Master Real Estate Course

Lesson #11 Be a Person of Action

Objective:

• Get out there and make something happen.

1. Buy six properties. 2. Love your tenants. You buy a property and you pay off the mortgage. Then you enjoy the income. Then your children enjoy the income. Then your grandchildren enjoy the income. Your great-grandchildren will enjoy the income. When does this end? Now, you know why real estate investing is so great because it never ends. In a hundred years, your offspring will be saying, "Thank you great-great-great-great grandpa or grandma!" Start your family dynasty. This is beyond the comprehension of average people. You can do this. You deserve this.

Background:

Be a person of action. Get out there and make something happen. You will succeed by doing. You research. You read. You are learning a lot from your Mastermind Alliance, from other investors, from your research and from your reading, but at some point you have to stand up for yourself, alone, and act. As average people are paralyzed by indecision, you are self-confident. This is you, the warrior.

This isn't the stock market, where other people are making the corporate decisions for you. In the real estate investment business, you are in control. But, nothing happens without you. You are the commanding general. You have to exercise your control. Act.

In reading your Action Principle^®  every day and doing your twenty minutes of quiet time, hopefully, you will be brimming with self-confidence. If you see a house for sale for $190,000 that with a little TLC could be resold for $230,000, you don't set up a committee and take a vote; you make an immediate offer.

Be a person of action. You can talk. You can think. But, to get anywhere, YOU have to act. It's not your Super Agent's decision or your friend's or your father's or even your spouse's, it is YOUR decision.

A characteristic of the warrior is an ability to take decisive action. Act.

If there was one thing, the most important thing that I did as a real estate investor, it was to act. Even if you completely screw up and pay too much for a property, with time you will still be far ahead of your peers and certainly farther ahead than you would be if you didn't act. How many people do you know who bought homes and now regret the decision? They are making money with one property. You will be making six times as much money with six properties. Act. Go back and read the Warrior Mindset that opens each mission. Now, you understand. You will work and save and sacrifice to buy the real estate and pay off the mortgages and then, forever, forever you will have the wonderful people called tenants paying your rent.

Why do some people fail even if they have this system? They are afraid to act. They keep asking questions, but they are really hoping for an excuse not to act. Most people will tell you what they think you want to hear. If you act squeamishly, friends and family will tell you to be safe and not buy. There are others who will be jealous of your success and will tell you not to buy. There will be those who really don't care what you do. They only want an opportunity to tell you either how great they are or how stupid you are for buying investment real estate.

The warrior is confident. You are the warrior.

Let the Action Principles^® be your guide. Worry about yourself and what you can do and not how others are acting. Always remember, average are doing NOTHING! The average American family has less than $10,000 saved for retirement. Many workers will leave work on the last day of their lives feet first because they never could retire.

The warrior plans. You are the warrior.

You research. You ask the right people the right questions. You think. You make a decision and take action. Average people are clueless when it comes to real estate investing. Their opinions don't matter much. However, as you progress in your real estate career, you will meet knowledgeable investors. If you think that you have a good idea and you run this idea by knowledgeable advisors and they express caution, this should give you pause to do more research while listening to their advice.   Yes, eighty percent of people aren't qualified to comment on your plans but the other twenty percent may offer valuable advice.

All the information in this course and all your research and all your contacts are worthless unless you act.

Be Goal Oriented

If you own six properties free and clear of mortgage, you should be able to retire comfortably.

Do not forget the goal of being rich and retired in twenty years or less. You never have to work again. What does this mean to you? Focus on your great life to come. This is playing your guitar on the beach in Key West. This is sipping coffee on the Champs d'Elysees. This is writing a great novel. This is saving the whales. This is whatever you want.

Accomplishing this goal might take you six years to acquire the properties and twenty years to pay them off. Or, you can wheel and deal and accelerate the program. Or you can make up your own program.

