Note: The following blog post is the first chapter of our new book entitled 1000 deals: My Life as a Landflipper. A classic American rags-to-riches story, the book follows the life of one man as he flips his way to the top. You can grab a copy here.
One afternoon when I was 26ish, my wife called to say that our old Ford Pinto had broken down on her way home from work. A friend drove me there, and I have such a vivid memory of standing on that particular roadside, studying the dead car and realizing that I had no money to fix it and certainly no money to replace it. So how could my wife get to her job?
I’d long since taken up public transportation myself, catching the bus near our $100/month rent house, riding barefooted and ponytailed out to the campus. Other times, friends would drive me to school or to whatever odd job.
So there I stood. A 26-year-old man contemplating his broken Pinto as Life rose up, cocked its Great Arm, gave him a damned sharp slap, and shouted into his face: Dude! You are freaking impoverished!
Even worse, I would soon graduate from college, despite my best efforts to linger there, and I had no idea what I might do next with my life. A framed bachelor’s degree in General Studies would make a fine platter for rolling cigars, but it wasn’t much use for anything else.
That night, Dad helped me tow the Pinto to my house and magically got it running again. I remember us boiling the carburetor or the points or something on my kitchen stove and how amazed I was when it worked and the car started back up again.
But now the problem had rooted itself inside my head. I was very poor, and I needed to do something about it. From that day forward, those thoughts preoccupied me, nagged at me so much that I could hardly enjoy my cigars anymore. In only four months the wolf would show up at our door to eat us. My wife and I had $400 in our savings account, from the sale of our second old vehicle, and even with her working full-time and me doing part-time stuff, we were drawing it down, using it up, at about $100 per month.
So within four months….
Anyway, it so happened that during that same time, something else was bumping around in my noggin. It was an idea, a crude plan I’d been building. Raised in the woods, I loved nothing so much as sitting on a log in the deep forest, just listening and watching. But I had no land myself, and so I was building a plan to acquire some, which is why I called Earnie, a childhood friend, and asked him to stop by for a visit. Earnie had gotten his real estate license, and I wanted to run my idea past him.
“So what’s up?” he asked, across my little table from me.
“OK. So. Here’s the thing, Earnie. One day – actually one day pretty soon, it’s looking like – I’m going to get a regular job. My plan is to save some money from every check until I have enough for a downpayment on a small piece of land. I’ll buy it with financing and work hard to fix it up and make it more valuable. Then, after I’ve paid it down for a few years, I’ll sell it. And I’ll use that money, the proceeds – my… um… my….”
“Right. I’ll use my equity on the first tract as a downpayment on a larger tract. Then I’ll keep doing that, with a larger equity each time, as a larger downpayment on a larger tract. Eventually I might own 40 acres, or even more.”
“Yeah. Sure, EB, that would work, but it’ll take you forever. The best thing would be to just go ahead and make a bunch of money and then buy your 40 acres outright.”
“Ah,” I answered. “Yes, that’s a very good idea. For sure. But can you slow down on that part? Expand on it, I mean. How do I go about making a bunch of money?”
“Well, you could buy ratty old houses, fix them up, and sell them for a profit. I’ve done it twice now. It works.”
“And the money to buy the houses?”
“Oh if you find the right deal, I’ll back you. 50-50. I’ve got a line of credit at the bank.”
StepAside: Throughout my life I’ve noticed things about myself which I can’t explain. One is my hatred of timeclocks and bosses. Only a person truly terrified of them can hate them with my kind of passion. The other thing is the appeal of buying an item for cheap and then selling it for more. I don’t know why that gets my blood up, makes me want to go out and do it, but apparently that’s how I’m made.
So Earnie’s suggestion really appealed to me, and I followed my nature.
“OK. But how do you find the houses? Tell me how to find a deal.”
So Earnie explained how each county has a Tax Assessor’s office which keeps records of every property within its boundaries, along with the owner’s mailing address, so a tax bill can be mailed out each year.
[Property tax – also known as ad valorem tax – is based on the real estate’s value and is paid once each year by property owners. The Assessor decides how much you owe. The Sheriff collects it.]
Earnie said that he went to the courthouse and studied those records, finding homeowners who didn’t live in their houses. Mom-and-Pop landlords. If the owner had a mailing address which didn’t match the house’s physical address, it meant that the owner didn’t live in it. Earnie collected that information and cold-called the absentee owners, asking if they would sell.
Earnie went away, leaving me to toke on my cigar and muse alone.
The next day, sitting on a downtown bench, waiting for the transfer bus to campus, I got up and walked a few blocks… to the courthouse.
