ACQUIRING THE INVESTOR MIND-SET
The Foundational Strategies for Real
Estate Investing
CAPTURING YOUR DREAMS
by Jay Mitton, MBA, JD
Dallas, TexasAs the person introducing me began
to talk, I again felt a tinge of embarrassment. I was about to speak to over
22,000 people gathered at the Reunion Arena in Dallas, Texas.
Excitement suddenly swelled within
me as the master of ceremony’s introduction came clearly through the
loudspeaker:
America“We now have a real treat for you.
Our next speaker, in his area of specialty, has taught more people and has been
on more television and radio talk shows than anybody in history. He is known as
the father of asset protection. A prominent attorney, newspaper columnist, and
best-selling author, he is recognized as the number one authority in America on
lawsuit and asset protection.”
Expecting the introduction to
conclude, I was surprised as he continued: “Ladies and gentlemen, you may be
surprised by what this speaker is going to tell you. You may expect his
excitement to be about the subject for which he is internationally renown —
asset protection. That is only part of it. The most electrifying part will be
the rest of his story. Today we have asked Mr. Mitton to also tell us how his
wealthy clients became millionaires.”
I quickly took the microphone and
began my remarks:
“Good morning, ladies and gentlemen.
I appreciate the opportunity to speak with you today. In addition to my normal
subject, I have been asked to share the secrets of how millionaires create
wealth. Whether it is the first million, the tenth million, or the first
billion, they all say the same thing — that the way to become wealthy in America
today
is in real estate. In fact, other than one exception — a man who became wealthy
buying the right stocks — every client I’ve known, who has reached the
multi-millionaire and mega-millionaire status, has done so by investing in real
estate.
“I’ve always thought it a paradox
that clients would pay me to learn how to protect their assets, while at the
same time sharing with me how to create wealth for my own family. In reality, I
was paid twice for my efforts.
“Realizing that real estate is the
primary arena in which to create wealth, I began to learn the various real
estate strategies of my millionaire clients. After years of searching and
learning, I identified twenty-one successful approachesto real estate
investing. This doesn’t mean that each of my clients used all of these
strategies. Most of them used between one and five of them.
“When I realized this, I concluded
that creating wealth is accomplished through a two-step process. The first
stepis to gain a comprehensive understanding of all twenty-one strategies. The
second step is to narrow the real estate investment approaches to a small
number of these, then focus efforts on the chosen few.
“As I implemented my own
wealth-enhancing strategies, I restricted my areas of involvement. Rather than
trying to implement all of the strategies, I reduced my approaches to include
only those I could easily manage.
This resulted in my becoming an
expert in five of the twenty-one real estate strategies.
“Permit me to speak personally for a
moment. When I was a small boy, I lived in very austere conditions. Even though
our family had very little money, my mother taught us to make sugar cookies.
Using small preformed strips of metal, we shaped all sorts of animal figures.
We literally used cookie cutters, with which we formed our cookie dough. The
phrase ‘cookie cutters’ took on a very definite meaning.“Through my millionaire
clients, I have found twenty-one strategies — cookie cutters, if you will
— that they used to create wealth in real estate. These strategies were so
basic that I implemented several of them in my own business life.
I then taught two of these
strategies to my son, James. He listened closely, and in just a few short
months he was on his own road to becoming wealthy.”
The next sixty minutes were a blur.
Never, in the thousands of times I had spoken on legal topics, had my audience
seemed so animated. As they learned the insider secrets of real estate
millionaires, they seemed to thirst for more. Without question, I had found the
“hot button” of thousands of future millionaires!
Soon I was flying home. As the plane
droned into the growing darkness of the night, my thoughts turned to one of my
real estate investor friends, James Smith. I had met him months earlier, and
had been deeply impressed. He had a commanding presence, he was articulate, and
he was honest. Married for twenty-five years and the father of two college-age
sons, he was a man of strong character. Weeks earlier, when I asked James to
share with me his premillionaire beginnings, I could never have anticipated his
response.
“To be perfectly honest,” he began,
smiling,“no one really gave me much of a chance. I have been dyslexic since
birth, and my high school counselor cautioned me against dreaming of more than
an average lifestyle. My grades were at the bottom of my high school graduating
class, and I was doomed to a life of mediocrity.
“But, was I really? Once I finished
school, I was mentored by a friend who understood real estate investments.
After cautioning me against adopting a ‘get rich quick’ mentality, he proceeded
to teach me how to buy my first piece of property. “I rolled up my sleeves,
then spent three days before my high school graduation looking at properties.
