Take it from William Nickerson, author of How I Turned $1,000 into Three Million in Real Estate – In My Spare Time, who said,
“It is never too late to start, although fortune favors early starters. Each day of delay loads the dice against maximum success. But I know of many successful owners who bought their first income property after retirement at sixty-five. You can always start later in life.”
Age is Relative
To put things into perspective:
Thomas Edison invented the telephone at age 84;
Benjamin Franklin helped in the writing of the United States Constitution when he was 81;
Frank Lloyd Wright designed the Marin County Civic Center in California at age 88, and;
I started buying rental properties as a mere child at age 47.
Too Much Work?
I have a friend who retired when he was 65, but he had to take a job at an Arby’s fast food restaurant to help make ends meet. I asked him, “Why didn’t you just buy a few rental properties before you retired?”
He replied, “It’s too much work.”
Too much work?
Which is more work, being trapped in a restaurant 8 hours a day doing menial labor, or having free time all day, and cashing rental checks once a month? Sure, there is some repair work every once in awhile, but you can hire a handyman to take care of that.
It’s Never Too Early Either
I’ve had young people ask me, “Is it too early to get started?” If you have the motivation and don’t mind learning as you go, there is no better time to build wealth and security than when you are in your 20’s. You don’t have to know everything to start.
I have a friend who got started at age 25. He bought a 4-plex apartment complex. He lived in one unit and rented out the others. He had a sharp learning curve in the beginning, starting off at an Elmer Fudd skill level, but after he had done it a year or so, he had his business operating like a Swiss watch.
Are you too young or too old?
It’s not about age. It’s about just getting started.
Calvin Coolidge said, “We cannot do everything at once, but we can do something at once. “
Opening up the old mailbag again, I am printing my response to a recent fixer upper email question that I received.
Hello Terry,
I’m writing you with a somewhat specific question.
I am looking at a house at xxxx Star St. in Duluth, MN. It’s a vacant house (so many are nowdays) and the listing price 39k. Repairs look to be 10.9k plus a fee of 1,100 for re-registering it as occupied.
I walked through the house, visually it’s fine. I like the house, don’t get me wrong. New windows, carpets, paint, etc. But the repairs are mostly plumbing etc. Should I put in my bid for 39k EVEN or throw it down for 29k?
It’s in a fairly low crime area, but across the street is a halfway house for prisoners just getting out into the world…Prior values in the 200k for this area before the Great Collapse….
Thank you for your time,
Malcom
Dear Malcom,
What I see is a red flag that should influence your decision.
The location of the house across the street from a halfway house is going to considerably limit what you can do with the house. Regardless of whether you are going to turn it into a rental or flip it, you have a very limited pool of potential tenants or purchasers. In my opinion, most people would not want to live there.
Consider, if you had a tenant who had a choice to rent your property, or one in another neighborhood nearby that did not have a half-way house across the street. Which would they choose?
Granted, the purchase price is low. However, in my opinion, it’s better to spend a little more money for a house that doesn’t have a glaring defect.
There are a lot of properties on the market right now, and many at bargain basement prices. If I were you, I would consider looking around for another one.
Donald Trump said, “Sometimes your best investments are the ones you don’t make.”
What things do you actually have control over in your life?
When you think about it, there are actually very few things that we can control.
For example, I was forced to give up my dream of boxing. I ruined my hands in the ring. The referee kept stepping on them.
We are required to buy insurance for our cars and houses. The kids must go to school and have supplies and clothes. We choose food, cars and most consumer goods based on the advertisements we see on television. Different levels of government and social pressures decide many things for us, or leave us with limited options to choose from.
And, it doesn’t get any better as time moves on. It seems the older we get, the fewer choices that we have. Men still chase women when they get older, but only downhill.
The One Thing We Control
Napoleon Hill says that we have control over but one thing, the ability to control our own thoughts. This is the most significant and inspiring of all human traits. It is part of our divine nature. This divine tool is the sole way to control your own destiny.
Mind control is the result of self-discipline and habit. You either control it or it controls you. The most effective way to control your mind is by keeping it busy with a definite purpose, supported by a clear plan.
The Ultimate Question
A lot of people I know have read Think and Grow Rich, and they say that they think it is a great book. But, very few know the answer to the following question.
What does Napoleon Hill say that you must do twice daily in order to make your desires become reality?
On page 36 of my copy of Think and Grow Rich, Napoleon Hill says that you should have:
1.) written a concise statement of what you want,
2.) how you plan to get it, and
3.) when you will get it,
then you should read your written statement aloud twice daily, once before retiring at night and once after arising in the morning.
What Does This Have to Do With Real Estate?
In the early 2000’s, I thought my job was going to be cut and I that would be unemployed. I decided I needed a steady second income so I wouldn’t have to rely on my 8:00 to 5:00 job to bring home the bacon .
After I concluded that buying fixer upper houses and renting them out was the best second income for me, I wrote down my desire on a piece of paper and carried it around in my wallet.
I wrote, ” I will find and buy a fixer-upper house in the next 60 days.” In less than a month, I found and bought my first fixer upper house, and that was my start in this business.
That was the first time I experienced the power of this technique. I have had many subsequent successes with the technique as well.
Like most of us. you have ideas and dreams. But, if you go beyond just identifying them and you write them down, and put your passion into them, they are more likely to come true.
Before the show I heard Ron going through the news and he said that ratings were so bad at CBS that Katie Couric was showing up to work in sweat pants, a tank top and a ball cap too.
So, during the interview, I mentioned that one of the advantages of working with rental properties was, like Katie Couric, I can show up to work in sweat pants and a ball cap.
