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Real Estate Mistakes #1

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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

Real Estate Mistakes #1

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