By just about any way you look at it, 2018 was the best year for multifamily real estate this century: Renters paid more for housing than they ever have before,
If you lived in 1990 (current age), what are 5 things you would do to become a millionaire?
Wow, that is the year I turned 20 and set my goal to reach a $1M net worth by the age of 30. So I can tell you that I could of done it in 5 years knowing what I know today instead of the 9 years it took me then. I believe as do most of my friends and clients that the 90’s were the best decade to make money in the last 100 years. And the 90’s were part of the largest economic expansion in the history of the US from 1982 to 2000 it is said, give or take a year or two on each end. I know that there was very low unemployment, increases in median income, great returns on the Dow & Nasdaq, and solid appreciation in real estate of all types.
I had started a small business in 1988 that expanded by more than double each year thru the 90’s, experienced great ROI on the stocks and mutual funds I had in my drip accounts, and purchased my first rental property in 1990 at 19 and had 7 before I turned 21. I was able to get plenty of credit cards that I was fortunately wise enough to use to put down payments on rental property purchased on land contract, to buy business equipment, and buy an occasional gold Krugerrand.
I attributed hard work in a booming industry, & aggressive savings rates that were then used for investments in property, equities and businesses as a major factor.
Also the ability to set goals and work toward their achievement. Keeping focused on what was important and maintaining the drive each year because I enjoyed what I did and loved the challenge. I’ve set goals for monthly, yearly, and long term 3+ years since the age of 18. I still take a week for vacation, relaxation, recharge, and review of the years past goals as well as setting the new year’s goals every December 23 to Jan 1.
It amazes me when I look back at my goal/ note books I write every year and have kept in a file cabinet for the last 25 years, not only the detailed financial and income statements, but hours worked per week, net income, money invested/ saved and how, expenses, and many details. The biggest single factor to choose one would be the easy credit available.
I had 17 mortgages at one time, good luck getting that many today, and I was able to get specific priced appraisals, seller concessions paid back in cash, refi cash outs at 100%, and equity loans by the 2 and 3 on a single property, sometimes getting over 120% in loans from 4 or 5 homes which were listed as my personal residence then rented out as there were no continued residency clauses. The ability to do stated income loans and lines of credit of $1m with basic financial statements allowed me to grow substantially just as the economy grew. Many may think I was wrong to take out so many loans and the methods utilized, but I paid a lot of money in interest, points, and origination fees to these lenders, and I have never defaulted on a single loan, installment payment or credit card. Good credit is as important as a good job, and I always had a 6 month emergency fund covering every monthly expense fixed and variable. I took a small hit from the tech correction, I was fortunate to have been working on a multifamily purchase/ rehab project, and was doing it with cash not a typical loan because I was closing on a line of credit and didn’t want an additional loan showing up and delaying the much larger credit line. So I had used funds that I had invested in drips intending to put it back in 3 to 6 months upon selling the multifamily to my partner to cash out some of the equity for other projects. Luckily the project took several months longer, and I saw the net stocks imploding, shorted the QQQ’s as the NASDAQ 100 fund was known back then, and stayed in short term trading with a lot of put options that offset most of my losses in my drips I hadn’t sold to cover the rehab on the multifamily. So I weathered the market correction down only in the single digits. I wish I had done as well in the coming real estate correction. I’ve always done a flip for every rental property purchased to keep balance in the split of short term income vs long term net worth strategies. So while the flips were good, they ground to a halt after 2006, and couple that with getting hit hard on the depreciation especially in Vegas and South Beach, and to a lesser degree in Detroit’s suburbs. I weathered the storm holding on to the rental properties and they are all back above water, some well ahead of their peak, and just a few in Detroit still at a loss, but w/ positive cash flows.
My consulting business was very limited thru the 90’s and wasn’t a real company that had its own outside office etc until 2003 due to running a more lucrative business venture prior. Consulting has stayed inline with the economy, being focused on business startups and expansions in the good times, and dissolution strategies in the downturns. The main aspect of our consulting is asset protection services which caters to high net worth clients, and has seen its share of peaks and valleys with the economy as well, although I’ve seen more under 30 millionaire’s created from internet ventures than ever before, and their income/ net worth buildups are sometimes staggering. Seeing guys come in stating they are making $200k and worth $500k and wanting advice because they say they will be millionaires soon. Well it is good to be optimistic right? They come back in a year or two making $600k or $800k+ per year and stating their company will be growing at 40% a year going forward for the next 3 or 4 years. I haven’t seen the fast money since the 90’s, but today it is more limited to certain sectors, where in the 90’s everyone was invited to the party.
If I could go back, which I have always said I would go back to the 90’s over any other decade, and we assumed I couldn’t have knowledge about the events that have occurred or it’d be too easy to get incredibly rich by simple things like a 10,000% + ROI from Dell Computer stock, or AOL, or Microsoft, and on and on.
If I didn’t have the exact knowledge but could make general investments etc, I would make a few changes, as we all would change a few choices we thought were good ideas when we were in our 20’s. I would get into an internet based business much earlier. I would of bought into the internet stocks, as a whole. I did trade the 4 horsemen of the Nasdaq for those that remember Microsoft, Cisco, MCI, and Intel, but not as much as I should of been into tech. I spent a little more than I should of, but I vacationed in and then found condos to live in Vegas and South Beach, which appreciated in double digits for several years before the recession in real estate, but I should of waited until my 40’s before paying for 3 homes, luckily the condo in South Beach is rented by the hotel connected to it when I am not there. I would of purchased more properties and sold them doing more flips and less rentals but real estate never went down before like it did.
So I would just make small changes, I’ve stuck to the same methods people have utilized for many decades prior and will for many decades after me. I have never felt the need to reinvent the mouse trap, rather I’ve just improved upon age old strategies to conform to my areas of expertise and knowledge. If I don’t know enough about an area of business I hire someone that knows more than I know. If you’re working towards becoming rich, you need to leave the ego behind. Be open to advice, be humble. People are willing to help you if you are humble and appreciate the advice. Those that know it all learn lessons the hard way.
There is a big philosophy about it being good to fail when you’re young, and how failure builds character etc. I agree that success comes from how you handle failure, but people should avoid failure at all costs. Learning from other’s mistakes is better than learning from your own. Failures are both time consuming and costly. Time and money is in limited supply. Sure we can take another shot if we miss, but the game clock keeps ticking, and money for startups is tough to find or save up.