Its been a while since we did one of our Meet the Investor interviews . . . I hope we’ll get to post these more regularly! With that in mind, we’ve got a great interview for you with real estate investor Rich Weese! Want more articles like this? Create an account today to get BiggerPocket's best blog articles delivered to your inbox Sign up for free Meet Real Estate Investor Rich Weese How long have you been investing in real estate? I’m sure there aren’t too many members of BP older than me! I have been involved in a lot and seen all facets of real estate; recessions, inflationary spirals, and the ups and down of real estate in many different areas of the country. I started in real estate by accident in 1972. I was in my 3rd year of college and was urged to drop out and try selling real estate for a friend. He was a Broker and was consistently trying to sell my wife and I something. We had no money and I was working for Alpha Beta Markets in their kitchen cleaning ovens and cheese conveyor belts from 3 until midnight, and attending school during the day. Tell us about your first deal My friend was very persistent and kept finding properties to show my wife and I. My friend tried to sell us a house, but we were living in an apt for $110 per month. Any house was out of our range. Eventually, he found a duplex that was $24,900 and each side had 2 bedrooms and 1 bath. He told us of an FHA program called 221-D-2 that only required approx 3% total in down and closing costs. Our payment was going to be $215 per month and he said the front unit was rented for $140. We could live in the other unit, with a garage and only pay the difference of $75 per month. This sounded really good, except we didn’t have the 3%. The Broker made me a deal. If I’d agree to go to work for him for 1 year, he’d give me the selling commission of about $750. That would pretty much pay for our down payment, so I agreed and enrolled in Lumbleau real estate school in Santa Ana, CA. I had my salesman’s’ license in 28 days from start to finish. We bought and moved into the duplex, our first deal at 330-334 Walnut, in La Habra, CA. How did you get started investing? Not only did I get into real estate by accident, but I became an investor by accident on my first deal, this duplex. I started selling houses, and hated it. Working mostly with the wife of the couple, showing her homes, I quickly realized this wasn’t what I wanted. About this same time, my wife and I had cleaned up the yard at our duplex, removed some ivy and installed a wood fence along the front side. One day a fellow stopped by and asked if I’d sell it!! I think we’d owned it 3 months. I said I didn’t think so and explained I’d just bought it. He asked how much did I pay? I told him the price and he asked if I’d sell for a 5K profit at $29,900? The 5K was a HUGE amount for someone earning $1.35 an hour. I told him yes, not realizing I was about to really get an education. He was truly an investor. He offered the following; A house with about $1000 of equity that HE had bought on same 221-D2 loan program. A note for $1000 with interest payments of $83.33 mo and balloon in 2 years. An older upside down bathtub style Porsche automobile (60ish?). $1500 cash. I’d have wheels, cash in my pocket, an actual house, and $83 per month to help with house payment subsidy!! We did the deal and became accidentally involved in R.E exchanging and had learned from a real investor. This became my first investment as well as my first deal, first exchange and first sale. What attracted you to becoming a real estate investor? I found the offer made by this individual on the duplex exciting and something I wanted to pursue and I got involved looking for other properties. This fellow became my first guru. I had really found my niche! I loved the trading or doing deals. It was a lot more fun than just showing homes. I started buying other investments. My wife and I made a deal. We’d live on HER income, about $500 per month and invest everything I made back into real estate. I tried to convince others to do the same, but they saw me as a young kid with no experience. I went out and did it for myself. My broker started asking ME the questions and yet was taking portions of my commission!! I decided to get my Brokers license and open an office. I met someone at Real Estate school that I convinced to work for me and also hired a brother in law. The 3 of us opened an office in a dumpy area of Placentia, Ca. and called it “Mike Weese Investments”. It was a perfect time in a perfect area!! We started making lots of money, mostly on deals we found, bought ourselves and earned commissions. I bought a brand new red Cadillac and people started to notice I was progressing. I’d lived in the same area of Ca my whole