In the Master Success Course, you will learn that only three percent of people have written goals and only one percent of people review those goals every day. Make your real estate investment goal part of your mission statement and read it every day. Most people are doing nothing or investing in the stock market and hoping that someone else will do something for them. You be different. You are a warrior, a person of action, with a written goal that you review every day. If you do this, I wouldn't be very worried about the chances for your success. You will have put yourself into that very elite group of achievers.

Average people are clueless and without goals when it comes to retirement planning. They are reactive, hoping that someone else or something else will save them. You do not want to put your financial future into your company's or the government hands. If you end up with a great pension and social security benefits, make this the icing on your multi-million dollar real estate cake.

Be Persistent

You may find two good deals in one month and nothing for six months. Here is a statistic to remember - the average person moves every seven years. You can take the total number of properties within your small specific investment area and divide by seven and have a pretty good idea of how many properties will be on the market in any given year. Wait. Be patient. The deals will come. In the beginning, you will have to go out and find the deals. After you have become an active and successful real estate investor, the deals will start finding you. You will be known as an active real estate investor who can make decisions.

A Harvard University study showed that people who have written goals which they review every day make ten times as much as people with no goals or wishy-washy objectives. Yes, there is a real world out there. Out in that real world, there are some people who make $30,000 a year and there are some people who make $300,000 a year. You life is formed by your choices. Make your choice. Sadly, most people have already made their choice to be average.

You must keep to your research. You must keep looking at ads in the newspapers and magazines and online. You must keep looking at properties. What does $100,000 buy in your investment area? $200,000? $500,000? $1,000,000? When you know value, you will see profit.

Average people are doing nothing. What are you doing? Challenge yourself. This is the long march. Others will whine and complain and quit. What will you do?

When you spot a good real estate deal and make $20,000 or $50,000 dollars almost in a flash from your research and decisiveness, this is the same $20,000 or $50,000 that many other people have to work a year to earn. This is compensation for your research time.

Put your knowledge to work. Craft great offers and negotiate those offers and buy properties or craft new offers.

Action, action and action must proceed location, location and location which will proceed hundreds of thousands and a million and multi-millions.

You will run into dry spells when there are few deals or when the market is so hot that everyone is a real estate investing expert. Take a deep breathe because this too will pass. Do not stray from your plans. Do not fall down on your research. Do not feel compelled to invest outside of your small specific investment area. You are the sniper. Wait. Wait. Wait. This is what makes you the warrior. This is what makes you special. You do not get discouraged. You wait.

Be a Big Thinker

The only way that you will ever make big deals is to work on big deals. Read Donald Trump's books and you'll see him bragging about making a few hundred thousand dollars on the way to work. He can make more money in one morning on the way to work than some people will make in their entire lifetimes! It is a mindset. It is an attitude. It is an expectation.

Move the decimal point in your mind. You only make big deals by doing big deals. You only buy properties by making offers. You only make offers after you've looked at properties. Get involved and make things happen.

Stop thinking about $2,000 and start thinking about $200,000. Someone is making big deals, and that person can be you. Some people buy two-family houses and some people buy 200-unit apartment complexes. No one is likely to run up to you in the streets and hand you bags of money. You have to earn it. And, forget the State Lotteries. Lotteries are just a means for government to collect tax money from people who aren't good at math.

At least realize that there is probably no better or safer way for you to achieve your financial dreams than local real estate investing. If you want, you can buy a 200-unit apartment building, but all you'll need are those six small properties.

Story:

Angela's Attitude

When I was in my early thirties, I had a number of different jobs. I was a high school teacher, a real estate agent, an investor and I worked for the president of a large real estate company as a ghostwriter.

Also working for that real estate company was an agent, Angela, who specialized in converting apartment buildings into condominiums.

Angela was a Southern Belle. She was a classy, glamorous woman. She owned a mansion, drove a luxury car and her clothes and jewelry were only the best.

Often, she met her clients at the finest restaurants. In her business dealings, Angela operated on a professional level that was way above your average real estate agent. I admit that I was slightly in awe.

