In terms of investment risk, I’m talking about the risk of losing your assets – Colony houses, like the ones I own, are about the safest kind of investment you can make. Naturally, you must avoid paying too much and taking on too much mortgage debt. Residential renters are a much easier bunch to attract than commercial tenants. Also, everyone needs a shelter. Houses are considered a basic necessity of life. The danger of anyone taking your investment houses, with any equity, is almost nil! If you buy them right and structure the financing so your tenants can pay them off, you’ll be very well rewarded for your initiative.

When selling my properties that have existing mortgages already in place (obviously, without due-on-sale clauses) I always insist on a wrap-around mortgage when I carry back the financing. When you mortgage debt in excess of the basis (book value), this issue becomes even more serious! It’s called the loan over basis trap. Check it out!

Interest income on my carry back paper is the same as more profits to me! Carry back financing has made me a ton of money, so I’m not about to change my investment strategy. If you need a bit more convincing about seller financing and profits – you should take a peek at Chapter#6 of my best selling book, “Gold Mines Houses”, McGraw Hill Publishers. On a single transaction _ just one carry-back mortgage, my selling profits were $260,945, but my interest income for agreeing to take monthly payments over time was $939,077. I’ve watched the banks do business like this for many years. If it’s good enough for them it’s just fine with me!

I pay real estate commissions if agents bring me good deals. Real estate wealth has nothing to do with stiffing agents. If you get the reputation for being a “tightwad,” you could lose out on valuable tips and good deals simply because the sales people don’t want to deal with you. How much time would you spend with a client who thinks you don’t deserve to be paid?

I can buy a property quickly. To an agent that means fast paydays and they all like that. My requirements are: the property must fit my strict financial guidelines and just any property won’t do. Property qualifications are needed to determine if the property is a candidate. Agents won’t hang around you if you’re a looky- loo. No agent worth his salt can afford that nonsense. My agent’s job is to know exactly what I will buy. He doesn’t call me about every property for sale in Redding. A good agent will immediately qualify the property to determine if it has potential. My agent knows I don’t normally want deals where new bank financing is required. He also knows I want sellers who will carry paper. He knows I rank small “leper” properties, like four to six houses on a single lot or a bunch of ugly rundown duplexes, at the top of my buying list. When he hears about those kinds of properties, he acts quickly.  Finding a good agent is not a lot different than finding a good wife or husband. It’s simply a matter of weeding out until you find the right combination.

Real estate agents are the eyes and ears of the real estate business. I’d be hard pressed indeed to think of any successful investors I know who got that way without benefiting from their services. At least 50 percent of all my business over many years has been directly involved with a real estate agent who was paid to make the transaction happen. I’ve had several situations where an agent referral to a non-listed property or a special tip about an owner who needed to sell was all it took to create a big pay day for me.

More than once I’ve heard real estate gurus tell their audiences that an excellent strategy or technique for getting rich is to completely avoid paying commissions. Certainly I’m not one to recommend throw­ing your money away, but I must tell you paying commissions should be helping you make more money; otherwise you need to re-think your investment plan. Even in the worst case situation for me, assuming I paid a full six percent commission, I would still have 94 percent of the value left for me-plus all the benefits I acquire with a high-profit property. To me, that doesn’t seem like such a bad trade-off.

No one will make you rich except you.

I would recommend that a new investor simply walk into five or six realty offices sit down with an agent who is on the floor and discuss the kind of properties you wish to acquire. Some agents will jump through hoops to help you. Others will shine you on. Personalities will naturally play a role. Some people you like-some you don’t.

The hard fact is that no one will make you rich except you. No agent will make you rich. No other person will do it for you. You alone must make it happen. However, real estate agents are powerful helpers if you will teach them what you want done. You must give them parameters regarding what constitutes a good deal for you. They must know what you will buy and how fast you can close the deal so they can get paid.

Nothing comes ahead of cash flow! If you have it, you can continue to grow. You can transition from smaller properties to larger ones or fixers to pride-of-ownership. You can use your cash flow to buy mortgages for passive income or take a trip around the world. Cash gives you choices!

When you own the houses, you have your own personal money machine! Obvi­ously, you must maintain the property and provide the necessary management. But, in exchange for doing that, you control the money. It’s yours to spend any way you choose. The basis for wealth behind nearly every rich person can be traced, back to the ownership of a patent, a copyright or a deed! Owning income real estate puts you in with the right crowd.

