Visualizing The Much Larger Picture
Successful Real Estate Investors Don't Run For The Hills During Challenging Times
The man on the 6:00 o’clock news didn’t mince words. He said: “Nobody wants to own rental properties anymore.......With this Covid-19 virus the tenants can live in your houses for free!”
It’s true, in my state (California) they’ve ordered a moratorium on paying rents for tenants who say they’ve been financially harmed by the covid bug. As of right now it’s against the law to evict tenants who don’t pay their rents.
Obviously, down the road, they’ll be required to make up their delinquent rents when the moratorium is eventually lifted. Still, it’s my guess, the odds of any landlord ever collecting multiple months of unpaid rents are about the same as a one-legged man winning a “butt kicking” contest.
Depending on your mindset, Covid-19 could be viewed as a total disaster or a golden opportunity. Obviously, no landlord wants to be stuck with a house full of non-paying tenants, especially deadbeats who are working the system. Even worse, when the temporary order ends, it’s almost certain the non-payers will vanish into thin air without the slightest notion of ever paying back any rents.
In some ways it sounds like the doom & gloomers could be right! With the loss of rental income, plus the stepped up government intrusion, perhaps it’s time for “Mom and Pop” investors to throw in the towel.
There are indeed moments when you could ask yourself: Is it really time to sell out and give up?
Before I made up my mind to become a real estate investor, I had read many different books about the careers of successful investors and self-made entrepreneurs. Most of them started with nothing except their dreams and a total belief in themselves. I was deeply influenced by Robert Kent’s book; “HOW TO GET RICH IN REAL ESTATE”. Also, “GRINDING IT OUT”, the autobiography of Ray Kroc, founder of McDonald’s Hamburger corporation.
I was completely hooked after reading; “HOW I TURNED $1000 INTO A MILLION”, by William Nickerson who would eventually become my mentor. These books pretty much outlined the goals I was seeking, namely; financial freedom, becoming independent (working for myself) and no limits on how much money I could earn. It never entered my mind about how difficult a career change might be. All I could visualize was becoming successful from the day I started.
Wall Street speculators have long had a saying: “The time for buying is when there’s blood in the streets.”
Could it be possible to snatch a victory from the jaws of defeat? This is where an investor’s mindset makes all the difference in the world. During the financial meltdown of 2008, one in every ten houses in my state ended up in foreclosure. Values dropped by nearly 50%. “Doom & gloomers” all predicted the sky was falling! What will we ever do with all the foreclosures on the market? Looks like the final straw; real estate has finally crashed for good this time!
Positive-minded investors on the other hand were out scooping up bargains for 50 cents or less on the dollar. It wasn’t long before their crystal-clear vision and positive mindset made them the newest group of real estate millionaires.
It takes a different mindset to be a successful investor. I’ve found that investors who possess a positive mindset always seem to have extraordinary vision. They can visualize as well as analyze things that haven’t happened yet. The investors who bought up all the cheap foreclosures had no promises that prices would double – and very often triple in just a few short years.
They had lots of faith, plus the undeniable history that real estate has always bounced back.
In 1960, I purchased my first house with no money down, G.I. financing. Uncle Sam allowed me 30 long years to pay back the total cost of $19,500. Over the years I watched as values went up and down, but just recently, my old (G.I.) house sold for $425.000. On average, it grew in value almost $7000 per year since the day I bought it! From an economic standpoint, this is very definitely a remarkable return and most enviable track record!
I have never considered myself much of a risk taker. I’m willing to take chances, but only if I can determine the odds are in my favor. For example, I was never much of a fisherman until I discovered I could always get my limit shooting them in a barrel with a shotgun!
Education eliminates a great deal of the risk for real estate investors who have studied the market and understand the odds. That’s the reason the positive-minded foreclosure investors all ended up millionaires. Real estate history, the track record, pretty much favors those with vision who’ll go for the gold!
Self-made real estate millionaire Mark Haroldsen says; “Most people tend to sabotage themselves. Their big dreams are often only wishes. Down deep inside they’re always prepared to fail.” It’s been my personal experience that success requires a total commitment!
Once again, knowledge allows me to jump in with both feet. I don’t remember, ever once, considering failure while chasing down a property. Naturally, I wasn’t always successful, but when I failed, it was without my help. You must never allow negative thoughts to dwell in your mind. Thoughts like: I can’t do this, I’m not good enough or I’m afraid I might fail! Automobile magnate Henry Ford once said: "If you think you can or you think you can’t, either way, you’re right."
Quitting my 20 year telephone job in the late 1970’s seemed dumber than a box of rocks to all my friends. They were even more convinced when they learned that just around the corner the worst recession since World War II was simmering and about to boil over. Before long, banks would stop lending, real estate activity ceased and interest rates soared past 22 percent. I couldn’t have picked a worst time to quit my job and pursue my real estate dreams.
By now my friends and associates were pleading with me to give up; “There’s simply no way”, they said; “you can fix up houses and expect to make a profit today!” The banks won’t loan you a dime and besides, there’s no appreciation anymore. Lucky for me I had already developed that investor mindset I spoke of earlier. Perhaps I was a bit stubborn or I just quit listening to advice. If the sky was really falling, I was totally convinced it wouldn’t fall on me.
It’s very difficult and lonely when your closest friends are all negative. Like a plane flying on instruments, you must rely on your positive mindset and the testimonials of successful people. People like Robert Kent and William Nickerson. Both men ignored “sob sister” advice and pursued their dreams. Bill was advised by his economics professor to find a steady job and keep it! The year was 1931, in the middle of the Great Depression. Mr. Kent was told that buying rundown apartments with low income tenants was not sound economics. Both men became millionaires.
Today, the investment climate is thriving where I live, Covid-19 may frighten away the “chicken littles”, but rents and selling prices are higher than they’ve ever been. I can’t even find a single duplex with all the competition. One thing I know for sure, the man on the 6:00 o’clock news is full of bologna. The same goals I pursued over 50 years ago, namely; financial freedom, working for myself with no limits on how much money I could earn – they’re still available for every positive-minded investor today! Covid-19 has little to do with becoming the next millionaire.