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Archive for February, 2012

Quotes

Warren Buffet on CNBC:

I'd Buy Up 'A Couple Hundred Thousand' Single-Family Homes If I Could.

Warren Buffet
Articles

“Own the Ground You Walk On”

MalichyToday Malachy, a little Pekingese, won best in show during the 136th annual Westminster Kennel Club dog show Tuesday, Feb. 14, 2012, in New York.

I’m a big dog lover, so I was very interested.

I heard one of the judges say that he loved the way Malachy “owned the ground he walked on.”

My life kind of passed before me as I remembered all the times that I did not feel like I owned the ground I walked on, and all the times when I did feel like I owned the ground I walked on.

But for the purposes of this blog post, I’ll stick to how it relates to landlording. 🙂

The first time I felt like a stranger on my own property is when Josh and I bought an 8-plex.  I arrived on a Saturday to clean a vacant apartment.  A little punk tenant immediately confronted me, and told me what he wanted to do to me and how he wanted to do it.

Holy crap!

My blood pressure went through the roof and I decided I better take a walk down the street.

I called my son, who was on the way to help me, and told him what just happened.

Then I wished I hadn’t done that.

So, I called the police and asked them if they would come have a talk with the punk, because my son is 6′ 3″ and the punk was 5′ 3″ and my son was probably going to come and defend my honor!

That was the first time I felt like a stranger on my own property.

The next time it happened was right after we bought an 18-plex.

A non-paying couple decided to try to start a mutiny.

They cornered me on one of my first days on the property and told me how horrible the area was and how horrible the property was…basically all of the reasons they had amassed to defend their position that they should not have to pay rent.

My guess is that these horrible oppressive tenants are why the former owners sold us these properties!!

I served them.  I evicted them.  I renovated the units.  I rented the units to nice people.

Now I own the ground I walk on.

Don’t let horrible oppressive tenants make you feel like you don’t own the ground you walk on!

Video

Why taking risks is a good thing – Francis Ford Coppola

Articles

Fund Your Fabulous Retirement with Cash Flow from Rental Property

Nest EggRecently, I got an email that went something like: “Sure, right, easy for you to say.  You can buy rental property because you have a law degree and money and credit.”

Huh?

Let me just say, that when I started investing in real estate with my son, I was fresh out of law school with huge student debt, in my mid-40s, no money, no time, no retirement plan, and barely any credit.  Plus, I had just finished a 14 year stint as a single-mom.

Yep, I was really special.

We made only a tiny bit of profit on our first investment, after investing a whole summer of work.  (We made the mistake of trying to be flippers.  Now that I think of it, that was only one of a huge number of mistakes!)

We went negative on our second investment, a condo, which went down in value about $25K the first year we owned it because of a ton of foreclosures in that development.  The condo is now worth double what we paid for it with a nice positive cash flow.

On our third investment, an eight-plex (which we had no business buying), we found out at the last minute after investing $15,000.00 earnest money, $3500+ for an appraisal and inspections, etc., that we couldn’t qualify for the loan.  I wasn’t willing to walk away, so I broke down and begged a relative for the loan.  It was horribly embarrassing.  The relative gave us the loan and took a first position lien (because the property was a good investment) at a whopping 8.5% interest.  We had no track record, so we paid through the nose for the first three years that we owned that property.  My son and I did all the work (in our spare time after hours and weekends) for the first three years.  Plus it was negative cash flow and Josh and I had to work to feed the creditors.  (Please don’t follow this example!)  After that we were able to refinance at 6.5% interest and we finally had positive cash flow.  Today, 8.5 years after the purchase, the property is worth twice what we paid for it and we are currently refinancing for about 3.85%.  Booya!  Now we’re talking cash flow.

So don’t be a big stinking crybaby!  (To paraphrase Donald Trump.)

Let me tell you what is way more valuable than money or credit.  It’s the burning DESIRE, the drive, the motivation to be successful, to win, to be self-made.  This is the entry ticket to the game.  If you have this great desire, it’s game on.

You are going to make mistakes.  You will sometimes lose money.  You will experience frustration and aggravation and nasty little punks that get all up in your face.  You will start out working long hours.  You won’t know how to do a thousand things.

But over time, you will experience pride and accomplishment.  You will have a ton of fun making things look great and renting it to nice people, and you will fund your fabulous retirement before you know it.

You may have to be creative, especially to start.  But if you actively look and actively make offers, suddenly you’ll find a property and a situation that will click.

Now get out there with a smile on your face and put together a great retirement…one cash-flowing rental property at a time!

Quotes

The Greatest Opportunity Ever Is Just About to Pass You By

How much louder can I say this? This moment is the greatest opportunity ever to be an American homebuyer. It is the best moment in history. We may never see opportunity this great in our lifetimes. Time's "a-wasting" actually... You're about to miss the best moment, if you don't get on it, right now. The "V" bottom (as I call it) – where you can get the very best prices – is passing you by as I type.

Dr. Steve Sjuggerud

Dr-Steve-SjuggerudDon’t miss today’s article by Dr. Steve Sjuggerud!  Go there and read it now.  Seriously!  Do it now.

Links

Good News for Landlords

Rents are RisingThe KCM Blog just posted this happy graph, showing average national rent increases over the past three years and projected rent increases over the next three years based on a report from Marcus & Millichap.

Tipping PointOn the other hand, a recent Investor’s Business Daily article opines that high apartment rents are pushing renters to buy homes.

But fear not, because “more renters are on the way.”  Supply and demand is on our side.  There are a large number of echo boomers age 20 – 34 entering the rental market which are likely to make up for those who leave it.

All of this is terrific news for income property investors!