For an article on condos, I had an opportunity to interview her and she was gracious, as I would have expected. In closing our talk, I made mention of a large deal which she had just closed, which would result in a significant six-figure commission to her. I will never forget her comments:

"Honey, life must be so much easier for you. You sell little houses and only have little problems. I have a Mercedes, a big mortgage, a cook, housekeeper, and private school tuition. I can't afford to do your job. I have to make big money."

Angela didn't say this in a mean or a condescending way. She just told the truth. She thought one way and I thought another. Personally, I had a lot of different interests and I never became a top agent like Angela, but I did learn a lot about the importance of attitude from her. Think BIG.

Be Realistic

We know from the Action Principles^® that you can't change others. You can only do your best and serve as a model. In real estate, the seller decides what happens. You can make an offer of $198,000 on a $200,000 property and that offer can be rejected. The seller decides. You can make an offer of $150,000 on a $200,000 listing and the offer is accepted. The seller decides.

Some will, some won't, so what, next. No one wins them all, especially when making offers. You don't have to win them all. You don't have to win most. You only have to win some. If you win some, you will prosper. You will make your fortune.

Every deal doesn't work. You may spend weeks or months on a deal and you may put up hundreds or thousands in upfront costs for NOTHING. This is the nature of the business. In every deal, there can be many factors involved: real, imagined, serious, logical, stupid, emotional, timely. Sometimes these factors will work in your favor and sometimes they won't. If you play the game, you will win some and lose some. But, remember you don't necessarily have to do lots of deals to reach your goals. You can buy your six properties in a straightforward manner and not get involved in anything more complicated than taking your rent checks to the bank once each month. In this course, you will read about converting and developing and rehabbing and wheeling-dealing, but you don't have to get involved in any of them. You can just buy your six properties. You will be a multi-millionaire in twenty years or less.

Use your immediate connections to find investment opportunities. If you are renting, will your landlord sell you your condo or your building? How about the next-door neighbors? Will they sell? Will any of your family members, sell you any property? Always be open minded and alert and aware to opportunity. You won't know if you don't ask, so ask.

Be Aggressive

You are a Master of Success. Be an extrovert. Don't be shy. Let people know that you are in the real estate investment business. Hand out business cards. Your mother, father, sister, brother, children, neighbors and co-workers should all know that you want to buy real estate for investment. And, they should all become your ambassadors, telling others that you want to buy real estate for investment.

Optional. Get the names and home addresses of every income property owner in your specific investment area. Send each a note every two months telling them that you are a buyer. If you become an agent, as discussed in a later lesson, this step will be a must.

As a broker/investor, I would send promotional pieces to all income property owners in my area once every two months. Many of these investors told me that they were "always" receiving mail from me. Actually, it was only six times a year. I asked them how many other brokers "always" sent them mail. The answer you know – no one. From my mailings, I bought a listed a few properties. I bought a few properties. I became known as THE investment property broker in my small specific investment area. If you divided the time that I spent on those promotional mailings, not more than twelve hours a year, into the profit I made from those mailings, it would be a lot of money for the time. You are not average. Do not act average. You are special. Act special. Do what others can't or won't do.

Optional. Place a classified ad or small display ad in your local newspaper to the effect that you are an investor interested in buying real estate. Since almost all deals are all cash, you can call yourself an all cash buyer. For example:

WE ARE BUYERS!
   Active real estate investor seeks immediate opportunities.
   All types of properties considered.

Fast decisions and closings.
   No brokerage fees. Call Bennett Realty 509-555-5555

Note that in this example, a business name was used rather than a personal name. Many investors choose to operate using a DBA (Doing Business As) format for acquisition and management. Check with your local town clerk and bank about using a DBA.

Make lots of offers. Would you buy the $200,000 property if you could buy it for $190,000 or $175,000? Make the offer. Offers cost you nothing! Make lots of offers. Will you insult the sellers? You are offering them a lot of money and all they have to say is "Yes, No or Maybe". If someone wants to pay them $200,000, they can do that. If the property is still on the market, obviously no one has. You are a real estate investor. You are looking for good deals. This is what every successful businessperson in every business does. Making an offer is opening a dialogue. Don't be embarrassed when making offers. Don't be intimidated by agents. This is not about them and what they want. This is about you and your investment goals. This is about what you want and what you are willing to do for yourself and your family.