Are you willing to pay the price to have your life be the way you really want it? We all know there is a price to be paid for everything in life. If we stay in the same circumstances we are now it may cost us our life. Serious illness can be caused because of stress, the stress of being in a job we hate. Take the time to consider what price you are paying now for what you have in your life.
For me, the perfect job was buying fixer-upper houses and renting them out. It provided me the independence and financial security that I desired, and I could do it while still working my 8:00 to 5:00 job.
If you don’t like your job, if you are having your hours reduced, or if you lose your job altogether, it may be time to consider establishing a business that will provide you with some additional economic security.
How would you answer Joe Sabah’s question, “What price would you be willing to pay to have the life you really want?”
I asked John if he would write a post for my blog on this topic and he kindly agreed. Below are his insightful comments.
———–
Recently at the Tucson Festival of Books workshop, in addition to self publishing, you mentioned your underlying rental property business. I was more interested in your underlying business since I too have rental properties. I am also an attorney that represents claimants in negligence claims, workers compensation, social security disability, probate and estate matters.
So, I am one of the attorneys that will sue a landlord under premises liability if there is a case. What is frustrating to me is the fear of law suits against landlords that they will lose everything.
I have found at similar seminars (not yours) business consultants coincidentally selling limited liability companies and/or promoting their use as some kind of immunity or shield against law suits.
Protect Assets with Insurance
I advise property investor’s landlords to get insurance. If you have insurance, you really don’t need to worry about lawsuits since the insurance should defend you and indemnify you (pay) for any suit. The best asset protection is purchasing insurance.
Also, premises liability suits are some of the most difficult cases to take. Call around and ask for an attorney on a slip and fall case and you will be surprised by the lack of interest.
My advice to landlord property owners is to have a good insurance broker. Discuss with the insurance broker your specific concerns of a handy man being hurt and/or a tenant suit. It’s important that you are very specific at this meeting. Later if you are sued, you can bring this conversation up for coverage under reasonable expectations.
A landlord should have a business relationship with an insurance broker. All insurance needs such as liability, workers compensation, premises and an umbrella policy should be covered. If the selling agent states coverage is available, this should be confirmed in writing, such as providing a letter itemizing specific coverage.
Reasonable Expectations
Arizona had wonderful insurance law on reasonable expectations. If you go to an insurance broker for a specific example or insurable interest, the broker or insurance company can be bound. Under Arizona Law, reasonable expectations of a contracting party are to be enforced even if the written contract, such as an insurance policy/contract is contrary under the Darner decision/doctrine- 682 P.2nd 388 (Ariz., 1984).
There is a very famous landmark case in Arizona under reasonable expectations and insurance law. An auto broker went to his insurance broker requesting insurance on all of his vehicles. The broker wrote a small policy on one vehicle. The consumer was able to have coverage on all of his vehicles under the reasonable expectations.
It really should go without saying property investors need to be reasonable in their dealings. Underlying most premises liability issues, is notice. So, as a property owner if you are on notice of a dangerous condition, it must be fixed.
Notice of Dangers
The landlord obligation for premises safety may be summed up as Notice. For example, in Siddon’s, a four year old child was injured by a heavy door removed to allow access to the leased premises. The tenant asked the landlord to remove the door.
Another example is Shields, a landlord renting to a tenant repair shop that allowed pit bulls, that the landlord knew were dangerous.
I could go into some other areas such as fraudulent transfers, but that would be well beyond the scope of your inquiry. Perhaps in the future I could address this too for your readers.
Make yourself right at home. Pull up a chair, have a cup of coffee, and check out some of my articles, useful links, or previous posts. Hopefully, you’ll discover some useful investing information.
First and foremost, I am putting the finishing touches on my new book entitled “Never Sell Your Home! How to turn your home into a rental house.” Watch this space for further developments.
Even with rising interest rates, now is still a good time for do-it-yourselfers to start a new income stream with a rental house or two. House prices are still at rock bottom lows, but before too long they will start moving up again.
The key is to find a good fixer-upper house in a location where people like to rent. It’s still the best way to start your own business, and establish some long-term economic security!
Sometimes going through tough economic times is just the push that we need to start on a new path.
When tough times hit, I like to reflect on Lincoln’s saying, “We can complain that the rose bushes have thorns, or we can rejoice that the thorn bushes have roses.”
1. Place several small For Rent signs on all nearby streets, especially the major intersections. If you get a sign with an arrow on it, you can point the arrow in the direction of your house. I buy the signs at Home Depot or Lowe’s.
2. Hold an “open house” on Saturday and Sunday. People driving by can come in and look around.
3. Contact companies that help people find rental properties. Some will list your property for free. These companies usually contact me.
4. Run an ad on craigslist.org. You can upload photos and describe the qualities of your rental property. The ads are free & I usually get a great response.
I hope you find a tenant soon.
Let me know if you come up with a good technique that I haven’t thought of.
Good luck!
Best regards,
Terry Sprouse
Location, Location, …
One thing I didn’t mention in the letter, but which is perhaps the most important consideration of all in attracting good tenants, is the location of your property. Properties located where people really like to rent are called “opportunity zones” (or “transition zones”). Just as Baskin-Robbins must offer the flavors of ice cream that the public likes, so you must offer rental properties in the areas of town where people want to live.
If your property is located in an area where people don’t like to rent, you will always have trouble finding tenants. For more information about my philosophy on where to invest, check out my EzineArticles.com article The Secret to Increasing Cash Flow – Invest in Opportunity Zones .
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