HOW TO MAKE BIG $$, GET INTO REAL ESTATE, ACHIEVE HOME OWNERSHIP, SURVIVE THE MILLENNIUM.
by Anita Sands Hernandez astrology@ earthlink.net
RICH DAD POOR DAD- Lets say there are these two men. One rents. The home that he rented back in l971 for $250 a month has gone up and today rents for $2,350 a month and every year he's paid the rent increase, to the point that now it's almost ten timed itself.
Now, there's this other man. He's the guy who bought that house that Joe Renter is renting. He bought it in l971 for 19k. Whether he lived in it himself or rented it doesn't matter, he NOW has a house worth $250k. 15 times its original price. The bozo who was renting that house all these years hasn't a dime. He spent $200 k maybe 300k,--- money down the drain --- and has nothing to show for it. The man who owns the house has been made a millionaire by that house, as he used it as leverage to buy several other properties and he rents them all and makes a fabulous living just by brushing his teeth in the morning.
INSPIRED to follow him? Get your tooth brush. Let's talk about budgeting, serious budgeting, SAVING OUR greenbacks and encouraging our PALS to do likewise and together buying a barrio 4-unit property. A starter kit, not the expensive kind of central city property but the BARGAIN kind in a n area that is about to go through gentrification, but which now is a little skid-rowish. Were talking about starting a trend here, being a pioneer. Such land can be bought with a really low down payment. This property will appreciate, the area will gentrify, prices will soar way up, soon enough you'll own it outright and guess what, that day when there's NO RENT due on the 1st, you will be able to get free of wage slavery.
I know, I can hear you protesting, you want to live in the smart and stylish side of town no matter what the cost. What is more you want to work at that dreary job, in fact you love working at that dreary job. (That s because you're young and energetic, believe me, you wont always feel that way.) You wont always love that job. What is more --- that job may not always be there for you. Or that job might get to be a drag because you will slow down and get older if not get OLD. And when that occurs, if you're freelance, you wont always attract all the business you do now. It could happen.
And later, what's horrific is that when the wallet is leaner, rent gets fatter, and more monstrous as the decades fly by. Food costs are higher , gas, car insurance. Money floods down the drain, and your energy is lower. What that means is YOU ARE DECLARED "OUT" FOR THIS LIFETIME, condemned to a one-room cage. You will never get a fireplace, a big dog, a vegetable garden or a fruit and nut orchard.
You will live in a single room until the exit gate when you are assigned a new body and a new lifetime. But then the habits start all over again. It is entirely possible that next lifetime, you'll rent for 50 years, living for the day like a pea-brain butterfly and get into the same damn locked box all over.
Face it, a big, old house appreciating in value, (shared even) is what you really need, then a string of little houses you rent to others and finally a farm one gas-tank away from the city. And you can get them all.
Dream the dream. Instead of giving in to hopelessness, minimum wage, job vulnerability, the danger of being homeless overnight. Instead of watching apprehensively as the Social Security Administration goes down the drain and MEDICARE is thrashed, rethink your LIFETIME SURVIVAL strategies. Let in new input. Your fears, negative thinking about property owning are your worst enemy. Take a minute to hear an idea that will make you a home owner in a few months. In this difficult era, where many of us are a single check away from homelessness, & corporative downsizing and mass firings have reached alltime high, you need just one thing. REAL ESTATE bought cheap, fixed up with the communal efforts of you and your friends and then time to pay it off and watch it appreciate in value. Up to 15 times its original cost.
You are a spiritual, new age person or you wouldn't be reading this. I know, you never were much of a materialist. Other things beside money have had the front space in your brain. But when you realize that you're headed over a cliff, and you have to learn a simple real estate trick so that you wont put yourself in a bad position when you're old, you will learn. You will USE the wisdom, use your friends to co-own. Use the upward current of the economy, even if it's momentarily a downward cycle (the most useful of all!) As Ralph Waldo Emerson said, the greatest lord of all is USE. SO USE EVERYTHING.
