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Building Wealth With Real Estate: A Look Back

by | May 20, 2024 | *Financial Awakenings, Building Wealth, Investment, Life Aspiration Planning, Real Estate, Weekly Column | 0 comments

There’s nothing like cleaning out your attic or a storage unit to offer a chance to reflect on your life. I’m currently “enjoying” this opportunity as I dig through boxes holding decades of accumulation. It takes a lot longer if you stop and ponder on the contents of every box.

Several were full of books written 40 to 50 years ago. They were largely theory to me when I read them, and they formed the foundation of my professional career. These were books like How You Can Become Financially Independent By Investing In Real Estate, by Albert J. Lowry, and How to Make One Million Dollars In Real Estate in Three Years Starting with No Cash, by Tyler G. Hicks. I found scores of similar books, along with the course manuals for hundreds of classes I took regarding every nuanced real estate strategy known to man.

I purchased my first house for around $12,500 when I was 19 years old. It was an older house on St. Cloud Street in Rapid City, SD, so small there were no closets in the two bedrooms. I scraped together enough cash to make a small down payment, since this was before I had learned how to purchase real estate without cash. I had just started my career selling real estate and was still living with my parents, so I rented out the house. I was fortunate in finding a great tenant who ended up living there for many years.

Despite the promise in Hicks’s book, I didn’t make a million dollars in three years. However, after ten years I had purchased rental real estate worth around a million dollars, largely with no cash. You could say I was highly leveraged. Then I discovered putting all my investment eggs in one asset class may not be the best thing to do. In the 1980’s, the rental market in Rapid City fell apart, with vacancy rates as high as 25%. I almost came apart with it.

That’s when I learned the painful truth of a statement from one of my early instructors: “In the long run real estate always ends up a good investment. The problem is you’ve got to be around for the long run.” I realized that having some cash, stocks, and bonds on the side was a really good idea. I stopped buying real estate and began maximizing my IRA, which became a SIMPLE IRA, which eventually became a 401(k) with a money purchase pension plan.

Through the years, even with the struggle of the 1980’s, the knowledge I acquired from the contents of all those boxes served me well. As I sat in that storage unit and looked at Lowry’s book, I had a strange moment of realization. The goal that was so theoretical in my 20’s had become a reality in my 60’s. I had become financially independent by investing in real estate.

My wife reminds me, “You worked hard to make that financial independence happen.” That is true. I certainly have practiced what I have preached to clients. I also have been around for the long run, which has gone by surprisingly fast as I’ve been busy living it. Today, I work not because I need to, but because I want to. That’s a nice position to be in and one that I advocate for my clients.

I did decide it was time to get rid of those books on investing in real estate. And that first little house on St. Cloud Street? I sold it long ago, using the profits to dive deeper into the real estate market, but the lessons it taught me remain a permanent part of my portfolio.

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