If an agent who is presenting your offers appears to be negative, ask to accompany the agent and make the presentation yourself. An agent could be working against your interest for several reasons:

• She is embarrassed bringing a low offer on a property that she appraised at what she feels is a fair market value price.
• Your offer might be a co-broke with another agent, which would mean that they would have to share the commission.
• She might be working with a client that she thinks might make an offer equal to or higher than yours.
• She might be jealous or resentful of you for trying to steal a property.

In the final analysis, a property is worth what a ready, willing and able buyer is willing to pay for it. If a listed property is still on the market, that means that no one has offered the listed price. Offer less. This is not a popularity contest. This is business. You buy low and sell high.

Be Inquisitive

Keep reading all your local newspapers and real estate magazines. What are the issues affecting real estate? Who is building? Where? Keep surfing the Net to find websites, especially agent sites that cover your area. Keep informed of local zoning and appeals meetings.

Local politics can play a key role in your investment strategy, especially if you are developing or redeveloping properties. Who is in? Who is out? How can you support the winners? Is it in your interest to stay neutral or independent? Do all the area wheelers and dealers and movers and shakers frequent the same morning coffee shop? Then, that's where you go.

Remember, you don't have to remain an active investor forever. It's only going to take a few years for you to acquire your six permanent properties. Then, you can relax and watch the world go. In twenty years, you'll be financially independent. Or, you can accelerate the process and the reward. You are the commanding general. You decide.

Be Prepared

You have a lot of feelers out in the marketplace. You have your Super Agent as your prime ally. You don't know where your next opportunity is coming from. It isn't going to do you any good to tell the world that you are ready to buy if you aren't. Some people will languish for months over every detail of the sale of their property. For other people, a divorce, death, promotion, demotion, illness, transfer or a hundred other acts of life will necessitate a fast transaction. You want to be ready to avail yourself of opportunity. If you are a new buyer, have your pre-qualification and pre-approval letters ready. If you already own property, have your line of credit ready. If you are a more experienced investor, you have a line of credit.

Let's say that you buy a $200,000 house for $180,000. Using this system, buying a house for 10% under market value would be a minimum expectation. You might have a $160,000 first mortgage on the property, which means that you have about $40,000 worth of equity. Immediately after buying this house, you will want to get as much of that $40,000 as you can back in the form of a line of credit. A line of credit will be your "bank account" sitting there ready to be put to work on your next deal. However, you don't have to pay interest on your line of credit until you actually use the money. This is the perfect scenario for you as an investor.

Remember that as you continue your research, you will begin to discover how arbitrary real estate appraisal can be. From above, you have a house for $200,000 that you buy for $180,000. You receive a $160,000 mortgage from Bank A. After the closing, you now own the house and are in a different position as a borrower. You can immediately decide to refinance. You may or may not have done any work to the house. You approach Bank B and have the house reappraised for $220,000 or more. You borrow against this new appraised amount. Of course, as you continue to borrow at or near the full value of the property, your risks may increase. Based upon your own personal situation, you must determine the amount of risk you wish to assume. If you are borrowing to take advantage of another deal, the risk may be warranted. If you are borrowing to buy yourself a new watch and a fancy vacation, be careful.

Be a Nice Person

This isn't meant to be funny. Sometimes, people will sell you their property because they like you, and conversely, some people will refuse to sell you their property because they don't like you. My grandfather, Harry, had a mantra, "It's nice to be nice". Listen to Harry's advice. It pays to be nice and polite and respectful and considerate. This is following the Military Action Principles^™. You could be looking at the worst handyman's special in town, but it is never in your interest to insult the seller. When you are inspecting a property, the housekeeping of the owner or the tenants is not your concern. If you are buying a building with tenants, the tenants will naturally be concerned about a change in ownership. At this stage, the tenants may be hostile. Be pleasant and professional.

