My father was a truck driver.
I grew up thinking that I would like to be a scientist, or perhaps an attorney.
As it turns out, however, I too am a truck driver.
I've been a driver now for about thirty years.
It has been a good, honest living, but I have always wanted to break out of this rat race.
I have always looked for ways to get ahead.
I have bought all of the books and tapes and have gone to a few seminars.
In fact about twenty years ago I attended a Dave DelDotto seminar...
he was "Mr.
real estate" for a few years back then.
He was the guy on TV who wore bright red Hawaiian shirts and sipped on Pina Coladas with the surf behind him.
He taught that you could buy real estate with "no money down", and he had books and tapes to prove it.
I listened to other gurus as well, namely Carlton Sheets.
I ordered his books and tapes and I lived those things...
I ate drank and slept Carlton Sheets for months on end, then I decided to try to buy some of that real estate with no money of my own.
I look back now in humor as I think back to the days when I would call real estate agents to meet me in front of these ten unit apartment buildings with the intention of making no money down offers.
I would try to explain to them the techniques that Carlton had taught me.
It never really hit me until an owner once said to me over the phone, "Why would I give you the title to my property without receiving any money from you?" I finally had to conclude that most of these guys were liars, just plain and simple.
They were in the business of selling books and tapes, the actual content does not work.
I then decided to become a "Land Baron".
My plan was simply to buy as much land as possible, subdivide it, and sell for profit.
I sent away for about ten different credit cards, and I ended up with about thirty thousand dollars of credit, back in the late eighties.
I started investigating land deals in Arizona and Nevada, and Colorado.
In Colorado I came across a forty acre parcel for only five thousand dollars.
I bought it and immediately sold it for double.
I then bought another forty acre parcel in Arizona, near Bullhead City.
I kept that one for a few years and ended up selling it for a small profit.
I had also purchased some smaller parcels near the Colorado River, and ended up liquidating them at a loss.
It takes money to subdivide, it takes money to make the credit card payments, and it takes money to make the payments on these parcels that were not purchased for cash.
Needless to say my "Land Baron" days came to an end as well.
There was a stretch of years in which I pretty much forgot about investing.
I just went to work and paid my bills and tried to be a good little member of the rat race.
Then, about four years ago, I again picked up the desire to begin investing in real estate.
My plan was simply to purchase a few properties with a modest down payment, and rent these properties out to tenants, who would in turn pay the mortgages with their rents.
Great concept.
The first thing that I had to do before I bought anything was to forget everything that I had ever heard from these real estate gurus.
Believe me when I say this, if you truly want to buy real estate, the information that they give you will actually hinder you from buying anything, because their concepts are not based in reality.
The real world doesn't adhere to their teachings, and if you try to invest with nothing but a mind full of "guru speak", you're going to hit a brick wall.
There is one basic way to buy investment real estate.
First, you must qualify for a loan.
It always amazes me when I see novices go out and spend hours searching for properties when they haven't even been pre qualified by a lender.
It is also a good idea to find yourself a good real estate agent, someone who understands investing and knows what to look for.
Again, I find novices running all over the place, calling on all kinds of ads, driving here and there, when all that they have to do is to find a good Realtor who will do the searching for them.
Secondly, you need to have MONEY.
Sorry, gurus, there is no such thing as a no money down deal, unless the seller is a total moron, or unless the bank is offering one hundred percent financing.
Many years ago the banks would only lend eighty percent to an investor, meaning that you would have to come up with twenty percent of your own cash.
In recent years, banks were commonly loaning ninety percent, meaning that you only had to come up with ten percent.
However, in addition to the down payment, the bank also wants to see some "reserves" in your bank account, usually an amount equal to six months of payments on the proposed loan.
If the payment is going to be two thousand, for example, the bank wants to see twelve thousand in reserves, in addition to the down payment.
As you can see, the reality of investing is a far cry from the way of the guru.
I started buying when the real estate market was on fire a few years ago.
I already had one income property, since we kept our first home when we moved into our second home.
