Many people may not be satisfied with my 10 steps. They see them more as philosophies than actions. I think understanding the philosophy is just as important as the action. There are many people who want to do instead of think, and then there are people who think but do not do. I would say that I am both. I love new ideas, and I love action.
So for those who want a to-do list on how to get started, I will share with you some of the things I do, in abbreviated form.
• Stop doing what you’re doing. In other words, take a break and assess what is working and what is not working. The definition of insanity is doing the same thing over and over and expecting a different result. Stop doing what is not working, and look for something new.
• Look for new ideas. For new investing ideas, I go to bookstores and search for books on different and unique subjects. I call them formulas. I buy how-to books on formulas I know nothing about.
For example, in the bookstore I found the book The 16 Percent Solution by Joel Moskowitz. I bought the book and read it and the next Thursday, I did exactly as the book said. Most people do not take action, or they let someone talk them out of whatever new formula they are studying. My neighbor told me why 16 percent would not work. I did not listen to him because he’s never done it.
• Find someone who has done what you want to do. Take them to lunch and ask them for tips and tricks of the trade. As for 16 percent tax-lien certificates, I went to the county tax office and found the government employee who worked in that office.
I found out that she, too, invested in the tax liens. Immediately, I invited her to lunch. She was thrilled to tell me everything she knew and how to do it. After lunch, she spent all afternoon showing me everything. By the next day, I found two great properties with her help that have been accruing interest at 16 percent ever since. It took a day to read the book, a day to take action, an hour for lunch, and a day to acquire two great deals.
• Take classes, read, and attend seminars. I search newspapers and the Internet for new and interesting classes, many of which are free or inexpensive. I also attend and pay for expensive
seminars on what I want to learn. I am wealthy and free from needing a job simply because of the courses I took. I have friends who did not take those classes who told me I was wasting my money, and yet they’re still at the same job.
• Make lots of offers. When I want a piece of real estate, I look at many properties and generally write an offer. If you don’t know what the right offer is, neither do I. That is the job of the real estate agent. They make the offers. I do as little work as possible.
A friend wanted me to show her how to buy apartment houses.
So one Saturday she, her agent, and I went and looked at six
apartment houses. Four were dogs, but two were good. I said to write offers on all six, offering half of what the owners asked for. She and the agent nearly had heart attacks. They thought it was rude, and would offend the sellers, but I really don’t think the agent wanted to work that hard. So they did nothing and went on looking for a better deal.
No offers were ever made, and that person is still looking for the right deal at the right price. Well, you don’t know what the right price is until
you have a second party who wants to deal. Most sellers ask too much.
It is rare that a seller asks a price that is less than something is worth.
Moral of the story: Make offers. People who are not investors have no idea what it feels like to try to sell something. I have had a piece of real estate that I wanted to sell for months. I would have welcomed any offer.
They could have offered me 10 pigs, and I would have been happy—
not at the offer, but just because someone was interested. I would have countered, maybe for a pig farm in exchange. But that’s how the game works. The game of buying and selling is fun. Keep that in mind. It’s fun and only a game. Make offers. Someone might say yes.
I always make offers with escape clauses. In real estate, I make an offer with language that details “subject-to” contingencies, such as the approval of a business partner. Never specify who the business partner is. Most people don’t know that my partner is my cat. If they accept the offer, and I don’t want the deal, I call home and speak to my cat. I make this ridiculous statement to illustrate how absurdly easy and simple the game is. So many people make things too difficult and take it too seriously.
• Finding a good deal, the right business, the right people, the right investors, or whatever is just like dating. You must go to the market and talk to a lot of people, make a lot of offers, counteroffers, negotiate, reject, and accept. I know single people who sit at home and wait for the phone to ring, but it’s better to go to the market, even if it’s only the supermarket.
Search, offer, reject, negotiate, and accept are all parts of the process of almost everything in life.
• Jog, walk, or drive a certain area once a month for 10 minutes.
I have found some of my best real estate investments doing this. I will jog a certain neighborhood for a year and look for change. For there to be profit in a deal, there must be two elements: a bargain and change. There are lots of bargains, but it’s change that turns a bargain into a profitable opportunity.
So when I jog, I jog a neighborhood I might like to invest in.
It is the repetition that causes me to notice slight differences.
I notice real estate signs that are up for a long time. That means the seller might be more agreeable to deal. I watch for moving trucks going in or out. I stop and talk to the drivers. I talk to the postal carriers. It’s amazing how much information they acquire about an area. I find a bad area, especially an area that the news has scared everyone away from. I drive it for sometimes a year waiting for signs of some thing changing for the better. I talk to retailers, especially new ones, and find out why they’re moving in. It takes only a few minutes a month, and I do it while doing something else, like exercising, or going to and from the store.
• Shop for bargains in all markets. Consumers will always be poor. When the supermarket has a sale, say on toilet paper, the consumer runs in and stocks up. But when the housing or stock market has a sale, most often called a crash or correction, the same consumer often runs away from it. When the supermarket raises its prices, the consumer shops somewhere else. But when housing or the stock market raise their prices, the same consumer often rushes in and starts buying. Always remember: Profits are made in the buying, not in the selling.
• Look in the right places. A neighbor bought a condominium for
$100,000. I bought the identical condo next door for
$50,000. He told me he’s waiting for the price to go up. I told him that profit is made when you buy, not when you sell. He shopped with a real estate broker who owns no property of her own. I shopped at the foreclosure auction. I paid $500 for a class on how to do this.
My neighbor thought that the $500 for a real estate investment class was too expensive. He said he could not afford the money, or the time. So he waits for the price to go up.
• Look for people who want to buy first. Then look for someone who wants to sell. A friend was looking for a certain piece of land.
He had the money but did not have the time. I found a large piece of land, larger than what my friend wanted to buy, tied it up with an option, called my friend, and he said he wanted a piece of it. So I sold the piece to him and then bought the land. I kept the remaining land as mine for free. Moral of the story: Buy the pie, and cut it in pieces. Most people look for what they can afford, so they look too small. They buy only a piece of the pie, so they end up paying more for less. Small thinkers don’t get the big breaks. If you want to get richer, think big.
• Think big. Retailers love giving volume discounts, simply because most business people love big spenders. So even if you’re small, you can always think big. When my company was in the market for computers, I called several friends and asked them if they were ready to buy also. We then went to different dealers and negotiated a great deal because we wanted to buy so many. I have done the same with stocks. Small people remain small because they think small, act alone, or don’t act all.
• Learn from history. All the big companies on the stock
exchange started out as small companies. Colonel Sanders did not get rich until after he lost everything in his 60s. Bill Gates was one of the richest men in the world before he was thirty.
• Action always beats inaction.
These are just a few of the things I have done and continue to do to recognize opportunities. The important words are “have done” and
“do.” As repeated many times throughout the book, you must take action before you can receive the financial rewards. Act now!