Using my friend’s formula, I purchased a small house. I later sold it, made
several thousand dollars profit, and was on my way.”
James continued with his story. “By
the time I had thrust both feet into the real estate investment waters, I was
hooked. The more I immersed myself, the more I realized that it was the perfect
business for me to be in. It was conservative, I began to make money in large
lump sums, and the tax benefits were huge. Even more important, I soon
learned that each real estate purchase was an addition to my own self-directed
retirement program. I sensed that if I remained conservative, I would have
unlimited income potential. Even more important, my monthly cash flow would
more than adequately care for my needs. In short, I began to accumulate, fix
up, then resell properties.
“About this time, my mother was in
her late fifties. She had taught third grade for over thirty years and was
preparing to retire on $1,800 per month. When I explained my real estate
investing formula to her, she determined to jump right in. Within a short
period of time, she had purchased twelve pieces of property. Her monthly
positive cash flow exceeded $10,000. With no debt, she has been able to spend
the last two decades traveling and enjoying life to her heart’s content — and
all because she began to let money work for her, instead of working for her
money.”
REAL ESTATE – THE AMERICAN DREAM
James and his mother are living the
American dream. While their story is by no means unique, it is illustrative of
the wealth any American can achieve. What is unique is the comprehensive
success formula James developed in amassing his fortune. He acquired a thorough
understanding of effective real estate investment cookie cutters.
It is no wonder that real estate has
been called the “universal business.” Every day tens of thousands of homes are
bought, sold, built, or renovated. People move in, they move out, and they move
on. They buy, sell, rent, and lease. Some of these home owners make money, some
are foreclosed on; some build equity, others spend years paying rent. Sadly, my
misguided uncle was one of these. He recently passed away, effectively
bankrupt, leaving my aunt with little means of support. He believed that a
person should always rent, never own. He was a good man, but held an erroneous
philosophy. From our youth, most of us dream of owning our own home. As
children, we play house, we build tree houses, campsites, and forts. As teens,
we count the days until we can move into an apartment of our own. We struggle
through apartments, roommates, moves with friends, new jobs, new romances, then
marriage. Finally, one day we buy our own home.
No wonder the idea of buying real
estate is such a mental and emotional mountain to climb. It is a wonder that
any of us break free from our deeply held beliefs and learn to actually use real
estate to make a dramatic financial difference in our life.
WHY REAL ESTATE?
Perhaps you are wondering, as did I,
why real estate is so good, why it is better than almost any other
business for amassing wealth. I owned a successful legal practice and although
I was not a greedy person, deep down I was aware that money, or the lack of it,
had great power over my life. Even more specifically, I knew that the hours in
my day were limited. I only had a certain number of hours to spend with a
limited number of clients. I could add partners, staff, spend more advertising
dollars, and add additional overhead and stress. But, like a doctor in his
practice, there was a ceiling on my income potential, based on the hours in my
day.
Your income is generally limited to
the number of hours you can trade each day for money. Real estate investing has
no such capstone. Your potential income and wealth creation is unlimited.
During the early hours of my financial discovery, I believed that it took money
to make money. Thus, I began to leverage my money to make it work for me. I
distinctly remember a conversation I had with myself one day. I figured that if
I invested $5,000 with my stock broker, then saw an increase of ten percent, I
would only earn $500. I realized that at this rate it would take me years to
reach my financial goals. I remember thinking, I wish I could reach apoint
where I could leverage the hours of my life, instead of trading them for my
‘daily bread,’ where I could make money day in and day out, and have more time
to enjoy with myfamily.
This is exactly what I found real
estate investments can provide. I began to understand the principle of leveraging,
and how I could leverage my money and my time through the correct use of real
estate. Using the same formula as above, I could follow the example of my
millionaire clients. I could invest $5,000 in real estate, and often control a
piece of property worth $250,000 or more. I learned that when this $250,000 property
increased ten percent, my investment earned $25,000. This was five times my
original investment, or a500 percent return. That was leverage!
On one occasion, one of my
multi-millionaire clients said to me, “I owe my entire fortune to my
understanding of leverage.” Before continuing, let me be clear in stating that
my purpose is not to discount the value of stocks, bonds, and other
investments. We should all strive to have a balanced, diversified investment
portfolio. Still, nothing I have found compares with real estate in providing
return on investment. Nothing I have found gives as much leverage. This is why
more millionaires make their money in real estate than through any other
investment vehicle. The good news is that you too can join their ranks. In
fact, every sixty seconds a new millionaire is created. Beginning today, you
can become one of them — a true multimillionaire. (Not coincidentally, 12,000
people move their residence every sixty seconds. No wonder real estate is the
answer!) The advantage of real estate investing goes far beyond the remarkable
rate of return on your dollars.