life, came from lower class income and people saw the difference. This was 1974. What would your dream deal be? Have you had a “dream deal” yet? In 1974 I went hunting for the new office location. I was thinking very big at the time. This was my first truly scary investment. I found a brand new vacant 30,000 sq foot office complex and decided I’d try to buy it. It was $1,475,000 and seller was the developer and he wanted 10% down. He had a convertible loan with Metropolitan Life Ins. It would convert from construction to permanent when 80% full. He had it listed for a 3% commission and agreed to pay me $40K. Now I only needed approximately $100K. I had purchased 17 older units in Whittier, CA and asked him if I could create a note for $60K. He said okay but wanted it as a 2nd for $40K and a 3rd for $20K. It gave him flexibility if he needed to sell one or borrow against one. Now, I was down to $47,500 needed. I convinced my parents and my wife’s parents to each put in $20K. I still needed $7500. The first person I had hired to join me in my real estate, my friend agreed to do it. I presented the offer and it was accepted. Our payment was $14,909 PER MONTH. I’d negotiated a deal where the builder would manage the building, lease it out and pay me an 8% cash on cash return for one year. At the end of one year, it was my problem if it wasn’t rented. We named the building “Weese Financial Plaza” and put our new office in. Now I really looked successful and people started to come to me, both salesmen and investors. These were people I’d talked to before, that now WERE interested in what I had to say. I started holding seminars in our building and it just took off. People were writing checks and my salespeople started bird dogging properties in many western states. I began doing real estate syndication (fancy name for limited partnerships). We were doing a lot in CO, so I obtained a broker’s license and opened an office there and hired a bunch of bird dogs. We bought 156 units in Denver as well as some smaller ones, as well as 202 and 161 in Colorado Springs. We also bought many in AZ, TX, CA and OK. Within a short period of time, I was tired but well off financially. Oh, btw, in less than a year, the “Weese Finanacial Plaza” building was 95% full, and throwing off a nice cash flow. I gave my dad the job of onsite mgr, and he loved it. A large escrow company, Preferred Escrow, moved into my building and asked if I’d sell a share of it. Eleven months after purchasing, I sold it for $2.2 Mil!! I took a large note, which I split with partners, kept 30% of the building ownership and earned a $70K commission. This was my first “Dream Deal”. What was your toughest deal? My toughest deal was done in 1975, and I’d never be able to duplicate it again. It was a 26 legged exchange including properties from 4 different states and many owners and partnerships. It took me over 3 months, night and day to get it completed, but was a tremendous achievement. Once again, there was a car involved! One of the investors lacked enough cash to fund his total acquisition part. He owned a 1965 Jaguar XKE convertible and offered it to offset his cash shortage. I took the car as part of my commission. The car, promissory notes and cash received for commission totaled in the very high 6 figures. I was nominated for Real Estate Exchangor of the year for State of CA for it, but didn’t win. How many deals have you done in your career? Personally, my wife and I have personally owned over 1000 single family residences. I have been owner or partner in thousands of apartments and several office buildings. I wouldn’t know the total number of deals I’ve been involved in. At the height of my career I had 206 investors before retiring and some were in as many as 6 partnerships. I almost bought the Von Richthofen Castle in Denver to live in and hold seminars 30 years ago, but my offer came in 2nd. It was really something. Do you have your real estate license? I was a licensed Broker in both California and Colorado in the early 70’s for 7 years. I decided I was happier without overseeing sales people and let my licenses lapse. There are definite benefits to being licensed from a commission standpoint. There are also other benefits from NOT being licensed, in my opinion. What is your focus (area of expertise)? I don’t think I have any one area of expertise. I’ve pretty much done it all. Brokerage, no money starting out, property management, foreclosures, handyman company, built 44 custom homes in St. George, UT, picked 3 booming areas at correct time(so. CA, UT, Casa Grande AZ) and feel I’m in my 4th and 5th currently, south TX and MS. I was an original guru before TV, and have spoken for seminar companies as well as Chamber of Commerces, Rotary Clubs