I had a good start, but I was eager to buy more.
I believe that I borrowed on that house in order to come up with the funds to buy other properties.
I bought two more single family homes.
I the purchased a triplex, which is a single building with three separate apartments under the same roof.
A short time later I was able to purchase another triplex with a family member.
We each own half of that property.
I sold one of the homes that I had purchased about nine months later.
I made a profit of fifty thousand on that one property.
When I had purchased that particular property, the bank required a twenty percent down payment, so when I sold it, I got that down payment back as well as the profit.
My check at the closing was for one hundred thousand.
I did not want to be hit with high taxes on this money, so I utilized a 1031 tax exchange, which gives you a period of time in which to take those earnings and purchase other property with it, thus avoiding the tax consequence.
Since I live in California, investors were telling me to invest in other states, so I took their advice.
I purchased three houses in Charlotte, South Carolina.
I then purchased a condo in Knoxville Tennessee.
Finally, I purchased a condo in Gautier, Mississippi.
The reason that I bought this last property was because it is located in the post Katrina area, in an area designated by the government as the "Go Zone".
When you purchase a property in this zone you are given additional tax breaks and incentives.
It appeared that I was finally on my way to financial successes.
I had built up an inventory of nine income properties.
I felt very good about owning these properties.
I saw them as a way to retire early.
I felt that I had accomplished something that the average person had not done.
I was very proud of myself.
I had finally achieved something of substance, not just a dream.
I now had an inventory of properties that were very valuable.
I had worked very hard to achieve this, and I felt like a million dollars.
I refinanced a few of my properties and took out cash.
I began buying everything with this cash.
I did not want to owe anything apart from the mortgages that I had.
Yes, everything was wonderful, and everything was finally looking up for me.
That is, until two things happened that would alter my life: I got hurt at work and was placed on disability for eight months, and the real estate market plummeted.
I found out, far too late, that I wasn't prepared for either.
I was not receiving any income from my properties.
In fact, I had to pay a little into each property in order to make the mortgage.
Their value was a future value, the value of appreciation.
The appreciation would far outweigh the small carrying costs on each property.
I had always banked on the idea that my properties would always go up in value.
Since I wasn't yet receiving any income from the properties, I still depended on my job to pay the bills.
I hurt my knee in December of 2006.
I struggled to do my job until a specialist determined that I had to be placed on full disability for a period of time.
I stayed off work for those eight months, receiving disability income that was far below my normal wages.
It became very difficult to make all of the mortgages.
During this time the real estate market began to drop.
The equity that I was counting on was disappearing.
I was now unable to sell any of these properties because of the market conditions.
I returned to work in March, 2008.
However, I was unable to return to my regular position because of my knee.
I was forced to take a position that does not offer overtime.
I am currently making less than I did before I injured my knee.
I had to face the ugly truth about my situation.
I now had numerous mortgages on nine properties that were now worth less than the mortgages, and would not sell.
I had a job that paid less than a year ago, so I could no longer afford to carry the costs on these properties.
The mortgage on my residence adjusted while I was on disability.
I was unable to refinance because of the disability status and lack of reserves in the bank.
My own mortgage went up an additional three hundred dollars.
The business that I was once so proud of, the business that was going to bring me financial independence, turned on me and became a huge chain around my neck.
I had five income properties out of state, and four properties here locally.
I had to make the painful decision to let my out of state properties go into default.
Two of those properties have sold as short sales, meaning that the bank agrees to accept much less money from a sale than what is owed on the mortgage.
There are two other properties that are currently in escrow as short sales, and the fifth one was taken over by the bank as a foreclosure.
Regarding the four local properties, I am now struggling to hang onto them, in the hopes that I can at least profit from the eventual sale of these properties, when the market finally rebounds.
Needless to say, my credit is ruined, but what's even worse than the state of my credit is the emotional pain caused by this situation.
Although I realize that I had no control over how the market dropped, I still feel like I failed, and have put my wife and I into a financially precarious situation.
It is very painful indeed.
