While the research for this book began in the spring of 2004, the idea was born nearly two years earlier when we interviewed Cristina Martinez for our first book, The Millionaire Real Estate Agent. Cristina had built an amazing real estate sales business that generated over $4 million in gross income each year by catering to residential real estate investors. The stories she told inspired us and pointed us down the winding path that ends with these pages. Thanks, Cristina.
I'd be remiss not to mention Michael Allen, who was my original wealth-building mentor. Many of the ideas in this book about money and wealth building came to me long ago during our breakfast discussions. Although Michael is no longer with us, he has been ever-present in my thoughts, especially during the writing of this book. He has my deepest gratitude.
We began the search for investor interviewees by focusing on the wonderfully talented and successful real estate agents and investors we've known for years and kept asking for referrals until we expanded our list past those initial contacts. While everyone who agreed to be interviewed was helpful and insightful, several people really stand out because they went above and beyond to introduce us to more investors or supply more information. The first name that springs to mind is Dyches Boddiford, who, even though he didn't really know us, extended himself again and again by putting us in touch with numerous investors, sending us his material on entity planning, and participating in teleconferences to discuss the early systems and models we had developed. Don Zeleznak, ix
George Castleberry, Tamara Fuller, Renata Circeo, Don Beck, and Elmer Diaz also participated in those teleconferences and wowed each of us with their incredible knowledge about the finer details of market analysis, property acquisition, and property management. Not only are they all incredible investors, they are all teachers at heart. Jimmy and Linda McKissack shared their insights into how they parlayed their real estate sales business into a phenomenal investing business. Jimmy's knowledge of the Texas foreclosure process lit our way through that thicket of information. Early on, Chris Hake took it upon himself to devise a spreadsheet that laid out how many properties one would have to own and how much cash flow those properties would have to generate to net a million dollars in annual income. George Meidhof and Michael Huang guided us through the early stages of how to set up legal entities for investments and how to structure every kind of partnership. George also visited us in Austin and walked us through the aisles of a home improvement store to show us how he shops for bargains when fixing up properties. Both Rick Villani and Rob Harrington, Jr., spent many hours with us, on the phone and in person, detailing how they built their uniquely different but highly successful investment businesses. Rick has made fixing and flipping houses into a science, and Rob's done the same with evaluating and acquiring commercial properties. They were huge allies in the writing of this book, and their wisdom and insights touch more sections than we can name here. We'd also like to extend a special thank you to bestselling investment authors Robert T. Kiyosaki and Robert Shemin, who generously took time off to talk with us at length about their investment philosophies.
What follows is a complete list of all the Millionaire Real Estate Investors who we interviewed for this book: Al Abramson, Gene Arant, Joe Arlt, Stanley Armstrong, Susan Barbour, Ray Barr, Leanne Barschdorf, Don Beck, Armand Bedirian, Rische Beeson, Dwan Bent-Twyford, Mike Bergida, Chris Bird, Dyches Boddiford, Dottie Bowe, Mike
Brodie, Charles Brown, Jim Castagnari, George Castleberry, Steve Chader, Renata Circeo, Jerry Clevenger, Bill Cook, Judy Cook, Kim Daugherty, Alex Delgado, Don DeRosa, Elmer Diaz, Linda Dolese, Greg Dorriety, Barbara Drake, Ron Duguid, Brannon Fain, Dave Fairweather, Janet and Bobby Faulk, Darrow Fiedler, Charlie France, Tamara Fuller, Ron Garber, Jane Garvey, Leo Gee, Rick Geha, Bill Goacher, John Grossmann, Bob Guest, Chris Hake, Nancy Halberg, Brian Hammermeister, Robert Harrington, Jr., Carlos Herbon, Dave Herries, Pat Hiban, Tony Holloway, Michael Huang, Chris Jessey, Vena Jones-Cox, Ken Jordan, Donnis King, Robert T. Kiyosaki, Leona Kline, Robert Kohorst, Jon and Amy Kubas, Nikki and David Kupfer, Pat LaMonica, Don Leiby, Allen D. Leone, Cathy Manchester, Barbara Mattson, Arnold May, Mary McDonald, Patricia McDonald, Bobbi McKenna, Jimmy and Linda McKissack, George Meidhof, Jack Miller, Anna Mills, Tim Minnix, Paul Morris, Jimmy Napier, Mike Netzel, Dennis Nevius, Erv Norgren, Bill O'Kane, Rocco Pangallo, Glenn Papineau, Wendy Patton, Craig Power, Pat Puckridge, Marshall Redder, Sharon Restrepo, Sally Richards, Carlos Rivero, Peggy Rollins, Joe Rozanski, Steve Scheffe, Robert Shemin, Rick Smith, Will Stewart, Patrick Swint, Mike Tavener, Geidre Trahan, Robert Trahan, Todd Tressider, Robert P. Tucker, Rick Villani, Lyle Wall, Pat Wells, Danny Williams, Bob Witcher, Jean Yevic, Jen and Jay Yilmaz, Charles Young, Don Zeleznak, and Ryan Zeleznak.
Many of these investors joined us for a Millionaire Real Estate Investor Mastermind session in Austin in summer 2003, and for two days we just talked and brainstormed about every aspect of investing. The results were amazing, and many of the ideas, "ahas," and insights reflected in this book originated at that inspirational gathering. A special thanks to all of them for making an investment in us. Although Charles Sullivan was unable to attend, he provided detailed feedback on the manuscript. Thanks, Charles.