You are going to wake each other up, help them see, help them change then use each other for a mutual support system to move from being renters to OWNERS. Change is the law of the universe. There are good changes like that one, and there are bad ones. We don't imagine the bad ones are coming, but they are. An older person could warn you about some of the changes that you are likely to experience --- changes that you don't dream of now. For one thing, your interests are going to BRANCH OUT. I know that you wont believe me now, but we older people have seen it happen to so many of the best and brightest that I am moved to warn you what will happen. ONE DAY you will want to do meaningful dharmic work and it doesn't bring cash in -- not at the git-go, in the same regular flow you've got now.
Imagine that one day you're bored with this 40 hour week, doing whaever you're doing now, I MEAN BORED TO DEATH and you realize your work isn't spiritual enough, that you've developed certain passions and interests. Well, you can't quit the dull work if you've got huge rent to pay. And babe, you will have a huge rent! Like maybe TEN TIMES what it is now!!! And God knows what dependents you'll have then.
Lets dream about your being able... later in life, to do the career that fits your interests and talents so that WORK IS FUN again. To pursue such a dharmic career one day, it is required that you be totally l00% FREE of the RENT RAT RACE. That way you can pursue your INTERESTS without risking being evicted, on the street broke. You must plan now to avoid the horrific RENT race that WILL COME later. The rent race is being 55 or 60 years old, body slowing down, being a little more delicate, fatigued, less fiery, yet having to earn the biggest damn RENT you ever knew in your lifetime! That's happened to all of us elders I WISH that someone had told me what I'm going to tell you back in the 50's when I was l8. Because in the last 40 years, I've earned good and I've spent good. If I had SAVED good, too, I could have bought the home of my dreams when it became available. SEVERAL times I had chances. The last chance was l996, during a major real estate LULL. They couldn't GIVE homes away. Suddenly, 8000 square feet of Spanish home and garden, 4 bedrooms, two kitchens (guest house) that I was renting came up for sale for PEANUTS (189k) and my four totally employed children and I couldn't get together 20 grand for the down to buy it. When it sold I was evicted.Now I pay the highest rent I've ever paid in my life. I live alone, no chance of saving a nickle and real estate is WAY back up in price and my chance is gone. I had another chance earlier, back in l973. Another house I was in became available, 3 bedrooms, den, fireplace, triple garage.. sold for peanuts, 21k, and I couldn't swing it then, either. Not for lack of money. I had a friend or two who'd have lent the 5k to me. No, this one was for lack of knowledge. I wasn't a materialist. I was a flower child. I thought renting was COOL. Buddhist.
If I'd read this article in l971, seen the horrific truth and DONE THIS Home-buy thing EARLIER I would be a relaxed, healthy writer/oil painter today not a stressed wage slave.
If I'd known that REAL ESTATE and property OWNERSHIP was easy to do and it was the only way to get free of being a wage slave, a hamster on a treadmill, I'd have put it together. It would mean that today I could be the super Buddhist of all time, teaching for free, changing the planet instead of doing jerk work for small bucks to pay a cruel beast of a landlady who screams at me for putting corn in the front yard, hates me for handing her l7k a year of my blood, a huge sum. But hey, back in the 70's, I was in a SPRING/ SUMMER TIME mood, a languid stupor, like a dumb squirrel who wasn't picking nuts and stashing them in a tree because I could not believe WINTER WOULD COME in all its fury as IT bloody HAS.
Maybe there's hope for me too, as possibly another CHEAP REAL ESTATE PERIOD is just ahead of us. So listen, read well, let yourself get motivated. Let the germ of a great idea root in your brain. You and your family and friends will start now, will save the money for a down payment, work extra hard while the economy is strong. You'll do lotsa moonlighting, and get a few thousand dollars of cash surplus and when a crash comes, buy foreclosed property like it was popcorn. When the stock market goes whammy -- AND IT WILL --- all you need are greenbacks.
Oh, and one more thing. In addition, you will learn to language in a way that will motivate relatives to also get greenbacks and join you, not to help you become Donald Trump, but to help themselves. (Read on, and youll see what that means.)
You will all want to start today because in about a year and a half, there's gonna be a BIG RECESSION and property will be dirt cheap and available for those who have GREENBACKS. You don't want to buy now, as it's waay too high. Were talking about a year or so from now, after a stock market bottoming.
