Do Not Let Your Sordid Past Stop You from Becoming Wealthy
Credit reports full of black marks, marriages strained to the breaking point, jobs lost-some never to return again- and foreclosed houses bought by renters that should have remained renters-all these happenings will close these ten years worth of economic blackness, of social turmoil wrought by a government powerless to stop it. None of this has the power to stop you.
There is an old saying, “What does not kill you makes you stronger.” And resilient real estate investors bounce back from the hard times.
My first attempt into real estate moguldom went very badly. I hated it and wanted out. Two years into owning my first tri-plex, cash flying out the window and tenants running me ragged, I was ready to give up the ghost and be a renter the rest of my life. All I knew about real estate investing was losing money, tenants lying and cleaning debris-filled units. The idea was to buy a 3-unit building, live in 1 unit and rent out the other two.
Isn’t it a good idea to have your tenants make the house payment?
It was good to try it, but I failed in my execution of it. I did not know much about real estate investing or managing tenants. The building was in a not-so-good neighborhood, and I found it hard to attract good, stable and long term tenants. The first night there were cops next door on a domestic disturbance call. There always seemed to be a unit vacant and the tenants seem to know the game better than I did. After years of money flying out the door, I gave it back to the bank so now besides having a foreclosure on my credit report, I had several tax liens as well. I was done with real estate.
My first real estate venture rated a grade of ‘F’-as in Foreclosure. I gave birth to an REO.
It took several years of diligent rehabbing of my credit to qualify to buy another property. I opened up several new credit cards and made a deal with the tax collector that if I paid the liens off, they would delete them off my credit. Three years later I bought my residence in beautiful Laguna Beach and since have bought many more houses.
Two very important lessons I learned. Quality of neighborhoods is paramount; I want the feeling of “pride of ownership” all around. I buy and hold single family houses only in primarily owner-occupied areas. Tenants appreciate living there and will jump through more hoops to stay there.
Managing my residents is something I have gotten quite good at. I have learned that tenants are there to do a job for me in exchange for living in a nice place. I am the boss and they are a valued employee who has four things that go into their job description:
- Pay the rent on time
- Be a good steward of the asset
- Get along with the neighbors
- Stay a long time
Everything else is secondary.
There are lots of other things that I have picked up on my way to owning dozens of houses, writing four books, teaching college classes in real estate and mentoring many investors, realtors and mortgage brokers. There are so many ways to real estate success but you can’t quit.
As Winston Churchill said in his famous speech in 1941 as his British Island was facing Nazi bombardment, “Never, ever, ever, ever, ever, ever, ever, give up. Never give up. Never give up. Never give up.”
“Never give in, never give in, never; never; never; never – in nothing, great or small, large or petty – never give in except to convictions of honor and good sense”