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Video Transcript
Hi, I'm martial arts master Bill FitzPatrick and this is Real Estate Investing Mistakes #1 If you have the persistence and determination to become a Black Belt You have the persistence and determination to become a Black Belt Millionaire As your teacher, I want you to REALISTICALLY see the challenges ahead I want to share with you the good - copy that I want to share with you the bad and the ugly - avoid that As a martial artist, you know that you don't win every fight I have mentioned that I sparred often as a brown belt - I was good but there were just other guys better than me and I lost - not terribly - but I lost - always 6, 7, 8th place However, NOT winning trophies did not stop me I persisted and earned a black belt and eventually became a martial arts master Persist In business, in real estate, successful people are willing to make mistakes And, learn from those mistakes I made mistakes I recently brokered the sale of a 6 family house for $525,000 I bought this house forty years ago for $25,000 Sounds like a good deal Buy for $25,000 and sell for $525,000 WOW, half a million dollar profit on one property! The problem is that I NO LONGER owned the property When I bought the 6-family for $25,000 - At that time, I was a high school teacher - After school and on weekends I worked on my properties After a few years of updating the units and the mechanicals Well .... Once again, my great agent Don Nardo, without the property even being on the market Have you heard this story before? Don told me that he had a buyer willing to pay top dollar I sold the property for $105,000 My net profit was about $50,000 and NOT $500,000 And, I'm just rounding off numbers here - even after selling expenses, commissions and capital gains taxes Lets say I made $40,000 Well, lets put the deal into the proper time sequence This deal took place in the 1970s - Back then, I was making $10,000 a year teaching So, on this ONE real estate deal I make the equivalent of 4 years of my teaching salary Yes, I thought I was a real estate genius I thought I would be Donald Trump - but - of course back then no one knew who the hell Donald Trump was I jumped at this deal from Don and that was a mistake Think Bill, What does Don want I can't blame him - he is a real estate agent He wants to make commissions Why was selling this property MY mistake - Not blaming Don - MY mistake Because this property was perfect - It was in the center of town Walk to shopping and the train Stucco exterior - almost no maintenance It was an unusually good property because it was built as a 6-family A well-built 6-family It was NOT some crazy chopped up conversion There were six identical one-bedroom units - All separate utilities Basement storage bins and coin-op laundry Very small yard for minimal upkeep - yet off street parking for all six units The units are affordable for one person or a couple Every year - year in and year out Always 100% rented - zero vacancy rate Every month - month after month - after year - after decade 6 happy tenants paying rent It was as close to a perfect multi-family investment property as you could get When I talk about properties being cash machines, this property has been churning out profits for over 80 years and will easily go another 80 years It was a KEEPER I sold it. That was a mistake I should have refinanced the property - Taken out enough to use as a down payment on my next purchase and then - over time - have paid off the mortgage And by refinancing rather than selling no capital gains tax When you smart enough to acquire an excellent property You keep it My mistake
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