Take the extra step and make the extra effort. There is nothing wrong with creating a list of public officials and business movers and shakers and sending them holiday cards. You are going to be a business leader in your community, so act like one. Find other investors and network with them. Find the old timers who own investment properties in your area and listen to their stories. It all adds up.

It may make a lot of business sense to support various local officials with your time and money. Let common sense prevail. In politics, money usually buys access.

Let us repeat. Sometimes, people will sell you their property because they like you, and conversely, some people will refuse to sell you their property because they don't like you. Sometimes people who like you will sell you their properties for a very good price and on very good terms. Do you get it? It's nice to be nice! It can also be extremely profitable to be nice.

The Wealthy Mechanic

There is a very good series of books and videos on investing called, The Wealthy Barber by David Chilton. Well worth your reading. Go to your library. Remember from your Action Principles^® A-B-A-B (Always Bring A Book.) The barber is a millionaire because he has learned and applied the simple rules of investing.

In my town, we don't have a wealthy barber but we do have a wealthy mechanic. This fellow pumps gas and fixes cars in his small garage.

Why does he do this? It's not that this fellow needs the money.

This service station proprietor owns more than a dozen income properties. He is a multi-multi-millionaire.

This mechanic happens to be a very nice guy. He fixes cars with a smile. He is honest. You trust him. You like him. He has bought almost all of his properties without brokers or agents directly from his customers. Over the years, he has let his customers know that he is interested in buying real estate. The mechanic is a nice guy. The mechanic buys real estate. Customers are inclined to sell their real estate to this nice guy who has worked on their cars over the years.

There is not much more to this story. The wealthy mechanic did not get an MBA from a prestigious university. He was a nice guy who bought real estate from his customers.

And, I'm sure he'd be very happy to answer the questions of any local aspiring young investor. He would be a great mentor if anyone would care to ask.

Is there a wealthy barber or wealthy mechanic or wealthy plumber in your town? Probably, yes. Do your research. Patronize their businesses. Become friends. Ask. Listen. Learn.

As you research and learn the names of the owners of all the income property in your small specific investment area, you will find lawyers and doctors and architects. You will also find a few hair stylists and bus drivers and little old ladies. Remember, in this business, you don't need an advanced degree from a prestigious university; you need to become an expert on values in a small specific investment area. If the letter carrier learns this and acts, then the letter carrier will become wealthy.

Be Organized

Start to organize a history of sales in your area. How do list prices compare with eventual sale prices? What offices are the most active? Which agents are the most active? Start estimating the eventual sale prices for all new listings. Start a list of sales that you consider to be good buys and bad buys. Where are sales being financed?

From your Action Principles^®, remember the Japanese concept of Kaizen, or continual self-improvement. You keep working until you win. You win when you have your six properties. You will never regret this decision. Your spouse and children will never regret your decision.

This database of information will be your goldmine! Remember that this is the work of the successful real estate investor. Who is doing this work? Probably, very probably, only you will be making this investment.

Organize a time that is convenient for you to look at current listings. You want to see many different properties in your investment area in all price ranges. The more properties you see, the greater your knowledge base will be.

Be A Good Parent

Owning investment real estate is an excellent family business, and a good teaching tool. Everyone can get involved with yard work and cleaning hallways and touching up units between tenants. Teens can start doing paperwork and learning the income and expenses of property ownership. Imagine if your children could start their investment careers to acquire six properties, beginning at age 20 or 21. They could retire in their early forties!

Do NOT feel that because you may have had it rough that your kids should have it easy. This would be a mistake. You are going to be rich. Start teaching your kids about wealth management. Get your kids to appreciate that persistence and determination and hard work and study will equal financial success. Put your kids on the crew. If you do not make your kids work, if you do not demand responsibility, your monetary success will be as much a curse as a blessing.

Self-discipline is a warrior trait. Keep testing yourself. You will become an expert in a small specific investment area; with discipline, stick to that area. When you earn a little extra money, you will feel entitled to splurge, with discipline stick to your acquisition schedule.

