I mean if you lined up everyone in this country by smarts I think somebody would be to my left. If only Hugo Chavez and Cher. Anyway I figured if these semi literate people could do it so could I. I wound up on a twenty year career in real estate and learned almost all of it the hard way. I had no mentor. No smart older father figure to tell me what was what. But I learned. I paid attention. I talked to people, and I watched. I watched other investors make big money and I have seen people lose quite a bit through stupidity. I have done deals that have paid off better than I could have hoped. And I have really lost my shirt a few times. Now what I want to do is help you out. I like helping people learn the ropes of this business. I will tell you all the things I wish someone would have told me. Looking back there are some things I would change. But on the whole I would do it again. I have done very well. My future looks better now than it ever has. Early retirement is within my reach, with a comfortable income for life. I have no boss to answer to. Except my wife. No one tells me what to do. Except my wife. But it is still a much sweeter gig than I deserve. I am well aware of that. And by helping you get started I am doing my karma a good turn.
I bought my first rent house in 1987. It was the bottom of the oil bust in Houston. Pages of foreclosures were listed in the paper every week. Rents were going up due to the freshly foreclosed owners needing homes. Ok, so here I am 23 years old with a rent house. No experience in land lording. No repair, marketing or people skills. But I was determined to figure it out. I learned everything the hard way. Never getting much advice. Not knowing even the basics. That is why I am writing this book. There is and appalling lack of practical information for the small time landlord. Sure you can watch the fix it and flip it shows. But they cram a two month flip into 43 minutes. It takes longer, trust me, sometimes much longer. And the learning curve is not only steep but expensive.
So the point of this is to shed some light on the shortcuts I have learned. All the basic repairs you use the most. Most repairmen charge a trip charge plus parts and labor. You can do most of this yourself. Hopefully I can tell you things others have left out of their books and “Real Estate Investment Courses”. Some things may seem like common sense, but when the note is due and you still have no tenant it is easy to get flustered and make mistakes. I will shoot straight with you because I have no axe to grind. In my experience with investment clubs I have seen most of the bad mistakes I managed to miss on my own.
I got lucky and found a school that taught home repair and remodeling. They actually built a house from the ground up inside a warehouse. It took around three years but I took every class they offered. Plumbing, sheetrock, tile work, electrical and quite a few more classes were offered with very small classes. Taught by the best instructors they could find. I painted houses with a professional crew for awhile. I worked on appliances. I managed my own properties. In that time I have learned quite a bit about the game and have passed this on to other investors as I could. Several years ago I joined a real estate investment club thinking I would meet some salty old dogs who would show me things I never picked up in my work. Guess what. I had more experience than most and was soon tapped to give an Investing 101 class. Now certainly there were others who knew things I did not. Multi family, trailer parks, hotels, and out of town properties. I was always the hands on investor. I did my own repairs and turnovers. To save money I picked up tricks along the way I have not seen in any real estate book. To save time I learned shortcuts and quick fixes. This book is not really for the investor who already has lots of rentals and a management company to handle them. This book is for newer folks. People who want to make some money and handle things themselves. Who are not afraid to get dirty and sweaty. People who already have a job and that want to do better for themselves
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I feel compelled to set most of you on the right path now. If you think you will get into real estate, make a ton of money quickly and never deal with tenants you are kidding yourself. There is saying in real estate about people who do not want to deal with tenants. “Everyone wants to go to heaven; no one wants to die to get there.” It takes time to find properties and manage them properly. Dealing with tenants is not as bad as most people think, if you follow some simple rules. You can make money. You can become a millionaire. You can live the life you are looking for. But, that will take time and hard work. Surprisingly you do not need to be a genius, just tenacious.
I will also tell you of the sometimes funny sometimes bizzare world of the landlord. How I wound up surrounded by a S.W.A.T. team at one of my rentals. Why I drove through the streets of Houston, my truck loaded to overflowing with the most hardcore pornographic magazines imaginable. How I ended up on television rescuing cats on Animal Cops Houston. Why I stole other peoples trash to cover the drugs I was taking to the dump. This, my friends will be the unadulterated whole truth about what to expect.
As I learn I will expand this website as needed. I will cover basic repairs and everything you need to know to start in this business and succeed.
IS NOW THE RIGHT TIME TO GET STARTED?
Well no one can answer that with absolute certainty. Let me try to explain why I think now, the end of 2009, is one of the best times to get started. Most of the money that I have made in residential real estate has been realized through appreciation of the houses that I had as rentals. I have made a fair amount through rents but the big money, the kind that allows you to do more with your life, has been in the value of my properties going up. Right now I think we can all agree that housing prices are down almost everywhere.
The current financial crisis that has plagued the mortgage market is something that I have seen coming for several years. This is not because I am smarter or paid more attention than the analysts. It came about as I saw the tenant mix declining as more unqualified people were given loans. For those of you who are unfamiliar with the loan approval process let me tell you about my first house that I bought to live in, in 1987. I purchased this home with a Veterans Administration loan. We signed the contract on our new home and provided the application to the bank. We had a closing date of about 40 days from the date of the contract. It took a month for the final approval of the loan to come through. This was because everything was thoroughly checked in regard to the information we provided on that application. At that time it was common for a mortgage company to hold that loan for years sometimes decades. Contrast that with the huge push to get everyone in a house that started around 2004-2005. Where most loans could be approved in a day or two. There were huge institutional lenders who were making what were called (no doc loans or stated income loans). What was happening was this. The institutions were making loans on properties with very little, if any, confirmation on what the future homeowners said their financial situation was. So, in theory you could spend your day asking “would you like fries with that” and tell the lender you made $75,000 a year. Because the lenders were selling these loans off in bundles, or groups, they really did not care about the loans future stability. When you add the proliferation of (interest only, negative amortization and other odd types of loans) they were looking for trouble. An interest only loan is one where you could pay for years and still owe the original borrowed amount. These loans are fine as long as everything appreciates rapidly. If there is a slide in values you can very quickly owe more than the property is worth. As quite a few of the loans were made to people with no money down, or worse %110 loans, they had no incentive not to just walk away from the property allowing it to go back to the lender.
Now why is this important to you?
Because of the basic laws of supply and demand, that’s why. Think about this for a minute. There are more houses on the market in what is termed “distressed condition” this forces the lenders and owners of these properties to sell them at a lower price than they would like. Correspondingly, every one of those people who had to move out of a house they could not afford is still living somewhere and it is likely they are renting now. With more tenants in the market rents will increase accordingly. So if you pay less for the property and get higher rents from that property that is a good thing for an investor. When I began investing Houston was in a similar situation. The oil bust was on and there were lots of homes for sale. More tenants in the market meant lower vacancy rates and higher rents. So it turned out to be a fantastic time to “go for it”. I see a reflection of that situation now in the market. So if you are on the fence about this think about what I have told you and decide if this is what you really want. If it is then maybe now is the time to move on this.
Oddly enough seeing all this through landlord’s eyes, lots of evictions due to the tenants still out there being pretty bad, prompted me to move up into commercial property. I did a 1031 exchange, for the uninitiated I will explain these later, for my first small shopping center in 2005. That turned out to be an excellent move for me and it has moved my investments to the “next level”.
