Bill OKane

Chicago, IL Years Investing: 28 Number of Deals in 2004: 5 Career Deals: 50-55

Units Owned: 2,800 residential units and over 200,000 square feet of commercial space

Areas of Expertise: Rehabbing and repositioning; management; and investing in highly appreciating locations

Real Estate License: Yes

An investor's mindset is something that's built up over a lifetime. Many investors can look back on some moment in their childhood or some life-changing experience that shaped their outlook. For Bill O'Kane serving as an altar boy in his church taught him the lesson he believes all investors must learn: preparation can defeat fear.

"The priest made sure you knew the routine and knew what you had to do," he says. "So even though I was up there in front of a thousand people, I wasn't nervous at all."

Investing isn't that different, O'Kane says. It's doing your research, learning your market, and knowing exactly what to do when an opportunity comes your way that can conquer the new-investor jitters and ultimately lead to success. These days O'Kane is prepared for whatever the market throws his way. Since he borrowed half of the $7,000 down payment and bought his first three-flat in Chicago in 1978, he's accumulated scores of multifamily units and one large office building. For O'Kane finding a good deal is a matter of negotiation and figuring out where everyone's willing to sacrifice.

"I've always enjoyed the art of the deal," he says. "One of my rules is that I always find out the other person's priorities and compare them to my priorities. If there's not a conflict there, you should be able to make a deal."

His ability to find a win-win solution is illustrated by the first "trophy building" he bought in 1986. It was a 31-unit apartment building with six storefronts, worth about $1.2 million. However, the seller was demanding no less than $1.4 million, a price O'Kane wasn't willing to pay.

"The negotiation was breaking down," O'Kane recalls. "But then they offered to loan me the $400,000. That allowed me to get a $1 million loan from a lender, and they actually gave me a check for $400,000 at closing."

That building, which O'Kane bought for nothing down, is worth around $8 million today.

O'Kane says another way preparation is key is in finding deals in the first place. O'Kane knows his market inside and out—"Almost down to the per-foot level," he says—and also knows where to go for financing. In fact, doing research to find investor-friendly lenders actually helps him find investor-friendly properties.

"When you find the lenders who want to work with investors, they will be a valuable resource on what's going on in the marketplace," O'Kane says.

O'Kane is a firm believer in the old saying about location. What he wants in a property more than anything else is that it be in the next hot area.

"There's an old line: 'Buy on the fringe and wait,'" he says. "I think properties appreciate the most when you buy them in a neighborhood that's going to 'pop' in a few years."

O'Kane stresses that it takes knowledge of the marketplace to know what the "new hot market" will be: a brand-new subdivision on the outskirts of town or a transition-ing urban neighborhood. But no matter where it is and what is going on in the marketplace, O'Kane is adamant that there's only one good time to buy: now.

"It's kind of like a football game," he explains. "You take what the other team's defense is giving you. If they're shutting down a long pass, you go for a short pass. If they're letting you run, then run."

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