John Maxwell's Ten Success Principles

Christian Leadership Expert and Self-Help Author

1. Choose a life of growth. Improve yourself.

2. Start growing today. It not what you will do but what you are doing.

3. Be teachable. Keep your mind open. Listen.

4. Focus on self-development and not self-fulfillment.

5. Never stay satisfied with current accomplishments.

6. Be a continual learner.

7. Concentrate on a few major themes: relationships, attitude, communication, leadership and personal growth.

8. Develop a plan for growth.

9. Pay the price. Don't be afraid to work for what you want.

10. Find a way to apply what you learn.

Library

Trammell Crow, Master Builder: The Story of Americas Largest Real Estate Empire, Robert Sobel

The Wall Street Journal. Complete Real-Estate Investing Guidebook, David Crook

How to Succeed in Commercial Real Estate , John L. Bowman

Property Management 101

You are a landlord. You are NOT the police. If tenants call and complain about any real or suspected criminal activity including loud noise, they should be told to call the police. A problem tenant can disrespect you but not law enforcement. With police reports, you have evidence to bring to court against a problem tenant. If problem tenants realize that you or other tenants will be calling the police, chances are the problem tenant will choose to live elsewhere.

Form your Mastermind Alliance of support staff before you need them. Remain loyal to dedicated workers. Replace the apathetic.

Love your tenants. Treasure them. They are the keys to your financial independence. You are borrowing hundreds of thousands of dollars but you don't have to pay that money back. You have these wonderful people called tenants to pay back all that money and make you rich.

Don't forget and respect the fact that your investments are your tenants' homes.

Operational Limitations:

Average people tend to have weak goals. They speak in generalized terms about being interested in investing in good properties in good locations without any specific knowledge about what "good" means. You are different. You are a warrior. You have a specific goal to own six properties free and clear of debt within twenty years or less. In goal setting, specific is meaningful and general is pretty meaningless.

Do not complicate our system. You do not need an MBA to become a multi-millionaire. You need your warrior spirit. You need a willingness to research and to take decisive action based on that research. If you also happen to be a nice person, this will pay dividends.

Jargon:

Assessor - A public official who establishes the value of a property for taxation purposes.

Chattel - Another name for personal property.

Condominium - A real estate project in which each unit owner has title to a unit in a building, an undivided interest in the common areas of the project, and sometimes the exclusive use of certain limited common areas.

Construction Loan - A short-term, interim loan for financing the cost of construction. The lender makes payments to the builder at periodic intervals as the work progresses.

Credit - An agreement in which a borrower receives something of value in exchange for a promise to repay the lender at a later date.

Depreciation - A decline in the value of property; the opposite of appreciation.

Installment Loan - Borrowed money that is repaid in equal payments, known as installments. A furniture loan is often paid for as an installment loan.

Liability Insurance - Insurance coverage that offers protection against claims alleging that a property owner's negligence or inappropriate action resulted in bodily injury or property damage to another party.

Liquid Asset - A cash asset or an asset that is easily converted into cash.

Maturity - The date on which the principal balance of a loan, bond, or other financial instrument becomes due and payable.

Mortgage - A legal document that pledges a property to the lender as security for payment of a debt.

Mortgagor - The borrower in a mortgage agreement.

Principal Balance - The outstanding balance of principal on a mortgage. The principal balance does not include interest or any other charges.

Real Estate Agent - A person licensed to negotiate and transact the sale of real estate on behalf of the property owner.

Security - The property that will be pledged as collateral for a loan.

Tenancy By The Entirety - A type of joint tenancy of property that provides right of survivorship and is available only to a husband and wife. Contrast with tenancy in common.

Title - A legal document evidencing a person's right to or ownership of a property.

Trustee - A fiduciary who holds or controls property for the benefit of another.

Question and Answers

How did you get started?

I was a high school teacher and bought a three-family house. Within a few months of ownership, a broker approached me about selling the property. I made more money on this first real estate deal than I would have earned teaching for two years.

