Real Estate Investors Help People – That’s How We Make $$$$
Zig Ziglar was the greatest salesman in history. The reason that Zig was great had nothing to do with his unusual name. Zig never tried to sell anything, he always looked for a way to help people and in doing so he made a fat pile of cash.
As real estate investors, we also help people, but many of us don’t understand this fact. Worse than that, we as a group are notoriously bad at explaining to the public what exactly it is that we do. Without real estate investors our economy would collapse. Without our noble group there would be so many unsolved problems that no computer system could even track the problems.
The most vilified members of the real estate world are landlords. What most people don’t understand is that landlords are the people who invest their own capital in order to provide housing to others who couldn’t buy a house themselves. When we talk about affordable housing, it is the landlord who provides homes for the poor. The government tried to take over this market segment in the sixties and seventies. The well-meaning government’s planners built government housing, more commonly known as slums. These expensive construction projects fell into horrid 3rd world conditions quickly, because the government had no idea what it was doing and did not possess the skill set that landlords need to survive. Landlords help every town in America and millions of people by providing housing across every economic class.
Flippers make money by solving another problem. Flippers take dilapidated property. They invest their time, energy, and money into bringing property back to life. Normal people do not have the skills to repair an old house. Without flippers, there would be a lot more blighted neighborhoods and vacant lots.
Real estate investors also engage in creative financing of properties that simply will not sell through the traditional MLS system. Take the example of an overleveraged house. Nobody is going to buy a house for 120% of its value, well nobody who isn’t a real estate investor. A real estate investor will step in and buy this house by taking over the payments from the seller.
There are a number of mechanisms to accomplish this but that is a much broader subject for a later time. Once the investor takes over the payment and buys the house non-traditionally, that investor can either resell the property to someone who can’t get a bank loan to buy the property or the investor can cash flow the property until the market catches up with mortgage paydown and a net profit can be realized. Without this sort of “subjet-to” purchase, banks would fail at a much faster rate. This would force the Federal Gov. to take over more banks, thusly limiting the available capital for every other type of commercial or retail loan. The public really owes us a great deal of gratitude.
Defaulted paper is another way that real estate investors bail banks out. If we didn’t buy notes then banks would have to eat the losses they have on bad mortgage debt. This would wipe out a lot more banks.
Sheriff sales are other forms of tax sales are where real estate investors bail out governments. We buy properties that have tax liens. If investors didn’t buy these liens then many more properties would fall into disrepair and never recover. The urban blight problem would be much more extreme.
In each of the above examples, I described a method the real estate investors use to make money. We make a lot of money using these techniques. The important part to understand is that we make money because we are helping people. Our job is HELP MORE PEOPLE. Donald Trump is wealthy because he supplies office space and housing to thousands of people. Donald Trump helps more people than you and me. So let’s get off our backsides and go help someone. Your paycheck awaits.
(May 2014 Newsletter)