As I look back at all of the things that I have done in order to achieve financial independence, I now can see all of the mistakes that I made.
As we all know, hindsight is 20/20, as the saying goes.
I look back now and I can see how I over bought.
I wasn't financially able to carry all of those properties.
I failed to plan for a possible market drop.
Here's another interesting fact: Every time I wanted to buy another property, my wife would fight me all the way.
She knew that I was biting off too much, but I couldn't see it.
She would finally give in and sign the loan documents, but she never agreed with what I was doing.
I also borrowed against many of my properties.
I got in the habit of refinancing and taking out cash.
I couldn't see back then that this was eating up equity, and that the payments would go up.
I was reckless, in spite of my wife's warnings, and now I am paying the price, and unfortunately, so is my wife.
I look back now and I wish that I hadn't despised my lot in life.
I've been a union truck driver, something that I have enjoyed.
The pay and benefits are good, the retirement is good.
I wish that I had been more realistic in regards to my job, and in regards to my investing.
I don't believe that there is anything wrong with investing, but you can take anything to an extreme.
I over did it, I gambled, and I lost.
How I long for the days before I invested, those simpler times when I didn't owe so much money, when my biggest financial concern was merely to pay the mortgage on my home.
It was so much simpler then.
In bringing my story to a close, I want to leave the reader with two specific points to remember.
The first is this: Be happy with your lot in life.
Count your blessings.
If you have a family, and own a home, and you have a decent job, you are truly blessed.
Rejoice in your situation, don't despise it.
Be grateful for what you have.
The second is this: If you do decide to invest, whether it be in real estate or stocks and bonds, be very careful.
Do not be over confident.
Do not take unnecessary risks.
Do not spend what you don't have.
Be frugal in your investing.
And finally, if your spouse is in total disagreement with what you are doing, sit down, and consider carefully what they are saying to you.
Do not assume that you are the expert, and that they don't know what they're talking about.
Just remember, the grass always, always looks greener on the other side.
This very much applies to any type of investing that you might do.
Be careful.
I grew up thinking that I would like to be a scientist, or perhaps an attorney.
As it turns out, however, I too am a truck driver.
I've been a driver now for about thirty years.
It has been a good, honest living, but I have always wanted to break out of this rat race.
I have always looked for ways to get ahead.
I have bought all of the books and tapes and have gone to a few seminars.
In fact about twenty years ago I attended a Dave DelDotto seminar...
he was "Mr.
real estate" for a few years back then.
He was the guy on TV who wore bright red Hawaiian shirts and sipped on Pina Coladas with the surf behind him.
He taught that you could buy real estate with "no money down", and he had books and tapes to prove it.
I listened to other gurus as well, namely Carlton Sheets.
I ordered his books and tapes and I lived those things...
I ate drank and slept Carlton Sheets for months on end, then I decided to try to buy some of that real estate with no money of my own.
I look back now in humor as I think back to the days when I would call real estate agents to meet me in front of these ten unit apartment buildings with the intention of making no money down offers.
I would try to explain to them the techniques that Carlton had taught me.
It never really hit me until an owner once said to me over the phone, "Why would I give you the title to my property without receiving any money from you?" I finally had to conclude that most of these guys were liars, just plain and simple.
They were in the business of selling books and tapes, the actual content does not work.
I then decided to become a "Land Baron".
My plan was simply to buy as much land as possible, subdivide it, and sell for profit.
I sent away for about ten different credit cards, and I ended up with about thirty thousand dollars of credit, back in the late eighties.
I started investigating land deals in Arizona and Nevada, and Colorado.
In Colorado I came across a forty acre parcel for only five thousand dollars.
I bought it and immediately sold it for double.
I then bought another forty acre parcel in Arizona, near Bullhead City.
I kept that one for a few years and ended up selling it for a small profit.
I had also purchased some smaller parcels near the Colorado River, and ended up liquidating them at a loss.
It takes money to subdivide, it takes money to make the credit card payments, and it takes money to make the payments on these parcels that were not purchased for cash.
