Millionaire Real Estate Investors

Overnight Millionaire System

Think Like A Millionaire

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Although this book has only three names on its cover, it contains the wisdom and expertise of many people from different social, economic, and cultural backgrounds. Fortunately for the authors, the two things those people all have in common are a passion for real estate and a willingness to share their wisdom. Without both, we would not have been able to craft a comprehensive book that speaks so powerfully about building financial wealth. For this we are immensely grateful.

Because each person's story of how he or she became a Millionaire Real Estate Investor was compelling and inspirational and because we had a limited amount of space, it was extremely difficult to select only 21 stories to share. We fretted, we scratched our heads, and we wrangled over who to choose before finally deciding. The amazing individuals featured in the pages that follow were chosen because of the breadth, depth, and diversity of their investment journeys. Separately, the thread of their individual stories may not have been the most colorful or the most fantastic, but as a whole their successes weave a rich tapestry that fully illustrates what it takes to become a Millionaire Real Estate Investor. These people see the endless possibilities of wealth building through real estate. They were our inspiration, and we hope they will inspire you.

Joe Arlt

Virginia Beach, VA

Years Investing: 8

Number of Deals in 2004: 30

Career Deals: 500 or more

Current Units Owned: 400

Areas of Expertise: Lease options; subject-to acquisitions; and VA foreclosures

Real Estate License: Yes

Do you hate infomercials? Think people never buy that stuff? Or if they do, never do anything with it? Joe Arlt will tell you different. The former certified public accountant with, in his words, a "fancy Ivy League" MBA could be the poster child for late-night infomercials. He changed his life after watching one by real estate investor John Burley. Arlt's interest was piqued enough that he took one of Burley's five-day boot camps in January 1996.

"I made two decisions after the seminar: I wanted to give real estate a try, and I didn't want to continue living in New Jersey," Arlt recalls.

He immediately started investing part-time, driving from New Jersey to Virginia Beach (his soon-to-be new home) to take advantage of the many repossessed houses surrounding the large military base that were financed by the Veteran Affairs Administration. Arlt put his finance and accounting background to work and started buying the properties subject to the existing mortgage or on a wrap. He then resold each property on a wrap. Arlt now owns 250 single-family homes in the area and has an ownership interest in more than 250 other properties across the country.

"I do long-term lease option agreements," he says. "I've created a transaction where the people moving into the house are basically buying it, but I get to treat it like a rental, so taxwise it's viewed as an investment, not a dealer property."

Arlt, who got his real estate license in 1997, serves as the chief operations officer of the business he established with Burley, who serves as the president. When scouting deals, they look for a deal that will give them a 50 percent annual return on their net investment. Their main goal with lease options is to create cash flow.

"If I'm wrapping for cash flow, I want price and terms," Arlt says. "And when I'm dealing with tenants on these lease options, I'm always skeptical and always prepare for the worst."

It took a while to hone their buying and leasing formula, but they found a method that yields a solid return. For example, if they purchase a house for $70,000, they spend about $10,000 for the down payment and closing costs. Arlt and Burley then price the house at $87,900 and market it as a 10-year lease-option agreement with the ability to exercise the option to buy after one year. After the tenant-owner makes a down payment of, say, $4,000, their total net investment is only $6,000. The renters usually pay 10 percent interest because they are not qualified buyers, with part of the rent going toward the total purchase price. On a deal like this Arlt and Burley net about $4,200 a year. This may seem like a trickle, but when you factor in the large volume of deals they conduct, the cash flow becomes a waterfall.

"I'll be doing this business probably until I die or until I can't do it anymore," Arlt says. "Real estate is a great investment because if you buy it right, you can't go wrong."

Don Beck

Philadelphia, PA Years Investing: 25 Number of Deals in 2004: 0 Career Deals: 65 Units Owned: 105

Areas of Expertise: 20-40 unit complexes Real Estate License: Yes

Don Beck had been an elementary school teacher for 12 years when he bought his first home and in the process changed his life.

"It was a duplex," he says. "I lived in one half, rented out the other, and from then on it was just 'get out of my way.'"

It had taken Beck two years to build up the courage to make that first buy in 1979. But over the next five years he bought 80 more units, and by 1984 he had decided to retire from teaching. However, not everyone congratulated him on his decision to pursue financial independence over the security of a nine-to-five job.

"I walked into the principal's office and turned in my resignation," he says. "The principal said, 'I guess the real estate's been going pretty well.' I told him it was. But with that, he picked up the phone and called the school psychiatrist to check me out because I was tenured and my wife was pregnant with our first child."

Beck knew that he wasn't crazy and that becoming a full-time investor would bring more rewards than just money. It gave him time and freedom. After their child was born, Beck carted his newborn daughter around with him while he looked for more investment opportunities and worked as a landlord. Instead of pouring all his energy into other people's children, he had ample time to devote to his own.

"Investing gave me a lot of flexibility to adjust my schedule around my family," he says. "It gave me the chance to be a homeroom dad and attend all my kids' school plays and sporting events and to be there when they came home from school."

While Beck started out buying duplexes, he eventually settled on midsize complexes of 20 to 40 units. He initially developed this strategy when the high prices of single-family

homes in his suburban Philadelphia market meant they couldn't generate cash flow. However, he soon learned that apartment complexes had other advantages.

"I've got one roof, one heater, and one on-site manager taking care of everything, instead of 20 single-family homes with 20 roofs and 20 heaters and a full-time maintenance guy running all over the place to take care of them," he says. "Plus, if one tenant moves out, I lose only one-twentieth of my income."

