What You Missed February 2018 General Meeting
by Rob Earhart
The Deals Are Still Here - and I'm Finding & Buying Them!
February 6, 2018
Clyde began with, “I always try to stop by open houses to see what they’re selling for, but most are not really deals. The agent is just trying to make their Mercedes payment for the month.”
“I enjoy helping people to make money,” he quipped. He then introduced Keith, who has learned from him on how to find and work deals. Keith had learned how to pick up about 20 properties.
Clyde continued, “I still have a home in California and have some properties there, but I have some friends in Florida and have a junky trailer park in Holly Hill. It’s not much but is still making money. When it will be paid off, I’ll be 99 years old,” informed Clyde. “I’m looking forward to it.”
Clyde said, “I bought a house in Winter Haven and had a lady named Barbra working on it. She had a man named Ken helping her and I got to know him. Ken told me about a property I should look at. We drove to an area with about 12 bungalows that needed lots of work. This lady came out that had some teeth and asked if she could help me. I jokingly asked her for a loan of $20 and she said she didn’t have that much.”
I told Ken “to check to see how much the owner was taking in and he found that it was about $700 in total. I told him to offer her $800 in one check and clean up the places. He cleaned them up and started to rent them by the week: $185 per week and 12 units. If they don’t pay by 7 o’clock on Friday night, we can call the police to throw them out. With the motel license, we can enforce the rules quickly.
“Over time the purchase price was set at $149,000 and $800 per month. All units take in $104,000 per year with 40% for repairs, leaving $60,000 per year net income. Now he’s so busy I can’t get him to do anything for me. We called it the Auburn Hilton,” he exclaimed.
Clyde then went through a couple of properties to show how the numbers would work out to make the most money.
“My daughter has a house in Winter Haven and, with one vacancy, she went through 200 people to find a good tenant,” proclaimed Clyde. “It’s a pleasure to have a good tenant, but a bad tenant is a pain.”
Ken talked about another house I bought with a 2% loan. I had talked to the lady that just wanted to get out. She was upside down after a modification. We went back and forth and she accepted $2,000 to move and I took over the payments. I now have a nice house with good tenants that cash flows about $350 a month. Ken said she has since passed away and I think she went to heaven.
Clyde commented, “So you won’t be seeing her again, will you?” Laughs all around.
Ken talked about another house that had been empty for years but there had been three generations that lived there. Each one left their stuff there. The roof leaked and became an issue. We finally talked the two sisters into selling it. Clyde said, “Ken could get it for $20,000 but did not have it, so I loaned him the money, but at 12% interest.” It cost $2,500 to drag the stuff out over two days. Ken then listed and sold it and made $55,000, and we ended up with four lots for free.
You have to seek out the deals. Some are not worth it, but you can always find something over time.
“I brought an oatmeal container that has 3x5 cards in it,” explained Clyde. He then handed out those cards. “It has a free offer from Gary Johnston and you will get some information on how to make some more money. Also it has the four different classes I will be giving this year.”
Ken said he had been driving by this house for a couple of years and it was always trashed. Some landlords rent to the same kind of tenants. One day it looked empty, so I looked up the owners and made an offer of $22,000 cash. He called back in a few days and said he would take it. I cleaned it up and made the upstairs a second unit. I had it paid off in three years and now I collect $875 per month, free and clear.
Clyde explained that “at age 17, I dropped out of high school and went into the Marine Corp. I was young and dumb and thought we were going to Korea in 1952. The planes we were on did not have any windows or seats, and we landed about 75 miles north of Las Vegas where they were getting ready to test the atomic bomb. Once it went off, the grounds were leveled,” exclaimed Clyde. “It was a hell of a sight.”
“We were on a bus and couldn’t get out unless the wind was going the right direction. The atomic cloud had killed several hundred sheep so they didn’t want us to get injured. They took us to Las Vegas. I put my last dime in a slot machine and hit the jackpot. I won $18.75.”
Clyde talked about Jimmy Napier’s book on how to run a calculator the right way. If you run a calculator well, it will change your life. “I keep a calculator in my bathroom,” he proudly proclaimed. “If I’m stinkin’, I’m thinkin’.”
I talk to Jimmy every two to three weeks. His main job now is keep the chickens off the front porch.
Jimmy talked about upgrading things with 1031 exchanges. He said he owns a couple of House of Pancakes and a Carl’s Jr. in California.
Someone asked, “How do you find your deals?” He said, “By driving around and stopping to talk to people, you can find out lots of things. The crazier you can be, the better people like you.”
Clyde talked about people with lazy money in the bank, paying one-half percent. “If you have $50,000 in the bank at ½% you will get $250 as a return. If you loan it to me at 4% you will get $2,000. Let me use your money so you can make more for yourself,” explained Clyde.
In a poignant moment, Clyde said, “I move money around and treat it as a game, just with real money. I used to play monopoly and now it’s just with real money.”
Clyde hung around to answer questions for at least half an hour. Many thanks for the good advice.