Needless to say my "Land Baron" days came to an end as well.
There was a stretch of years in which I pretty much forgot about investing.
I just went to work and paid my bills and tried to be a good little member of the rat race.
Then, about four years ago, I again picked up the desire to begin investing in real estate.
My plan was simply to purchase a few properties with a modest down payment, and rent these properties out to tenants, who would in turn pay the mortgages with their rents.
Great concept.
The first thing that I had to do before I bought anything was to forget everything that I had ever heard from these real estate gurus.
Believe me when I say this, if you truly want to buy real estate, the information that they give you will actually hinder you from buying anything, because their concepts are not based in reality.
The real world doesn't adhere to their teachings, and if you try to invest with nothing but a mind full of "guru speak", you're going to hit a brick wall.
There is one basic way to buy investment real estate.
First, you must qualify for a loan.
It always amazes me when I see novices go out and spend hours searching for properties when they haven't even been pre qualified by a lender.
It is also a good idea to find yourself a good real estate agent, someone who understands investing and knows what to look for.
Again, I find novices running all over the place, calling on all kinds of ads, driving here and there, when all that they have to do is to find a good Realtor who will do the searching for them.
Secondly, you need to have MONEY.
Sorry, gurus, there is no such thing as a no money down deal, unless the seller is a total moron, or unless the bank is offering one hundred percent financing.
Many years ago the banks would only lend eighty percent to an investor, meaning that you would have to come up with twenty percent of your own cash.
In recent years, banks were commonly loaning ninety percent, meaning that you only had to come up with ten percent.
However, in addition to the down payment, the bank also wants to see some "reserves" in your bank account, usually an amount equal to six months of payments on the proposed loan.
If the payment is going to be two thousand, for example, the bank wants to see twelve thousand in reserves, in addition to the down payment.
As you can see, the reality of investing is a far cry from the way of the guru.
I started buying when the real estate market was on fire a few years ago.
I already had one income property, since we kept our first home when we moved into our second home.
I had a good start, but I was eager to buy more.
I believe that I borrowed on that house in order to come up with the funds to buy other properties.
I bought two more single family homes.
I the purchased a triplex, which is a single building with three separate apartments under the same roof.
A short time later I was able to purchase another triplex with a family member.
We each own half of that property.
I sold one of the homes that I had purchased about nine months later.
I made a profit of fifty thousand on that one property.
When I had purchased that particular property, the bank required a twenty percent down payment, so when I sold it, I got that down payment back as well as the profit.
My check at the closing was for one hundred thousand.
I did not want to be hit with high taxes on this money, so I utilized a 1031 tax exchange, which gives you a period of time in which to take those earnings and purchase other property with it, thus avoiding the tax consequence.
Since I live in California, investors were telling me to invest in other states, so I took their advice.
I purchased three houses in Charlotte, South Carolina.
I then purchased a condo in Knoxville Tennessee.
Finally, I purchased a condo in Gautier, Mississippi.
The reason that I bought this last property was because it is located in the post Katrina area, in an area designated by the government as the "Go Zone".
When you purchase a property in this zone you are given additional tax breaks and incentives.
It appeared that I was finally on my way to financial successes.
I had built up an inventory of nine income properties.
I felt very good about owning these properties.
I saw them as a way to retire early.
I felt that I had accomplished something that the average person had not done.
I was very proud of myself.
I had finally achieved something of substance, not just a dream.
I now had an inventory of properties that were very valuable.
I had worked very hard to achieve this, and I felt like a million dollars.
I refinanced a few of my properties and took out cash.
I began buying everything with this cash.
I did not want to owe anything apart from the mortgages that I had.
Yes, everything was wonderful, and everything was finally looking up for me.
That is, until two things happened that would alter my life: I got hurt at work and was placed on disability for eight months, and the real estate market plummeted.
I found out, far too late, that I wasn't prepared for either.
I was not receiving any income from my properties.
In fact, I had to pay a little into each property in order to make the mortgage.
Their value was a future value, the value of appreciation.
