There’s been plenty written about how to do well, no, how to get rich – and quick – investing in real estate. It started with a man named William Nickerson, author of How I turned $1000 into a Million in Real Estate in My Spare Time. The book was first published in 1959. I have a first edition copy.
My Dad gave me the book. He referred to Nickerson as Saggy Front Porch Nickerson because it seemed that Mr. Nickerson’s advice usually orbited around buying a property with a saggy front porch and fixing it up. But it was and is a great book with excellent advice.
Then came Robert G. Allen in 1980 with Nothing Down A proven program that shows you how to buy real estate with little or NO money down. The success of this book inspired a litany of copycat writers, each with their spin on real estate riches. There has been a cottage industry on this theme ever since.
So that begs the question – can you get rich quick investing in real estate?
I think real estate is the first, best and last chance for ordinary people like you and me to achieve financial security. But will it happen quickly?
Let me share this insight with you. Most people are on a trajectory of work hard, get poor slow. If the trajectory can be changed to work hard, get rich slow, that’s a tremendous improvement.
I think there’s more people getting rich quick from selling advice on how to get rich quick than there are people getting rich quick from following the advice.
Yet I know of a woman that went to the seminars, followed the advice, bought a property with little money and has prospered enormously. She is a delight.
But after a career in real estate spanning nearly 40 years, I only know of two people that hit it big, fast. One of them I already told you about and I’ll have more to say about her in another post. For right now, let’s meet the Flipper Boys.
For reasons that will become apparent, I can’t share their actual names. But about 15 years ago, I met two gentlemen I’ll refer to here as the Flipper Boys.
The Flipper Boys started out well enough. They were both real estate agents. They formed a partnership, bought an apartment building, fixed it up and flipped it at a considerable profit. Flush with cash and enamored with their success, they proceeded to reinvest the gains.
The next deal was a dilapidated retail center. They also bought a real estate agency.
I won’t pretend to be an expert in retail real estate, but some basics are easy to understand. Traffic counts, accessibility and visibility are all vital to the success of any retail property.
The site the Boys selected was near a major four-way intersection. Three legs of the intersection had considerable traffic, but the leg the Boys were on tapered off to a two-lane road serving only a trickle of activity. Add to that the center’s configuration. There were two buildings in the center and one of them imposed a visual block on the rest of the property. Further, this awkwardly placed building faced away from the main road with the rear of the property closest and most visible to the street. I could see no alternative to this problem other than to tear this building down.
Finally, the Boys were halfway to renovating the rest of the center when they ran out of money. The center was entirely vacant and, in my opinion, unsalvageable, at least at the current debt load.
The final death knell came with the purchase of the real estate agency. This was 2008 when housing markets were imploding and transaction volumes were dropping off a cliff.
The early overconfidence gained by the Flipper Boys led to them bootstrapping their way right into bankruptcy. They would have been better off never having found the apartment building they made so much money on.
This sorry saga illustrates the point. Being successful at anything takes time and experience. Move too fast and catastrophic mistakes can be made.
And Robert Allen? He declared bankruptcy in 1996. In fact, as lucrative as it is to be a guru, the landscape is littered with gurus gone broke. You can read more about them at The White Coat Investor – Financial Gurus Who Have Gone Broke. I’ll have a post of my own on some of these folks soon.
In the meantime, if you’re willing to work hard and be patient, you’ll do well.
Consider Proverbs 14:23
In all toil there is profit, but mere talk tends only to poverty.
Take that, gurus!
Finally, I have to share Proverbs 31:16-18
She considers a field and buys it;
out of her earnings she plants a vineyard.
17 She sets about her work vigorously;
her arms are strong for her tasks.
18 She sees that her trading is profitable,
and her lamp does not go out at night.
Real estate investing isn’t for men only, you go girl!
Before I go, a humble request. If you’re enjoying the blog, tell someone.
See you in seven.