So, first you need to start saving CASH. Get it the old fashioned way. DOUBLE DOWN ON WORK. DO moon-lighting. Doing electronic taxes for people, Massage, teaching, classes, seminars, computer services, whatever,--- but using ALL your many side talents, and being pro about it, getting biz cards printed, hustling this new biz. This COTTAGE BUSINESS. This gorgeous manifestation of Guerilla Capitalism. Also do your main 40 hour job with its hefty salary.
Next, DOUBLE DOWN ON THE SAVING OF MONEY. Before, saved money looked weird, like --- whats all that cash doing there just lying there inactive? Dont think that way. LET IT LIE safe in the bank. (No IRAs with penalties that are hard to cash in, no stocks, bonds.) Just let the damn stuff lie there earning minimum interest. Forget its there.
Now, DOUBLE THE EARNING, DOUBLE THE SAVING. You know what that means, you're so freaking busy theres NO TIME LEFT FOR SPENDING MONEY. Right away you are not able to go to movies, vacations, the beach. Youre busy working. You also save a lot there. So the money is soon lying in the bank in huge chunks, massive pyramids. Now, keep an eye on the Y2k murmur because if it gets serious, there will be a run on the banks and youll soon find out that there IS no such thing as insured bank accounts. That was just a rumor.
Next, start hanging photos of gorgeous 4-unit apartment buildings, cut ified up. (Your first buy) and cute homes with fields and gazebos and pools, (your second buy) and idyllic farms with goats for milk, chickens for eggs, (your third buy) because you're on your way with this regimen.
Oh and make all family members get on the same regimen. It is going to produce fast results --- huge savings from a primary, real job, a moonlighting job or two and no time left anywhere in your week for any nasty spending. Do it, Mom, Pop, the kids. Motivate your relatives and even your Mexican maid to join in. Jose and Maria can join you in a 4-unit or farm,co-own both the CITY and the farm properties with you.
Now, learn the rap. Talk Apocalypse, talk Recession, talk how one dollar becomes 15 in real estate. Tell them how they are going to need a food-bearing acre one gas tank away from the city as a back-up position in case of urban chaos.
You have a large family. Rummage around your distant rich relatives finding one who'd co-sign on either a city 4-unit apartment bldg (you own a one unit condo in it, with 3 friends in the other units, four down payments.) The relative is co-signer. Or, perhaps a few relatives will join you in a farm property. Sometimes were lucky and have relatives who might even lend you a partial down paym't, or want to co-own this income property with you. This can vary so get it organized in your mind. Make several lists, 4-UNIT LIST: Friends, relatives. Do they co-own, live there, or just put a son there perhaps to rent their share, figure it out. Farm ownership list. Much bigger number can co-own this, share in work and receipts. Farms give earnings.
This is going to be easy. You will fill up the properties before you even buy them, or find them.
Next, talk with your local Fannie Mae lender and learn about the FANNIE MAE LOAN that is given to first time property owners. Say you have chosen to go with the 4-unit apartment bldg. Concept. You will want to be close to, en rapport with the people who buy the other 3 apartments so haul them along to meetings with the Fannie Mae officer and all have lunch together after.
The Fannie Mae (a privatized arm of the FED) is giving low rates to poor people -- I am talking people with absolutely NO credit rating--- the loan is based solely on a history of paying rent checks. If you can come up with the cash for the downpayment, the Fannie Mae Lender enables first time property ownership with either 3% down straight Fannie Mae loan or a l0% down Community Loan programs. To find the F. Mae lender, in your are a, write for their free book, F.M. 4000 Wisconsin Ave NW Wash DC 20016. I do know the lender for the greater L.A. area, if thats where you want to live, call her, Sheila Warren at PNC which IS the FANNIE MAE (1-800-995-8842)
You will eventually need to acquire two properties. First buy your CITY HOME. This can be a single family house or up to 4 unit residential as Cooperative real estate ownership. 4 Families in 4 units is permitted under Gov't low loan program. Next the farm.
