There are many areas one can invest in. Since I was 15 years old I have looked for the fastest, most effective way to accumulate a lot of wealth, with the least amount of risk. I am now 58. While looking for this road to truth, I spent a lot of time in the school of hard knocks. The school of hard knocks is a very interesting but painful school to attend. It is also the most expensive way to learn something, but when you graduate you have a PHD in what to do and not do with your time and money. The schools I attended were: Investing in businesses as a silent partner, owning my own businesses, working for another family member-in my case my father, buying publicly traded stocks and securities, penny mining stocks, commodity trading, investing in gold and silver, real estate private lending, real estate development, real estate remodeling, buying foreclosure properties. I also worked as a real estate problem solver/matchmaker, bringing business owners together with business buyers, and matching up real estate owners with real estate buyers.
Writing about all of these activities would take an encyclopedia, so we will limit this essay to the kinds of situations you can run across in the real estate school of hard knocks. I will present my solution with the given situation. There are more than one possible solution and I invite you to come up with other possible solutions as you read. If you get some value from my experiences that will hopefully lower your tuition to the real estate school of hard knocks. Feel free to e-mail me your comments, alternate solution or stories. Do, please, let me know that it is all right for me to publish them.
My Real Estate Philosophy
As a way of introducing myself, I thought you might find what lessons I have learned, after all these years of real estate, interesting. Buy real estate instead of stocks, bonds, mutual funds, or commodities. When you pick a winner in one of these non-real estate areas you can make 5-10 times your money. When you are wrong, in one of these non-real estate areas, you can actually loose up to 90% of your money. In real estate, if you are not greedy-not trying to get rich quick-in one year, you can make 100 times your money, on the upside. The downside risk is only based on how well you looked at all the possibilities ahead of time. If you did, the downside risk is reduced to only the holding time to fix a mistake. If you rush in and do not explore all the possibilities of a business venture, you can actually loose 100% of your money. In my mind an upside of 100 times profit is better than 10 times profit.
My philosophy on real estate ownership has changed in the last 15 years. I used to think that selling at the top of the market was the smart move and buying in the crash. Now I feel that buying when prices are down is still a smart move but never selling is the way to go. In order to hold on to a property in a down market you require proper planning to survive the crash. This I call a back door or emergency plan. This is have a plan and knowing what you will do if everything goes wrong with you original plan. When you have a backup plan, you rarely need it. This is the basis of my philosophy. With this understanding, you might more clearly see why I did what I did in these situations.
The Stories and article:
The area of real estate investing is one of the most complex because it is a combination of law and real estate. It is one of the most interesting because fortunes are made and lost in this area, and the numbers are so enormous. Lastly it is an area where crooks can make a lot of money and many times get away with it. Following are some stories (case histories) I have dealt with and some articles I have written on the subject of fraud in real estate. Finally, I have included an article on the basics of foreclosures and real estate in general, for your interest. I hope you enjoy them.
It was early March 2000 and I received a call from Kevin. He said that he had heard about me from some mutual friends. He wanted to speculate in buying HUD houses (Properties that the Government had foreclosed on). He wanted to buy them, fix them up and then sell them at a profit. He had heard that I had bought many foreclosures in the 1970’s and 80’s and he was hoping I could advise him. We met for lunch and he told me his life story. The important part of this conversation is that he had bought a boarded up 14 unit apartment building in downtown San Bernardino, across the street, from one of the roughest high schools in California.pinetree hill