Next, I bought a single-family house and a six-family house. I hated the six-family house because I thought it was too much work and complaints from ungrateful tenants. Then, my Super Agent, Don Nardo, educated me on the business. He explained that all the money I was borrowing would be repaid not by me but by my tenants. He showed me how one old man who had lived for decades in the building had paid for the building over and over again with his rent.

He taught me that average people on the street were never going to make me rich. The people who were going to help me get rich were my tenants and only my tenants. My tenants were my customers. He taught me a simple lesson that I never forgot, "Love your tenants."

What is the prime rate?

The prime rate is interest rate that banks charge their best customers. Changes in the prime rate are published in the newspapers and discussed on news shows. The prime rate is an index used in most adjustable rate mortgages, especially home equity lines of credit.

Isn't it kind of naïve to think that everyone can become rich in real estate?

The Action Principles^® and the Master Success Courses weren't written for everyone and are not intended for everyone. Most people aren't going to understand what we are trying to accomplish which is to buy 6 properties and to own them free and clear of debt within 20 years. Even people who understand the goal won't be willing to do the work necessary to reach the objective.

Unfortunately, most people will keep asking questions of themselves and others until they have sufficient reasons for talking themselves out of investing in real estate. They will justify their inaction with "Prices are too high right now." Or, "Interest rates may come down in six months." Or, "You don't want to buy old houses – they're money pits and you can't fix anything." OR, "It's hard to find good tenants."

They are looking for excuses so that they can feel good about not investing. Yes, the overwhelming majority of average people are just like them and don't invest. This is the typical slacker mentality. Much better to be safe and do what you've always done, which is probably nothing.  You can't make a mistake if you don't do anything.

How can I profit from "highest and best use?"

Thinking "highest and best use" is what separates the serious professional investor from the also ran wannabes. Very simply, is the current use of the property, the highest and best use of the property?

Could the abandoned gas station be converted into a Starbucks?

Could the nursing home be an apartment building?

Could the old factory be converted into loft condos?

Could the two-family houses be leveled and a twelve unit building be constructed in it's place?

Could the house located in the center of a large lot be moved to one side and a second house be built?

Could be the old school be converted into office condos?

This list could go on and on. As a serious investor, you are alert and aware. How can I create extra value? What properties are obsolete? What stores are missing that our community could use? What stores or companies are ready to go out of business? Does the area need more affordable housing or elderly housing or luxury houses? Your area is always changing and you can profit by being a part of that change. Always keep your research current.  Always keep thinking. Always try to see what is needed and what others may have overlooked.

Isn't this investment program too simple?

I hope the program is just as simple as it needs to be:

You define a small, specific investment area of about 25,000 people.

You drive around the area thinking about investment possibilities.

Through research, you become an expert on value in that area.

As an expert, you buy and sell and invest.

You acquire 6 properties. You pay off the mortgages –

And, and, and – in 20 years or less, probably have $4 million – maybe even more and maybe in less time – but let's not get too crazy here and only take baby steps of a million dollars or so at time

You can make this program a lot more complicated but why? This is simple. The program works if you do it. The program doesn't work if you don't do it.

For security deposit purposes, how can I differentiate between ordinary wear and tear and serious damage when a problem tenant moves?

There is no legal definition other than you know it when you see it. Most problem tenants will anticipate your use of their security deposit and either skip out without a forwarding address or simply leave owing you a month's rent. You lose but you win. Be happy to be rid of a problem tenant. Patch, paint and move on. If the unit is seriously trashed, videotape the damage.

About three years ago, a family moved into our neighborhood and they are like the Clampetts from the Beverly Hillbillies. They never mow the lawn and they have three junk cars in the driveway. They have two old sofas out on their front porch. The whole property is a disgrace and they are lowering property values for all of us. We are at our wits end. What can we do?

Actually the Clampetts did their best to try and fit in with their Beverly Hills neighbors. Your junkyard neighbors sound like the opposite.

Are you sure that the offenders are owners and not renters? If there were landlords involved, it would be their responsibility to clean up the property. Presuming the tenants signed standard leases, these leases would cover upkeep of the property.

