It was 2003, and I was home from college on Christmas Break. After finishing a book that was recommended to me on several occasions, I thought to myself, “I’m gonna be rich!”
It took me less than two days to read Rich Dad, Poor Dad, lightning-fast speed considering how slow I usually read. The book put everything that I thought about money and wealth building into a simple formula.
You’d think that growing up in a small business family would have prepared me for the subject. My grandfather co-founded and built a highly successful company that employed hundreds of people across several markets and Central Texas. He enjoyed talking about his investments, particularly his real estate portfolio, which reminded me of a real-life Monopoly game.
I recall him taking me on tours of large multi-family communities and subdivisions that he either owned, developed, or had seller-financed. His 1,000+ acre ranch in the Texas Hill Country was my personal favorite.
Growing up, I always knew I wanted to be a business owner and invest in real estate, but I had no idea how it would happen. Those years of observations made sense after I finished reading Rich Dad Poor Dad.
I needed to start a business, then use the profits to buy income-producing assets like rental properties, and so on. That was the formula my grandfather used to build wealth decades before Rich Dad Poor Dad was written. While the book does an excellent job of illustrating how wealth is created, how cash flow works, and the distinction between “good debt” and “bad debt,” it does not provide you with the “how to.” That’s something I’ll have to figure out on my own.
Within a few months, I found someone who could assist me with the unanswered “how-to” question.
“A real estate millionaire is looking for a mentee.”
That was written in thick black marker on a white bandit sign, along with a 210 area code phone number–San Antonio.
I was finishing up my junior year in College Station, Texas. Maybe it was because I was young and naive (which I was), but I dialed the number to find more.
The person on the other end of the phone informed me that he buys houses directly from homeowners before they go to foreclosure auction. He was planning a boot camp to teach students how to buy “pre-foreclosures.” It cost $1,500 to attend, but he would teach me how to find deals worth $15k, $20k, or $30k+, but he would finance the deals.
The issue was that I was a typical poor college student with no job and no credit. My parents were going through a divorce, and I didn’t like asking for money. I did, however, receive some credit.
It’s strange that, even though I don’t have a job, I received several “pre-approval” credit card applications in the mail. I thought to myself: “If what this guy says is correct, I’ll put the $1,500 on a credit card and pay it off after my first transaction.”
I went to the class and soaked up everything he said like a sponge. I did everything he told me to do. As a skinny 22-year-old college student, I knocked on pre-foreclosure doors to convince homeowners that I could save their homes from foreclosure. Every weekend in San Antonio, I did precisely that.
I would drive 3.5 hours from College Station to San Antonio, knock on the doors of homes along a pre-planned route, and then drive back to my dorm because I didn’t have enough money for a hotel.
Then I finally got my first solid prospect after three months of door-knocking! It was the last house on the list for the day, and he needed to sell his home quickly. Because his wife was the primary breadwinner, he fell behind and could not catch up when she died. On top of that, his house was in disrepair, with a major foundation problem.
I don’t remember the exact figures, but he didn’t owe much on his mortgage. Of course, legal fees, penalties, and interest were quickly piling up, and he was only a few weeks away from losing everything.
All he wanted was to pay off his house and save enough money to buy a used truck. We worked out a deal with the help of my mentor (the guy from the Bootcamp), in which he got a lot more than he asked for. He got more than enough for a new truck, and we still made a great deal.
We closed on that deal and sold it to another investor, a process known today as “wholesaling,” which netted me around $20k after splitting it with my mentor. I couldn’t stop myself from jumping for joy.
Over the next six months, I would complete three more transactions, including a wholesale transaction and two rentals, all before graduating from college in August 2005.
Then my real estate journey came to a halt after I graduated. My business partner relocated out of state for an internship, while I relocated to Houston to work as an inside sales agent for a large travel agency.
While it would be another six years before I did another transaction, those first deals will always be the foundation of my journey–four transactions, including two rental properties, and I didn’t even have a job yet!
Stay tuned as I continue the story about what happened after those first four transactions!
4 Responses
Love it!
When I started, I knew just enough to be dangerous.
I found a truly runty 5-unit in Texas City for $68k on the MLS. Over the next 2 years, I bought four more 2-3 unit properties, all with hard money at 12%, all from burned out landlords or their heirs. The cashflow was great on paper but turnover and maintenance were high. I was breaking even, counting equity as if it was money in the bank, and undecided on my exit strategy. Would I sell or refi? Well, the crash of 2008 answered all my questions.
In the end, the best and cleanest deals I did were the wholesale of two of these duplexes for $10k each.
The lessons you’ve learned will make you a much better investor in the years to come!
Bought my first rental in 2000 just one year out of college and over the next three years a partner and I purchased 3 more units. On our first four units we averaged 103% financing.
Credit was much easier back then and anyone wanting to be rich should certainly read Rich Dad Poor Dad.
Awesome! Credit was a LOT easier back then. For those that know how to use credit today and raise capital from private investors – there are unlimited opportunities!