In terms of investment risk, rental pro­perties are about the safest kind of invest­ment you can make. Residential renters are easier to attract than commercial tenants. Houses are considered a basic necessity of life. The risk of loosing your investment houses, with any equity, is almost nil. Buy them right and structure the financing so your tenants can pay them off and you’ll be very well rewarded for your initiative.

Houses aren’t glamorous like shopping malls and high-tech commercial buildings but they are far better suited for investors, who start with very little cash and no reserves.

Most investors and wanabees are better off to stay away from strategies that sound slick. Over the past 10 years, I can recall the names of at least a dozen so-called invest­ment gurus who expounded the virtues of a wide assortment of “get rich” techniques. Most of these pitchmen are bankrupt or working at a filling station today.

Working for yourself is different! To start with, the more effort you put out, the more you’ll benefit yourself. Think about that for a moment. Usually it doesn’t work that way. When you are an employee, more often than not, your extra efforts only benefit the company. That’s one very important difference when it comes to achieving your personal financial goals.

For example, when I fix up rental houses for monthly cash flow or to sell for a profit, all the money I earn from my efforts is mine to keep. When you work for someone else, it’s not the least bit uncommon to make thousands of dollars for the company — And yet profit very little extra for yourself.

I often explain this earning discrepancy to real estate agents who ask me if I think owning properties is more profitable than simply selling them. Let’s say I purchase a $100,000 income property for $80,000. When I buy the property through my agent, he will earn a 6% commission or $4800. Generally he only gets to keep $2400 for himself — But that’s it!

My earnings are a whole lot different. First, there’s my $20,000 of non-taxable upfront profit or discount for having the “know-how” to buy at less than’ market value. Next, I’ll probably “fix up” the property, raise the rents and enjoy monthly cash flow. Finally, I may choose to do a three-year lease/option agreement — Selling the property for $120,000 by offering very attractive terms.

It doesn’t take a mathematical genius to see that by working for myself, I have substantial financial advantages. I have the flexibility of earning money in several different ways. In the example above, my agent nets $2400 while I will profit $40,000 on the very same property. That’s almost 17 times more profits. Needless to say, it’s also one of the secrets to becoming financially independent in the shortest possible time.

Mr. Roper, my real estate instructor, taught me enough to pass the examination on the very first go-around. At the time I remember thinking he was the smartest instructor in the world – but as things turned out, passing the real estate examination is not the reason I’m still thankful to Mr. Roper today. Instead, it was a casual remark he made to the, entire class of 76 students! Here’s what Mr. Roper said.

Commissions will not make any of you rich! Rich folks, he said, are the ones who get their names typed on deeds. They are the property owners. He then told us a simple formula for becoming wealthy! He said we should invest 10% of all our commissions in income properties. That way, he said, we’ll be earning money even as we sleep.

At the time I didn’t pay much attention to Mr. Roper’s advice! To me, it seemed like commissions would make me a whole lot richer than rents – and much quicker too! It took me several more years before I would finally test Mr. Roper’s advice. I purchased four FIXERUPPER HOUSES and began my journey living off the rents I collected.

Lots of water has passed under the bridge since I acquired those first four houses. Along the way I quickly discovered that fixed-up properties provided lots more cash flow. They also were 3 or 4 times more profitable! I also found out that you don’t need to be a Harvard graduate to make lots of money fixing ugly houses. Once you learn how to do it, you can keep repeating til you reach whatever income level you choose.

Before I sold a few houses several years’ back, my rents had soared to nearly $100,000 a month. Naturally I have expenses like everyone else - but I must tell you, I’m still a long ways ahead of any commissions I ever dreamed about earning.

One of the most frequent questions I’m asked at my seminars — Isn’t there a lot of work involved fixing up rundown houses” Of course there’s work, but when you’re done – the profits make it all worthwhile.

When you read my best-selling book, “INVESTING IN FIXER-UPPERS”, you’ll quickly discover why I’m the highest paid plumber in my town. Money makes plumbing seem much easier. The truth is, you don’t need to be a plumber, painter or electrician! About 90% of fix-up work is nothing more than hauling trash and cleaning. That’s why the ladies are often better than the guys. They understand the value of neatness and cleaning.

Folks often ask me — Is it hard to earn $100,000 every month from rents? When you first start out, it seems impossible, but as you begin to learn, it starts getting easier. First you’ll earn $1000 a month – and before too long you’ll reach $5000. The best part about investing the way I teach – you can quit after 10 houses or keep going til you own 200 like I did. It’s up to you! If you read my book, and you only acquire 3 or 4 solid income-producing properties, you’ll be lots better off than most of your friends.