I still remember standing there, barefooted, on those cool marble floors, in the breezy hollowness of that large foyer – looking around, fully bemused.
What to do? What next? How do I….?
I turned and walked back to the bus stop.
But… well… the dying Pinto. The menacing graduation. Both of them still lay heavily on my mind, and the fear was growing. That night I stared at the ceiling almost until dawn, listening to my wife’s gentle snore and cursing myself for a coward. This was something I needed to do. What kind of man was I, to chicken out like that, to give up without really trying?
Another day, another walk. But this time I stopped an official-looking lady in the lobby and asked her about it. She tried not to stare at my naked feet as she led me to the Assessor’s office. At that front desk I asked another lady, and she brought me to the large ledger books set on high counters, to study while standing, and briefly showed me how they worked. I told her where I lived and said I wanted to find out who owned my neighbor’s house.
So I started by investigating the immediate neighborhood around my rent house. Start simple. Start small. Conquer and control the one thing before moving up the complexity ladder, just as you might learn algebra. (Not that I ever learned algebra. I’m just saying.)
There was my neighbor’s name, right there, where anyone could find it. It even showed the date when he bought the house and its assessed value and that he had a homestead exemption, along with various other bits of information.
LEGAL DESCRIPTION: This was a lot number in a named subdivision. Lot #14 of Baywood Estates. Lot #3 of Unit #4 of Happyhomes Estates. (With land, it can be a more complex legal description – the NW/4 of the S/2 of Section 4, etc. – but in cities and suburbs, it will usually be a numbered lot in a subdivision unit.)
MAILING ADDRESS: This was the owner’s current mailing address. Usually it was the same zip code as all the other entries on the page – my zip code – meaning that the tax notice was mailed to a house in my neighborhood and therefore an owner-occupant and therefore likelier to know values and unlikelier to sell.
I moved up the block, studying each entry, until I found a lot whose owner received his mail in a foreign zip code.
So this is what Earnie was talking about. This owner was paying taxes each year, which is why the Assessor kept his current mailing address, but he probably didn’t live in the house.
The next day I packed a legal pad with my regular books and took an earlier bus. I stood in the Assessor’s Office for a couple of hours, learning the system and listing the names and mailing addresses of every non-occupying owner within ten blocks of my rent house. When I left, I had a list of all nearby landlords. Maybe twenty names.
That afternoon when my wife got home with the Pinto, I drove past each house, making notes. Was it in disrepair? Was the yard unkempt? Were the neighboring houses nice? Or junkers?
Note: This was the first I knew that houses on one side of a street are even-numbered, while the other side are odd. Business makes us kick around in the world and learn stuff.
Back home again, I set my list of owners and properties and physical notes on the table.
And I looked at it.
OK. So now what? Just call up a stranger and ask him to sell me his house? How the heck does that work? How do you even start a conversation like that?
I called directory assistance and collected the owners’ phone numbers and added those to my legal pad.
Then I sat and looked at it again.
Then I stuck it in a drawer beside my table.
Then I rolled a cigar.
StepAside: Life has its challenges, especially when we’re young. Me, I always try to find the wimpiest workaround. If I can’t do that – if I see no escape from my obligation and still lack the courage or knowledge to do what needs doing – I set the problem away and let it stew for awhile. Maybe a solution will appear. Maybe a miracle will happen!
A week later, Earnie showed up again. We sat there at my cheap little table, talking about this and that for awhile.
“So I went to the courthouse,” I said.
“Yeah? How’d it go?”
“Well, I made a list of all the rent houses around here.”
“No shit! So have you called them? What’d they say?”
“Nah. I guess I’m not exactly sure how to do that.” I reached and pulled the legal pad from the drawer and tossed it between us. “I guess I’m just trying to – “
“Let’s call them!” he shouted.
“Well, OK… so you mean… so you’ll call them?”
“Gimme the phone!”
StepAside: My childhood friend, Earnie, was among the money-lovingest people I ever knew. The kind of guy who might lend you a buck and then a month later ask for a signed schedule of your repayment plan. In other words… Earnie was exactly the kind of person I needed just then.
Sometimes miracles come in curious packaging, I guess.
And so we sat there at my little table. I fed him names and phone numbers and physical descriptions of the houses. He called the owners. I made notes about their conversations. He left and came back again after business hours, and we called some more.
When he finally went home that night, I sat and studied my list again.
Now it had five hand-scrawled stars on it – each one beside the name of a landlord who had agreed to maybe sell us a house in my neighborhood.