Jim’s Secret

Jim’s Secret to real estate investing success. 10 rules that will help you retire in 20-25 years.

Jim had a secret.

The funny thing was that he didn’t keep it a secret. If you were willing to ask him and really listen to his answers, he was happy to share it with you. But you had to be paying attention. Because if you weren’t, you wouldn’t even know that he HAD a secret.

We worked together in a non-profit/volunteer organization. He was an adviser, a counselor if you will. I was a rookie volunteer. And over a few years of working on projects together, I came to realize that he always had time to work on things with us. He always had enough money to help out when needed. He wasn’t flashy about it. And he was certainly frugal. But when there was a good reason, he was willing to take care of things for others. Quietly. In the background. No limelight, no publicity.

He lived in a modest home in a nice, quiet, suburban neighborhood. Nothing fancy or pretentious. A typical California style 3 or 4 bedroom rambler with 2 bathrooms and an attached 2 car garage. Maybe 1200-1400 square foot. Probably built in the 1960’s. He drove an older car. Again, nothing fancy, just a good quality car that was well maintained.

And in his early 50’s he was preparing to retire. I wanted to know how.

One day I started asking him questions and he opened up and told me about himself. What he told me has provided the basics of what I’ve shared with  people who wanted to invest in Real Estate ever since.

Jim worked as an engineer. He made good money, not a ton, just a little more than the average for the area at the time. He had a steady paycheck, with good benefits. He had a good education from a good school. While in school, his father had strong armed him into buying a duplex rather than renting a room or living in the dorms.  This was a key in Jim’s future success. He became a landlord rather than a tenant. And paid for much of his schooling in the process.

At the time we talked (in the early 1980’s), Jim owned 23 rental properties and was worth over $3,000,000!

I wanted to know his secret. And he was happy to share.

Jim’s secret was really quite simple, but a stroke of genius nevertheless. Simply put, Jim bought an average of two homes per year. Some years he bought more and some years he bought less depending on the market and his own circumstances at the time. But on average it worked out to two homes per year.

Some of the homes he re-sold. Some of them he kept as rentals. Once in a great while he refinanced one. But most of the time he just paid them off as quickly as he could. And his secret, or system if you will, will work for almost anyone who is serious about having a comfortable retirement. It’s not easy. It’s NOT a get rich quick scheme! It takes a lot of hard work and some risk over the years. But it works. And almost anyone can retire in 20 to 25 years a multi-millionare by using Jim’s secret.

1. Have a good job that provides enough to take care of your family and has decent benefits.

2. Do your investing activities on the side. Richard Paul Evans calls this “Winning in the Margins.”

3. Plan on buying two properties per year. One you’ll keep as a long term rental. The other you re-sell.

4. Buy them right. You make most of your profit when you buy, and lose most of it when you sell.

5. Use the profits from those you sell to fund your purchases and repairs. Don’t try to live on it.

6. Every property must cash flow. If it can’t pay for itself, sell it.

7. Only refinance a property if the interest rate is 2% or more less than what you are currently paying.

8. Put excess cash flow into paying off the oldest mortgage first. When you’ve paid it off, roll that money into paying off the next oldest. And so on. DON’T increase your standard of living to eat up the extra income.

9. Manage the properties yourself. Do as much of the repairs yourself as possible.

10. Make sure that your rentals are better maintained than other rentals in the area. Better properties equals better tenants.

May you find peace and happiness in your life and eternal life in the hereafter.

Cleve

ps: Check out Richard Paul Evans book “The Five Lessons a Millionaire Taught Me”. It’s an easy book to read and has some good insights in it. His website is http://richardpaulevans.com/