Beck's recipe for success includes one ingredient that many investors overlook: failure. Making a few lousy deals early on, he says, is ultimately how investors learn they can move beyond failure. It helps them break out of a confining comfort zone and learn the skills, the discipline, and the courage to make bigger, bolder deals that don't flop.

"But fail fast," he jokes. "There's less zeros at the end."

After two decades of investing and acquiring 100 units, Beck is still disciplined. But rather than using that discipline to pore through real estate books on his lunch hour as he did when he was a teacher with duplex dreams, he now disciplines himself to know when to stop.

"You have to be careful that it doesn't consume you," he says. "I simply don't need another 50 or 100 units."

Even though Beck is happy to manage what he has and leave acquisition to others, he still insists that nothing else even comes close to the benefits of real estate investing. With only a small percentage down or even nothing down, you get 100 percent control of a valuable asset. You get tax advantages. And of course you get someone else paying off the mortgage.

"To this day I still say that if anyone can come up with an investment that can do better than that, please tell me what it is and I'll probably get into it," he says. "But of course, no one can."

Dwan Bent-Twyford and Sharon Restrepo

DelRay Beach, Florida, and Bailey, Colorado

Years Investing: 13

Number of Deals in 2004: 75-100

Career Deals: Over 1,000

Units Owned: Three commercial buildings, one duplex; two lots; and 12 single family homes.

Areas of Expertise: Short sales and wholesaling; rehabbing; and subject-to acquisitions.

Real Estate License: No (Dwan) and Yes (Sharon)

Business partners Sharon Restrepo and Dwan Bent-Twyford launched their careers as Millionaire Real Estate Investors from the most unlikely places. Restrepo was a 25-year-old widow and Bent-Twyford was a recently divorced 29-year-old mother when each decided to bet it all on real estate—and they won big.

Restrepo and her husband dreamed of rehabilitating houses before he was killed in a motorcycle accident. Alone and in mourning, Restrepo decided to keep her husband's dream alive and used the settlement money from his death to buy a dilapidated single-family house. Since she knew nothing about houses or investing, she decided that the best way to learn and avoid getting taken advantage of was to do all the renovations herself, from repairing a falling-down roof to cleaning up a mold infestation so bad that it made her sneeze blood. The experience taught her about rehabbing, but more important, it also taught her a valuable lesson: don't fall in love with the house. She spent so much time and energy fixing the house, she forgot that the point was creating not the house of her dreams but the bottom line. With all her fancy tweaks and touches, the house ended up being too expensive to sell. Fortunately, she was able to lease-option the house.

"I probably made a whopping 500 bucks on that house," Restrepo says. "But during the time I bought and sold that one I bought and sold three others, and they were home runs."

Bent-Twyford's first deal was more lucrative than her future partner's. Broke and alone after her divorce, she happened to meet some investors who bought and flipped foreclosures. Bent-Twyford borrowed $3,000 from an aunt to buy a car, got a list of prefore-

closures, and with her baby on her hip started knocking on doors. After about a dozen nos she found a seller. Like Restrepo, she fixed it up herself.

"I took all the classes at Home Depot to learn to tile, lay carpet, everything," Bent-Twyford says. "It got to the point where when the guys at the store saw me coming, they'd run because I asked too many questions."

Her house sold in two days, earning Bent-Twyford $22,000.

"I thought I was rich," she says. "I wept because I was so happy."

The two investors met at a small seminar—they were the only women there, and so they started chatting—and soon formed a partnership to do rehabs. But after several years of successful rehabbing and learning exactly how to find a great deal, they branched out into wholesaling.

"It's a lot less work," Restrepo says, "and since you get good deals under contract and then find other people to buy them, you don't even have to own the property."

Then they mastered short sales. But no matter what kind of investment they try, both agree that some of their most valuable lessons are those they learned at the outset. Restrepo always comes back to the lesson she learned on that first house.

"Any time you make an emotional decision concerning your business, you will lose money," Restrepo says. "Every time we lost money it was because we compromised a business rule or made an emotional decision."

For example, when they were first rehabbing, they had a system where they always had three houses in the works: One was on the market, one was being worked on, and one was just bought. At one point they were down to two houses, both of which were up for sale, and were feeling desperate to buy. They walked into a house where the numbers seemed to work, trying to ignore the insects flying around them.

"Swarming termites," Restrepo says with a laugh. "We were literally swatting termites away while we were saying to each other, 'Seems pretty good. What do you think?' That was another deal where I think we made about $500."

Bent-Twyford says another lesson they learned in the "salad days" was the need for absolute commitment in order to succeed.

"I think a lot of people who get involved in investing don't always put 100 percent into it because they have a job," she says. "But for me it was do or die because I didn't want to put my daughter in day care. After you wait tables at Denny's, you'll do anything to not do that again."

Restrepo and Bent-Twyford agree that the beauty of real estate is that with just a little courage and pluck, a path begun for simple reasons—to keep a dream alive or to avoid waiting tables—is one that eventually can lead to financial independence.

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Real Estate 101

Real Estate 101

This book makes it easy to not only buy a home, but figure out everything that you need to do, even get a loan. In simple and easy to understand language, it talks about where you should buy a home, what to look for in a home, how to find a home, how to get an agent, how to get a mortgage and more. This is a step by step process that you, a new home buyer, can use to purchase a home.

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