This idea is so workable that you could do it even if no friends want to join you, by doing it with strangers. There are many so called working poor: janitors, landscapers, painters, roofers, immigrants, hardworking people who earn a ton of cash and spend a LOT on landlords/ apartments/ yet YEARN to own.
The Fannie Mae program requires no credit. They just want to see that you have been able to save a down payment and have that money in the bank.(Your uncle could give it to you. The FM does NOT check on the provenance of the money.) They want to see that the surplus cash is there for the down payment. They want to see that you also steadily pay high rent. If you pay 600$, your child whos going to join you pays 400$, together you can buy property with a monthly payment of a thousand. Thats how the Feds mind works. And they're right. They have this thing wired. You can buy property for a monthly payment equal to rent you now pay.
So plan to do it with friends, relatives, your fiancee, your maid, you'r gardener and even friendly STRANGERS.
LOTS of people you run across, who seem like the underclass, EARN tons of cash and don't pay the IRS a cent. They hide their earnings from the tax collector and the government knows that. The Fannie Mae doesnt care what and from whom. They want to see that you did file a tax form last year, but you can confide in your FM officer that maybe you lowballed Uncle Sam for some cash. The Fannie Mae is no longer the government. It ha s been privatized. These are bankers.
But the Government let the FM be privatized because they want all us spaced out people to buy property and to SAVE in property because when we re OLD, and get all the freebie medical care and the old age home, Uncle Sam wants to charge our estate for every cent we cost them. They want to take our HOME in compensation. This venal government has found that property is the best way for THEM to get payback. Property forces you to save in something that is ON THE RECORD. You will have an estate, and thats what the government wants. Your estate. Of course, you're not going to give it to them, we have other ways, and well talk about them later -- privately -- on how to foil the governments plan of ever getting you r home at cash out time. There are ways to leave it to your kids. Some legal, some not. But I just wanted to explain why the Fannie Mae is so avid to see poor people get homes.
As I was saying, you might not have relatives or pals who want to join you so you can find people in the underclass who could be great co-owners. They usually are uneducated and have no idea how this thing works. Many are not even citizens but they work hard, rent horrifically overpriced apartments in the barrio and show absolutely no earnings at tax time. They usually bank in their CAR trunk or mattress, have no credit. The Fannie Mae doesn't care, as long as they can prove they pay high rent and prove it with cancelled checks.
So if you're alone in town, find 3 families with bluecollar income, to rent the other three units. Not rent. Wrong word. You"d all own it, together. Many poor families have a lot of individual workers in them Tell 'em to pull the money out of the mattress and put it in the bank for a while as it must show up on record for a while, but to always keep less than l0k in each account. Never more. Then, together or with you in charge, find an old 4-unit, inner-city, semi-decayed bldg, that's up for sale & hasn't moved --what with real estate being dead, a distressed property, a motivated owner who might even take back a second for you. P ick a 4 unit bldg as that;s the most units the FANNIE MAE will go for. If you and your pals, the other 3 families live there, they can pay 3% down on this kind of property. With interest rates so high now, you can get a bargain on the price, even ask owner to assume 1/2 the closing costs. Offer 1/3 off the asking price. Let's say they want 350k for the bldg, yo= u get them down to 325k. Each family needs $2,400 for the down payment and half the closing costs, about $625. 3 grand each family, for each unit, payment for each will be $800 a mo, less than rent.
You want an apt for yourself, so FIND 3 apt dweller pals who want to own their own condo and begin a career in real estate themselves, and arrange to split downpaym't 4 ways. This kind of shared bldg is called a PUD (Public Utility Development) as they share l utility box. It's a CO-OP. Each family has a deed and a proprietary lease. You're in the co-op as long as you pay your monthly payment, & obey the rules.
You might go another way. Buy with another family. Emily my Real Estate lady NetChum says: "When lower income people are buying a 4 unit building together, it's much easier to do with two families on the loan. Loans put real estate into about 3 categories: 1 and 2 families, 3 and 4 families, and over 4 families.