We'd be negligent not to mention several people who, while not fulltime real estate investors themselves, were invaluable resources because of their industry expertise: noted economist Harry S. Dent, Jr.; real estate editor of CBS.MarketWatch.com Steve Kerch; Ron Kubek, a prominent real estate agent and broker in Canada; and the foreclosure experts at Wells Fargo. We relied on their vast knowledge more than they know. To each and every person on this list we offer heartfelt thanks, and we hope that what we've captured on paper accurately reflects the sum of all your knowledge.
Perhaps the best testimony to the power of the systems and models we lay out in this book are two that are very close to home. Heather M. Iarusso, our researcher, and Rachel Proctor May, our transcriber and profile writer, transformed their lives and their mindsets while working on this project. When Heather interviewed her first Millionaire Real Estate Investor for this book, she was helping her landlord pay his mortgage. Eight months and 114 interviews later, a friend rents two rooms in her four-bedroom, two-bathroom house. More important than the logistics of this move, however, is the mental "move" she made going from renter to homeowner to investor. She's now on the path to building wealth and passive income. After spending hours upon hours transcribing Heather's interviews with Millionaire Real Estate Investors, Rachel and her husband, who were both graduate students at the time, bought their first house. Armed with all the knowledge from these investors, Heather and Rachel have teamed up to buy their first investment property. Way to go!
Special thanks to the team at McGraw-Hill, particularly Mary Glenn, our exceptional editor, and her talented assistant, Ed Chupak. This book was a marathon, not a sprint, but their patience never flagged. Thanks for the help and the encouragement. Our managing editor, Peter McCurdy, also deserves our gratitude for guiding this book through the production process in a remarkably efficient way. We were tardy, but Peter got us back on track.
The staff here at Keller Williams® Realty International has been incredibly supportive while we have focused on this book. A special thanks
Back Row: Gary Keller, Dave Jenks, Bobby Faulk, Ryan Zeleznak, Rische Beeson, Jody McAnally, Ed Berry, and Sean Seaton.
Middle Row: Chris Hake, David Osborne, Jane Maslowski, Pat LaMonica, Steve Scheffe, Jimmy McKissack, Mary Taylor, and Rick Smith.
Front Row: Chris Jessey, Leona Kline, Janet Faulk, Cathy Manchester, Heather larusso, and Linda Dolese.
Back Row: Bill O'Kane, Gary Keller, Pete Reeser, George Castleberry, George Meidhof, Dennis Nevius, Bob Guest, Mike Colohan, and Jay Papasan.
Middle Row: Terry Dyroff, Todd Orrill, Rocco Erker, Adam Robinson , Darrow Fiedler, Gene Arant, Sandy Murphy, Mike Brodie, and Mike Netzel.
Front Row: Bonita Joy Yoder, Michael Huang, Joe Jackson, Leith Seegers-McKahan, Dottie Bowe, and Leanne Barschdorf (Steve Chader was present but is not pictured).
to Mo Anderson, Mark Willis, Todd Butzer, and Sharon Gibbons for their leadership and encouragement. My and Dave's executive assistants, Valerie Vogler-Stipe and Mindy Hager (truly "assistant executives" in our minds), gave us phenomenal leverage while we were writing this book. We thank them dearly, as well as Allison Odom and Jeannine Abbott, who in turn gave them leverage to do all that had to be done while we were lock-ed away writing toward our deadline. Thanks to Toni Tolerico, our PowerPoint wizard, and designer Justine Smith who helped design some of the graphics. This book is much more polished thanks to the efforts of Casey Blaine, a freelance editor, who gave us excellent feedback on the final drafts of the manuscript.
Over the past two years we've given close to 50 presentations of this material in the form of "sneak preview" training sessions. Thanks to the thousands of enthusiastic attendees who stayed afterward to share their investing wisdom and comment on our evolving models. Speaking of these events, the MillionaireSystems team deserves our gratitude for tirelessly scheduling and organizing these events as well as overseeing product sales and development. So big thanks to Molly Brown and Dawn Sroka. Laura Morgan and her events team also played a huge role in making these learning events happen.
My coauthors, Dave Jenks and Jay Papasan, have earned my sincere gratitude for their stamina and skill in pursuing this project from start to finish. We worked through lunches week after week (subsisting on Marye's Red Turkey and Turkey #1 sandwiches) and often took our writing home on weekends and nights. Thanks for their dedication to excellence through draft after draft and to their families and loved ones for lending them to this process for so long.
Professor Walstein Smith, former head of the real estate department at Baylor University, is also due thanks for letting a struggling student work for his real estate company part-time and get an inside look at what would become his profession of choice. And thanks to my lifelong friend Kim
Brightwell, who through our childhood games of chess and Monopoly taught me to think strategically.
Thanks to my wife, Mary, and my son, John, the true loves of my life, for their willingness to constantly be my guides and teachers even when I didn't want guidance or teaching. Thanks to my parents, Lew and Minnie Keller, for their loving parenting and sound advice throughout my life. And special thanks to my father, who, before he passed away, shared his investing stories with me and gave me permission to share them with you. Always the teacher—thanks, Dad.
A special thanks to you, the reader. It has been my experience that the best ideas are those shaped by many, which is why so many people were involved in the writing of this book. But the process doesn't have to end here with this printed edition. I encourage you to share your thoughts and suggestions for improvement and your experiences working with these models. Just visit www.MillionaireSystems.com and drop us a line.
Finally, thanks to God, from whom all things come.
Gary Keller January 14, 2005
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You already recognize that rich individuals think differently than middle class or poor individuals in every aspect of life. But particularly when it comes to money. That's why they're rich. Their selections and decisions just by nature bring about riches.