This morning in the HBCU Capital slack there is talks of buying a shell in Baltimore and figuring out the rest later. I was immediately IN.
In part this is because I know that Baltimore won’t be Baltimore for long and also because owning something and talking is better than talking but owning nothing. In all that talking you are doing you better be taking some action.
After we buy the shell the world opens up to us. We can then buy the rest of the row, we can then talk to lenders and hard money guys. We can then apply for grants and seek funding through other programs. The world is our oyster. The world opens up to the doers.
I realized though, that we just bought a shell in Detroit this week. After we bought that shell all kinds of dope ideas for what we can do with it came to mind. After we bought that shell many more people wanted to work with us. Buying something attracts the things you want.
I am no respecter of asset. I buy it all. Just like in monopoly. We are officially playing monopoly in real life. What does that mean though? Well..
Monopoly is about power. Power comes through owning the whole board but specifically by owning Boardwalk. You don’t get boardwalk just by buying boardwalk, you get it by buying up the board and then flipping into boardwalk.
Every time I have played Monopoly and solely waited on landing on boardwalk I lose. Its better to own the whole board while you work on the level up and potentially landing on boardwalk in the process. I do not rely on hope, I hedge my risks while plotting on the big come up.
The game Cashflow does this for you. You have to choose between big and small deals but you have to be doing deals. The small deals get you to the big deals but many will play and only go for the big deals. They will overlook the small stuff to admire the things that they cannot have. In life, in monopoly and in cashflow the small deals get you boardwalk, looking at boardwalk does not get you boardwalk it gets you bankrupt.
I made this point before, and someone “memed” it, but we live in a monopoly world where ownership determines wealth. Unfortunately many people live to go around the board and collect the “free” 200. You can’t win the game of Monopoly chasing the 200 dollar paycheck but this is exactly what people do.
Again, this world is Monopoly fam. You don’t realize it but it is. This is why you must focus on locking down the assets your little $200 can buy and then buying the assets that your assets can buy. Complete mindset shift but assets aren’t just for the cashflow beach life.
In a lot of ways assets fund the high level assets in your next life that your working income alone would never get you. You must work but you must also own. You can’t work alone and its foolish to own and do nothing. The wealthiest people in America own a lot and work a lot.
I buy everything
In life, like in the board game monopoly and in Cashflow I buy everything. If it needs rehab I buy it. If its in a bad area I buy it. If it has fire damage. I buy it. If it is the only home on one block I buy it. If it cashflows negatively I buy it. I buy it all and then figure out the rest later.
The key in this is that the ownership then allows you opportunities. I gobble up everything knowing that a few things could happen. If it flows negatively, rents can change. If its underwater, values can increase. If it needs rehab, I could come into a windfall or I could get a loan using the ARV and land as collateral. I buy everything because the power is in what you own not in what you talk about owning and not what other people own but rent to you.
Remember, the lending conversation is different when you have a balance sheet as opposed to when you do not. I want all the bandos.
Four houses one hotel
A while back I wrote a blog about the truck buying you the fleet not your own personal endeavors buying you the fleet of trucks. The same is true in real estate. As I mentioned in an earlier blog, our single family flip that wasn’t supposed to be a flip is going to fund the rehab on 5 more deals. One house turned into five homes.
Now the thing is this though. Since we bought right and will rehab right we will be all in on these homes for about 60k, on five doors, 12k per door. The duplex should appraise for 50k when done, the triplex should appraise for 70-80k when done. So now we turned 60k into 130k. We can then sell those off and put that 130k in cash (most folks don’t have this kind of money so competition is low) and put that on a million dollar property.
This is why you buy everything. Especially in an undervalued market. This is what Warren Buffet does, this is what Ben Graham did they just did it in stocks. Buy a lot of something that is undervalued and when the price returns to the mean you will be made rich. In this instance we are using real estate to give us the money to buy what we want but we wouldn’t have gotten there if we were saving and working, we got there by buying what we could.
So the point of this story is that there is value in buying everything even if its not on the best block, even if the numbers don’t make complete sense in the moment, even if you can’t afford to finish the project. Buy it all, figure out the rest later. This is better than sitting and waiting on the perfect opportunity because those don’t exist and because opportunities are made and lastly because the real opportunities come to owners and bosses.
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