It may be easier to find a landlord of a multi-unit apt. building who is willing to sell it with owner financing. Apt. buildings are very hard to sell. They may have tax considerations, so it may be advantageous (for the old owner) to do a lease-option on the whole building rather than sell it to you right away. Something about the IRS recapturing the depreciation they took over the years."
ANOTHER WAY: Do it as an out and out investment. Where you and a RICH INVESTOR buy property, using your Fannie mae status but eventually SELLING the property for profit. You do not tell the Fannie Mae you are doing it as an investment. Always say, I am going to live there for ever. Use a close relative (with property and credit) to cosign, and in this case, you can seek out a single family HOUSE, that is a fixer upper, = because you get terrific bargains that way. Its in your name as you qualify for the loan being a firstimer, but in one Year you "Equity transfer" 1/2 the property to him as he is a business partner. A year later, the Fannie Mae doesn't care about that transfer. Nor do they see it.
If it's a biz deal between you and a backer, and theyre using your ability to attract a low down payment and your ability to find THREE barrio families who also have downpayments, and your backer sees that he can UTILIZE the Fannie Mae Firstimer loan which YOU QUALIFY FOR, you can also go with a 4-unit bldg, but as these are more costly than a 1-family home , you will need someone with a lot of equity in property plus good credit , and an inclination to co-sign on the title. A rich man will be motivated to help you because he can't lose.
There are 4 families, each with a down payment -- the 3 barrio families, the gardener, maid and mechanic. And you. And he doesn't have to pay the down. He just 'lends his co-signature.' The rich man will INHERIT one apartment if any of the 4 can't pay the monthly condo payment because the other 3 will evict a laggard in a flash. So the co-signer might get a unit and he will definitely get some share of the profits when you and your co-tenants fix up the bldg, add a gorgeous orchard and garden, gentrify the area with window boxes and grass and down the line, sell it at a huge profit.
Your co-signer cannot lose. He will bring into creation a Utopian project, and if anything goes wrong, worst case scenario, say the car mechanic defaults, goes back to Mexico, the rich man will still end up with a co ndo unit for his own. If the 4-lst time owners choose the Community Loan way, they don't need a co-signer. Just cancelled checks and cash in the bank. This plan is foolproof. Even if one owner fails to pay monthly paym' t and squats, you simply go thru a normal eviction which can take a few w= eeks, meanwhile they (the other 3 families or their co-signers) pay the defaulter's paym'ts. So select your 4 people very carefully. Make sure they like physical work as the 4 families will sign on to 'totally and personally, with their own labor, rennovate the bldg,' strip down to lath, if needed, put in new drywall, new wiring if needed, plumbing fixtures, (sinks, toilets, tubs,) then paint light/bright colors over entire inside and outside of bldg, install window boxes with bright geraniums or year-round flowers, up and down entire bldg, and in front on sidewalk, wide holes = with trees surrounded by bedding plants, then a CO-OP VEGIE GARDEN & ORCHARD in the back and side yards.
With the GROUP working together on the property, you could have something glorious which would double in value in a few years.
Now, here's the nice part. You can sell your unit a few years later, you're a resonsible home owner with credit. Now you can use that cash = and credit to buy a home with no Fannie Mae.
The relative who co-signed on the barrio 4 unit now co-signs on your house. He had a good experience with you the first time. He floated a very secure loan. If l tenant defaulted on his condo, that co-signer has already aquired a very rentable condo so he has suffered no loss. The truth is, inner city people usually make darn good $, scratching around for hard labor jobs which are actually pretty highly paid. They are the vigorous upper class citizens of tomorrow and very likeable.
So start now on the dream. Get your real estate-owning group together monthly, for a sandwich and cake at your apartment. Invite the co-signer figure in, your Uncle Rich Guy. Invite a few candidates for the 4 lease-d= eed coop owners. You'll find poeple wanting to do this scheme just hanging little ads in supermarkets, hair salons, to find people who are 'up' to this. The Fannie Mae wont let you do more than one building yourself, but whats wrong with starting dozens of people up this road. And since you know all these rich people, inspire rich people to do it for the poor.
