Fifty years ago, that actually happened to me. The guy who asked me was “Siegfried X,” (obviously not his real name!), the best chef in our city. He was earning big bucks and had medals from Haut Cuisine Societies for making the best “this and that.” We had the same girlfriend for a while and that is how I met him. But that’s another story.
My first question was, “ Sieg, Are you serious? I make a big fool of myself sometimes, so are you just being sarcastic or funny.”
“No,” said Sieg, “I really want to change careers and do what you do.”
I replied, “What is it you think I do?”
Sieg went on, “I read a story about you in the local rag: Though you are in your twenties, like me; rumor is you already own dozens of properties in town and are said to be a multi-millionaire.”
I commented, “OK- Assume that’s true. Still Sieg, you too are at the top of your profession. You have a great reputation and a great future. You are going nowhere but up as a top chef.”
Sieg replied: “Yes but I work 12 hours a day , in a hot kitchen, with often underpaid, incompetent employees. You don’t know constant stress until you are a chef. I make a very good living. But you have fun every day, make deals & are filthy rich.”
“I want to be like you! You drive around in your Roller (Rolls-Royce), meet interesting people, and seduce beautiful women like “Susan.” Do you really make over a million bucks a year? How about taking me & Susan (our mutual girlfriend) along with you on my days off? WE can learn how to make deals and maybe, take over a few of your reject deals.”
To make a long story short, we agreed on a trade. I would work with him in his kitchen one day a week, to learn the secrets of a master chef. Sieg & Susie would accompany me on weekends to learn the “secrets” of areal estate wheeler-dealer.
MY EXPERIENCE AS A CHEF:
As a result of this deal, I learned, among other cooking things, that when you make soup and want to serve it the next day, you must always drain the liquid and keep the veggies, noodles, & fish or meat separate and semi-dry.
SIEGFRIED BECOMES A REAL ESTATE TYCOON:
Sieg learned that I started my day very early mapping out a plan to visit at least two dozen properties daily – properties in good locations that were, or I thought might be for sale at distress prices. I also would locate the owners of probate (estates) abandoned, foreclosed, or litigated deals – as in divorce. I seldom looked at broker’s listings. Why? The broker’s themselves took all the best deals and listed only overpriced stuff. Needless to say, there were always exceptions.
Persistence was the key. I followed up on every potential deal with as many as a hundred calls or personal visits. The initial asking price was seldom near the agreed final closing price. Financing was the key!
I made immediate oral offers of half the market value “all cash – as is- good for 12 hours only” on every property I saw. That was to prevent the seller from shopping my low-ball offer to a lot of other buyers. If he accepted more than 12 hours later, I reduced my offer by 10%. I got around 4% acceptance on all my offers. Note: You have to do a lot of fishing if you want to catch a lot of fish.
Financing varied. Sometimes with an unsecured line of credit, arranged with the understanding that the lender would lend me more – usually a mortgage of 65% of value. The strategy was, typically, to buy a property worth $100,000 for $50,000 with a down payment from (unsecured) borrowed money. Eventually, my own bankroll covered the minimal security deposit—usually $10k. A lender would often lend me $65,000. Thus, I could walk away with $15,000 cash and a potential capital gain of $50,000 every time I closed a deal. Please understand, that this is an example.
Every single deal was different – often with the seller carrying back a 2nd mortgage, which gave extra cash in my pocket. The theory was the same on all deals; buy with no money down, and a long-term loan of more than the purchase price. Mortgage was to be paid off entirely from rental income. You want to learn from a role model? It is never magic or osmosis. You pay attention & you “get it.” Or you don’t.
If you did only one of these deals every day, seven days a week, it is easy to see how your cash bankroll would grow by an average of $20,000 a day, seven days a week, and your net worth in terms of property owned would grow by at least $50,000 per day.
As your stature in the business grows, you’ll get many unsolicited deals offered to you. You may find 1000 acres of land at $5000 an acre, subdivide and sell it “retail” as four $250,000 lots per acre. Nice profits if you can create value this way. Do the math: 4000 X 250,000 = $1,000,000,000 – Or you could buy hotels or apartment buildings at wholesale and sell off the apartments or hotel rooms retail, at twice what you paid, as condos.
Want more details? Read a book called “Think Like A Tycoon.” It was a best selling paperback for a while, forty years ago. I saw it listed on Amazon for only $2- used. For a bit more, I think you can get a new updated copy in print or digital from Eden Press or from me directly.
The bottom line? What happened with Sieg & Susan?
After one month with me, Sieg quit his job as a chef . He went into real estate on his own, using my techniques. The way we did things was not unique. All the time-tested tricks of the trade still work, with minor variations to fit the times and take advantage of new laws.
Many other individuals built up vast fortunes in real estate doing almost exactly what we did:
What’s that? Looking for good deals, thinking up new projects to fill needs and guiding them to fruition. Using other people’s (borrowed) money. Making things happen in spite of bureaucratic interference, lawsuits, and many other frustrations.
MORE MONEY HAS BEEN MADE IN REAL ESTATE THAN IN ALL OTHER INDUSTRIAL ACTIVITIES COMBINED.
You don’t hear of too many real estate tycoons who made it big. Why? Because most of us prefer to be anonymous & low profile. We don’t want publicity to get targeted by all and sundry scammers. Be on the rich guy lists of Forbes and you’ll have no benefits — nothing but trouble.
A mere fifty years later, Sieg and Susie have been happily married (with kids) for years. They are one of the wealthiest couples in the USA. Net worth? More than you’d believe. They are in the upper 1% of the upper 1%.
If they could do it, so can you. No role model?
Want to learn the secret to success directly from Peter Taradash? Click here
Don’t want to get into real estate? Here’s an alternative