Has anyone spoken with the house occupants? Perhaps, it would be possible to reach some sort of amicable compromise. This probably won't work but it is worth a try. Your hope would be to find someone in the offending house embarrassed enough to organize maintenance or, at least, to lend a sympathetic ear and offer some advice on resolving the situation.

Your next step would be to contact town government regarding local ordinances, which the offenders may be ignoring. For example, there may be a town policy on the storage of unlicensed and uninsured vehicles. There may be health laws concerning trash and other unsanitary conditions. Usually, there are fines associated with breaking these laws.

Your final step would be to organize a group of neighbors willing to hire an attorney to sue the offenders and/or the town.

Action Plan:

Expand your thinking. Think BIG. Research the larger investment properties in your small specific investment area. Who owns the larger apartment building and strip centers and office buildings and hotel? What are these properties worth? How are they financed? How are they managed?

Start making your action plans. What is your plan for this year? What is your plan for next year? What are your plans for five years and ten and twenty years?

Your life is formed by your choices. Have you written your mission statement? Have your identified your heroes? How do you want to be seem and treated? What will be your legacy?

Support:

• For real estate values: http://www.zillow.com
• More real estate values: http://realestate.yahoo.com/Homevalues
• And more real estate values: http://www.domania.com
• And still more real estate values: http://www.electronicappraiser.com
• For real estate news: http://money.cnn.com/real_estate
• For commercial real estate investors: http://www.loopnet.com
• For state financing loan program information: http://www.ncsha.org
• For real estate blogs: http://www.real-estate-blogs.com

Inspirational Insights:

Buy low, sell high and don't be greedy.

Mortimer Zuckerman, b. 1937, billionaire publisher

I have a dream that my four little children will one day live in a nation where they will not be judged by the color of their skin but by the content of their character.

Martin Luther King, Jr., b. 1929, civil rights leader

All things are difficult before they are easy.

Thomas Fuller, b. 1608, English churchman

A man never discloses his own character so clearly as when he describes another's.

Jean Paul Richter, b. 1763, German writer

Management is doing thing right; leadership is doing the right things.

Peter Drucker, b. 1909, Management expert

You can't operate a company by fear, because the way to eliminate fear is to avoid criticism. And the way to avoid criticism is to do nothing.

Steve Ross, b. 1927, former CEO Time-Warner

You can get everything money will buy without a lick of character, but you can't get any of the things money won't buy--happiness, joy, peace of mind, winning relationships, etc. without character.

Zig Ziglar, b. 1926, Motivational speaker

Courage is doing what you're afraid to do. There can be no courage unless you're scared.

Eddie Rickenbacher, b. 1890, WWI flying ace

Be prepared to close your briefcase and walk away.

Scott A. Wolstein, CEO of Developers Diversified Realty

Gain a modest reputation for being unreliable and you will never be asked to do a thing.

Paul Theroux, b. 1941, American writer

Life's battles don't always go to the stronger or faster man. But sooner or later the man who wins, is the man who thinks he can.

Vince Lombardi, b. 1913, NFL coach

The true worth of a man is to be measured by the objects he pursues.

Marcus Aurelius, b. 121, Roman emperor

You're never beaten until you admit it.

General George Patton

Failures do what is tension relieving, while winners do what is goal achieving.

Dennis Waitley, Self-help author

During my eighty-seven years I have witnessed a whole succession of technological revolutions. But none of them has done away with the need for character in the individual or the ability to think.

Bernard Baruch, b. 1870, American financiar

You read a book from beginning to end. You run a business the opposite way. You start with the end, and then you do everything you must to reach it.

Harold Geneen, b. 1910, financier

It's what you learn after you know it all that counts.

Coach John Wooden

Outside show is a poor substitute for inner worth.

Aesop, b. 600 B.C., Fable writer

Never renege on a deal.

Jeffrey Gural, President, Newmark & Co. RE

The man who does things makes many mistakes, but he never makes the biggest mistake of all - doing nothing.

Benjamin Franklin, 1706, Statesman

For with God all things are possible

Mark 10:27