Worst case scenario is the funder would end up being a slumlord with a huge, rennovated apartment bldg. You did all the legwork, you found this cheap property, which barrio property is... you renovated it with your families, he ended up with it maybe. Not necessarily. But he sure didn't lose a cent.
Here's what nobody knows. Barrio properties earn the same rents as Beverly Hills properties while they cost a whole lot less. I was told this by a smart black man who owned the house next door to me in Beverlywood. He also had a few apartment buildings in the barrio, where he'd started on his road to wealth. He and his wife had two BMWs which my cat s would sit on, driving him batty, which is how we got to talking.
Letting the Fannie Mae and Barrio property float you on the highway to wealth with a rich Uncle along as co-signer is such a no-lose idea, someone smart should start it on a large scale with a simple data base program and flyers. Call it C.A.S.A --- Co-operative Aquisition Society of America. (CLICK ON URL BELOW to read up on it, it's a concept you could easily do! Rich and poor alike could register at central data bank (Your computer) the rich to co-sign, the poor to inhabit. I ran the idea by an L.A. millionaire, he said 'sign me up!" INSTANTLY!
You might be able to run CASA by yourself, finding your own source of micro-lending other than a Fannie Mae lender. Whats nice is that you could not only become Abraham Lincoln but maybe attract foundation grants, actual cash to you for running it. Who knows, who cares. Just spread the idea. Talk to any bank which has foreclosures, REOS.
Create CASA as a public charity and attract HUD federal grant funding. Like the other group HABITAT FOR HUMANITY, you can acquire donated linoleum, carpeting, bunkbeds, tables, bookshelves, couches, t.v's. garden sheds, tools, etc.
There's no limit as to the availability of people whod need to use CASA's data base, nor limit to the growth and expansion possible for an y group that gives a roof.
GOD LOVES POOR PEOPLE AND HE MADE A LOT OF THEM. If you were in real estate already, (and it takes two months of study to pass a state test) this idea could make you a million in commissions --really jack up your business. All real estate agents should contemplate doing this idea just for the commissions involved.
Now, Want a retirement farm home that you can leave to the kids? Create an anonymous Stockholder/ anonymous BOARD CORPORATION (click on this LIVE LINK, as second half of article describes concept) with a Utah located registration. Write Sec of State Utah after you find a UTAH local to be your mailing address. It's cheap, EZ. costs 80$. Then, USE this CORP to buy a 10 to 50 acre farm for orchard/produce growing. Create a limited partnership, which requires no expenditure at all, sell shares in the farm to 35 pals who build weekend cabins on the land, calling them agriworker villas, with a central bldg. for kitchen, playroom, dining room. ZONING laws prohibiting land break up DO NOT apply as these are small villas for agrarian workers. Each worker will own their individual villa via a stock share they keep in a bank fault, 1/35th of the farms land and buildings and output, owned by a stockshare not a land grant, so IRS cannot spot home ownership. Each members kids inherit that stock share, hence own a vacation villa w. a piece of paper they keep in a drawer! WHY DIDn'T IRS EVER THINK of this? Cuz they didn't imagine 35 people could CONSOLIDATE! AGREE!
Imagine retiring to an alpine village w. your 35 favorite relatives and/or BEST pals! You're the mayor of the village. Your goats give you cheese/milk, your trees give fruits and nuts. Your rabbits, chickens, tilapia fish give eggs/meat. You sell nuts and fruits and buy salt/coffee/ oil. Or get olive trees. Your grandchildren are AVID to visit you there. And you will be avid to have them. Think not? Look, listen to your elders. Learn from them. Learn to THINK AHEAD. No more lemmings going in pitiful circles on the hamster wheel of life but a gentleman farmer, travelling from his pied a terre in the city, to his farm village with his best friends along, keeping fit, growing organic vegies and fruit, spreading the joy and wealth and teaching others to do the same.
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ADDENDUM: if real estate bubble bursts and many homes languish on the market, bank owned, you can go straight to banks to buy repo s, or get seller to do a land contract
Your relatives can leverage cash out of paid up properties and acquire discounted homes/commercial real estate, 4-unit buildings, and you can get that first condo. Donald Trump calls DEPRESSIONS the best times of all. Read C.A.S.A.
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