etc. in CA, Mirage Hotel and Lake Las Vegas, NV, Salt Lake City, UT, Phoenix & Tucson, AZ and Rio Grande Valley, TX. I also self published a book of my early real estate experiences called “From Janitor to MultiMillionaire”. I’ve never offered it for sale, but have freely given it to those that asked. I’ve continued to buy and develop real estate for nearly 40 years and have a longer perspective than many short term investors or newbies. What do you look for in an investment? I look for good investments that will benefit over the long run. I’m mostly buy and hold for long term. I do buy foreclosures and keep some and sell some to turn over the money. I’m not one that is adamant on cash flow. I think that is an area that has negatives to many true investors. No tax benefits per se, usually older dumpy properties with little hope for appreciation and don’t afford much depreciation. I suggest most new investors try to buy break even properties, and just like Monopoly, buy as many as you can. Keep them, refinance and buy more. Keep your main job for the income end and build foundation of properties first. Cash flow will come as rents increase, but don’t sacrifice growth option at desire of cash flow to begin. There are too many gurus out there preaching cash flow and “replace your job with real estate income”. I’m the opposite of those. Cash flow just happens, in time, but not worth sacrificing acquisition of additional properties by having to put more down to obtain cash flow. There are 4 main benefits to owning real estate: 1. Appreciation 2. Depreciation leading to tax benefits 3. Principal pay down 4. Cash flow Charts will continually show that #1 and #2 are the keys to creating “TRUE WEALTH” in real estate, and far out distance the last 2 in the short or long term. What are some of the biggest mistakes you’ve made or seen made? For me, my biggest mistake was retiring at age 29. I had made millions and became lazy on continuing to invest and feed the mechanism of real estate. I should have been more aggressive in exchanging and acquiring more real estate instead of living on the past. From age 29 to 58, I was basically retired and raised my 6 kids. At age 58, I corrected the error and started investing again. In the last 15 months, I have purchased 59 homes, sold 13 of them and continue to purchase more each month. What advice would you give to a beginning investor? My advice to a beginning investor would vary, depending on age of investor, income, risk tolerance, goals from investing (cash flow, tax benefits, retirement, etc), wife’s’ attitude, would all enter into my advice. I’m conservative by nature, although I took many “risks” when younger. I’d urge caution to new investors and I would question all figures furnished to investor by a seller! Determine their motives, if any for their advice to you. Study those that have been really successful. Don’t become a seminar junkie! And most important, always have an exit strategy for your investments and plan for a rainy day. It will rain!! What advice would you give investors, given the current economic situation and lending environment? First: Double check and triple check all the income and expenses on a subject property given to you for consideration. Most are overstated and inaccurate. Second: Don’t wear binders or have tunnel vision. There are many options available in the real estate game. Third: Remember there is more money made in down markets in both real estate and stock market. While most are pulling their head back in their shell, the smart ones are out and looking around! Fourth: No one will ever take as good care of your money as you will. There will always be challenges and changes to the real estate and financing market. Be flexible and ready to change when necessary. Creative financing will set apart the successful from the non-successful. Learn new strategies and put them into action. Don’t assume “It Can’t Be Done”! Quite the opposite. Assume “It Can Be Done” and then find the way to do it. Is there anything else you’d like to share with the rest of us? I’d hope to be able to share the passion I have for real estate and convince others of the amazing things it will do for you. Nowhere else can you find an opportunity where someone (bank) will loan you money to buy something and someone else (tenant) will make the payments for you. Eventually, you’ll own something free and clear and it will be worth X amount of dollars. I don’t know what X will be, but it will be more than what you paid and a 1000% return on actual money invested due to the power of leverage. BiggerPockets conducts our Meet the Investor Interviews by email. We cannot verify information contained within and print these interviews to stimulate thought and healthy discussion.