The appreciation would far outweigh the small carrying costs on each property.
I had always banked on the idea that my properties would always go up in value.
Since I wasn't yet receiving any income from the properties, I still depended on my job to pay the bills.
I hurt my knee in December of 2006.
I struggled to do my job until a specialist determined that I had to be placed on full disability for a period of time.
I stayed off work for those eight months, receiving disability income that was far below my normal wages.
It became very difficult to make all of the mortgages.
During this time the real estate market began to drop.
The equity that I was counting on was disappearing.
I was now unable to sell any of these properties because of the market conditions.
I returned to work in March, 2008.
However, I was unable to return to my regular position because of my knee.
I was forced to take a position that does not offer overtime.
I am currently making less than I did before I injured my knee.
I had to face the ugly truth about my situation.
I now had numerous mortgages on nine properties that were now worth less than the mortgages, and would not sell.
I had a job that paid less than a year ago, so I could no longer afford to carry the costs on these properties.
The mortgage on my residence adjusted while I was on disability.
I was unable to refinance because of the disability status and lack of reserves in the bank.
My own mortgage went up an additional three hundred dollars.
The business that I was once so proud of, the business that was going to bring me financial independence, turned on me and became a huge chain around my neck.
I had five income properties out of state, and four properties here locally.
I had to make the painful decision to let my out of state properties go into default.
Two of those properties have sold as short sales, meaning that the bank agrees to accept much less money from a sale than what is owed on the mortgage.
There are two other properties that are currently in escrow as short sales, and the fifth one was taken over by the bank as a foreclosure.
Regarding the four local properties, I am now struggling to hang onto them, in the hopes that I can at least profit from the eventual sale of these properties, when the market finally rebounds.
Needless to say, my credit is ruined, but what's even worse than the state of my credit is the emotional pain caused by this situation.
Although I realize that I had no control over how the market dropped, I still feel like I failed, and have put my wife and I into a financially precarious situation.
It is very painful indeed.
As I look back at all of the things that I have done in order to achieve financial independence, I now can see all of the mistakes that I made.
As we all know, hindsight is 20/20, as the saying goes.
I look back now and I can see how I over bought.
I wasn't financially able to carry all of those properties.
I failed to plan for a possible market drop.
Here's another interesting fact: Every time I wanted to buy another property, my wife would fight me all the way.
She knew that I was biting off too much, but I couldn't see it.
She would finally give in and sign the loan documents, but she never agreed with what I was doing.
I also borrowed against many of my properties.
I got in the habit of refinancing and taking out cash.
I couldn't see back then that this was eating up equity, and that the payments would go up.
I was reckless, in spite of my wife's warnings, and now I am paying the price, and unfortunately, so is my wife.
I look back now and I wish that I hadn't despised my lot in life.
I've been a union truck driver, something that I have enjoyed.
The pay and benefits are good, the retirement is good.
I wish that I had been more realistic in regards to my job, and in regards to my investing.
I don't believe that there is anything wrong with investing, but you can take anything to an extreme.
I over did it, I gambled, and I lost.
How I long for the days before I invested, those simpler times when I didn't owe so much money, when my biggest financial concern was merely to pay the mortgage on my home.
It was so much simpler then.
In bringing my story to a close, I want to leave the reader with two specific points to remember.
The first is this: Be happy with your lot in life.
Count your blessings.
If you have a family, and own a home, and you have a decent job, you are truly blessed.
Rejoice in your situation, don't despise it.
Be grateful for what you have.
The second is this: If you do decide to invest, whether it be in real estate or stocks and bonds, be very careful.
Do not be over confident.
Do not take unnecessary risks.
Do not spend what you don't have.
Be frugal in your investing.
And finally, if your spouse is in total disagreement with what you are doing, sit down, and consider carefully what they are saying to you.
Do not assume that you are the expert, and that they don't know what they're talking about.
Just remember, the grass always, always looks greener on the other side.
This very much applies to any type of investing that you might do.
Be careful.
Source...