ADDITIONAL ADVANTAGES INCLUDE THE FOLLOWING:
1. You can build a lucrative monthly
cash flow today and a retirement income for your future.
2. It does not take money to make
money, yet you can make thousands of dollars (or tens, or hundreds of
thousands) on each transaction.
3. You get significant tax advantages,
such as depreciation. This occurs even though real estate typically appreciates
by growing in value.
4. Appreciation also makes real
estate the greatest means of preserving your wealth.
5. You are not locked into one place
of residence. You can invest in real estate from anywhere in the country.
6. You can build a small or large
business, and do this in addition to what you are already doing.
The secret of becoming a millionaire
is this: Real power comes when you move beyond the “do-it-yourself” realm into
the arena of true success. This occurs when you take it upon yourself to seek
out and learn from an experienced mentor who will personally guide and train
you.
May I suggest that you begin your
journey by picking one or two of the “cookie cutters” found in this book. You
will be amazed at how quickly your wealth will begin to accumulate.
The day I began writing this
chapter, I took an unemployed handyman under my wing and taught him one of my
favorite cookie cutters. The two of us even selected his first real estate
investment. I am convinced he is on his way to becoming a millionaire, and so
can you.
Ohio - Attorney general's office sues six foreclosure rescue companies
Attorney general's office sues six foreclosure rescue companies
Ohio Attorney General Marc Dann took aim Wednesday at foreclosure rescue companies that siphon money from people who are in danger of losing their homes.
Dann's office sued six companies - two of them based in foreclosure-ridden Cuyahoga County - that solicited money from consumers with promises they could save their homes from foreclosure.
Dann said the companies didn't contact lenders or do much else to prevent the homes from being sold, even though they accepted advance payment, ranging from $450 to $10,000.
"This may be the 'last chance' money these people have," Dann said.
The lawsuits, filed in courts across the state, accused the companies of violating the Consumer Sales Practices Act, but also took the new tack of insisting practitioners of foreclosure rescue must comply with the Debt Adjuster Act, which requires them to have insurance, limit consulting fees, undergo annual audits and keep separate trust accounts for clients.
"I believe it's important to take all the arrows in our quiver to attack a business as sleazy as this one," Dann said.
Ohio and Cuyahoga County, in particular, are ripe markets for foreclosure rescue companies. Both have frequently topped lists of the most foreclos- ure-ridden places in the country, and Cuyahoga County's foreclosure rates run triple the national average, giving it the dubious distinction of being, as County Treasurer Jim Rokakis often notes, "first and worst."
On Wednesday, the attorney general sued:
Cary Lavensky, doing business as Home Restoration Services, located in Cleveland.
Richard Pinnix, dba Pinnix Business Services, of Shaker Heights.
United Foreclosure Managers LLC of Youngstown.
American Housing Authority Inc. of Newport Beach, Calif., and a related company, American Housing Financial Inc. of Phoenix.
F.A.S., dba Foreclosure Assistance Solutions and Mortgage Second Chance, of Clearwater, Fla.
Foreclosure Solutions of Cincinnati.
Lavensky said he has been out of the foreclosure rescue business for a year. He said he could recall only one instance in which he had a dispute with a homeowner and, in that case, the family interfered with a planned sale of the home and then demanded a refund.
He said he is certain his company complied with Ohio law.
"I assure you, all our paperwork was drawn up by an attorney," he said. "This is the first I'm hearing of any of this."
Pinnix said that while the attorney general is right in saying he didn't have insurance or separate accounts for clients, "I have saved a lot of people's homes through refinancing and hard-money lending . . . I work 17 hours a day to help my clients. At the end of the day, the truth will come out."
Officials of United Foreclosure did not return a phone message left at the company.
The suits seek restitution for consumers, fines and an order barring the companies from doing further business until they comply with applicable state laws.
To reach this Plain Dealer reporter:
sherylharris@plaind.com,
216-999-4409
Posted at 07:34 PM in Attitude for Success, Bubble Going To Burst?, Commentary by Brian Gibbons - REISkills.com, Current Affairs, Flipping Houses, Foreclosures General, Mistakes of Real Estate Investors, Motivation for REIs, News - Mortgage Fraud, News - Mortgage Lending - Subprime, News for Real Estate Investors | Permalink | Comments (0) | TrackBack (0)