Introduction
I wrote this book to explain how I retired at age 56, moved to Florida from New York and
spent the next 20 years enjoying life. While the basic ideas are mine I did have the help of
my son in putting it into a readable form. This is “no get rich quick” millionaire book. I think
there are far too many of those, all of which I believe are impractical to some degree,
especially for those who start with little or nothing. It is, though, about the creation of a
comfortable, easy going life. A life where you can have the time and money to enjoy
yourself and indulge in your favorite pursuits, just like me. Creating and living a comfortable
life is an ongoing process. My son and I have nearly completely different views on what is
“comfortable.” In fact, we agree perhaps on very little about what is a comfortable life. Yet,
we both are very comfortable in our own way. Only you can determine what is comfortable
for you. This book is, therefore, part memoir and part how-to book. It shows how anybody in
America can achieve similar results.
This book is about my experiences buying, renting out and selling houses. It is not about
flipping houses, or even making a million dollars. It is about becoming comfortable
financially and giving yourself time to pursue your hobbies and favorite activities while living
off that so-called “nest egg.” And doing so long before what is considered retirement age.
Throughout it ideas are presented that will work for you as well. I use the houses I bought,
rented out and sold only as examples of what anyone can do.
Over the years, when telling people what I did, some said “you should write a book.”
Those who most encouraged me were those who followed my advice and experienced
similar results. Others dismissed the whole idea as “pie in the sky” dreaming. They are the
ones, though, who never seem to have money or time to pursue their dreams. Many of
them still have to work to make ends meet. Indeed, I think many people in America do not
lead comfortable lives. Surely if you listen to many politicians, financial experts and to news
reports most Americans are very concerned about their lives and financial condition. They
are in debt, they are stressed, they spend (waste) too much money, and they are living
paycheck to paycheck. They seemingly have very little to show for their efforts. Many
people are apparently merely muddling through life. For others life is rough, even
unbearable. Perhaps you are one of these people. If so, then this book is for you, for it will
help you get out of the situation you are in.
Perhaps my views are iconoclastic, out of the ordinary, even strange. My title alone is
evidence of that: Houses are Free! Yes, that's right: House are free. I can't say it often
enough! I know more than a few “experts” who told me that I am wrong and what I did “can't
be done.” The newspapers, TV financial shows and magazines do not present what you will
read here. In fact, they all seem to say that the idea expressed in my title is not true and my
methods cannot work. So be it. I believe they are wrong, however, for I do live comfortably;
by my reckoning or anyone else's. For those with a plan and a dream, achieving
comfortableness is relatively easy following my methods. This book will explain more than
how to look at house ads and how to buy, rent and sell them. It will also show you how to
think about earning, saving and investing money. Perhaps just another "how to book" that
uses money instead of muscles, but not one that promises you millions of dollars, just a
comfortable life. You do not need millions of dollars to have a comfortable life. There are
plenty of books on how to become a millionaire; this is not one of them. This book tells how
you can become secure and comfortable, an often overlooked goal in our mega-millions-
earning celebrity and sports player driven society.
The reason I went into real estate was rather simple. I was employed for many years at
various companies as a lithographer, making negatives for offset printers. In 1971 I started
my own lithography business. This was what I knew. By the late 1970s, however, I began to
notice a declining volume of business. Computers were slowly taking away my livelihood. By
the late 1990s nearly the entire industry was gone. Lithographers simply could no longer
support ourselves with our skills. We were just like typewriters, record players and LPs, and
the companies that made them: dinosaurs headed for extinction. Just like candlestick
makers and blacksmiths disappeared as technology moved ahead in previous decades,
lithography was a dying, soon to be dead, industry. I was approaching 50, newly divorced,
and was no longer needed in almost any place where I could make money. It became
imperative to find another way to earn a living. So what was I going to do? Go back to
school to learn some new trade? Even if I had learned computers that would not have been
enough. This new industry wanted young people who were not burdened with preconceived
notions about how to do things. In the early 1970s I began reading books about how to get
rich with real estate. By the end of the 1970s I realized that about the only way left for me to
earn a living was to be in real estate.
I was a so-called “average American,” making an average salary. I worked 2 jobs for
about 20 years just to pay bills and have a few extras. I didn't start my real estate ventures
until I was 46 years old. When I tell people how and why and what to do they come up with
all kinds of excuses as to why they could never do what I did. Yes, I had plenty of anxiety at
first, and lots of misgivings, especially just after a house was bought. Frankly, until they
were rented out I was panic stricken. You will probably have similar misgivings and go
though similar experiences. Yet, what's really amazing is that there is always someone
willing to rent. But don't worry about that, for that person will come to you.
I am not a handy type of person. I don't do plumbing. I don't do electrical work. I don't do
roofing. There are many things I can't do, don't do and won't do. Many years ago I tried to
fix my own toilet tank to “save money.” It took me a whole weekend, several bruised fingers,
along with plenty of aggravation and frustration. It still leaked. On Monday I called a
plumber and he fixed it in 20 minutes for the price of a service call and a few parts. I never
attempted plumbing again. Once I tried to make a molding around a window. After buying
enough molding to do 2 windows I began by mitering the corners. Every corner came out
crooked. After cutting each corner 2 or 3 times I finally filled in the corners with wood filler,
but it never looked right. Another time, watching a relative trying to fix a ceiling fixture, there
was a loud pop and sparks. He was thrown off the chair. I never tried electric work after
that. As for fixing roofs, I keep remembering a story about a man who was helping his
neighbor repair a roof. He fell off and became a paraplegic. That scared me away forever
from getting on any roofs. There are plenty of licensed, insured and trained professionals
for every job. Find and use them.
The only thing I can do is paint and clean. Soap, water and paint is what you need after
buying the type of home I'm going to recommend that you buy. Painting a house is very
easy. I sort of hate it myself but it's not so bad. The house looks nice when you're finished.
It gives a lot of satisfaction. Home Depot and Lowes have classes on painting, tile repair
and other simple home repairs. If you have a cooperative significant other or teenagers to
help, it's much easier. I have a fear of heights. I cannot go above the 14th rung, or about
15 feet. Guess who does go up that high? My significant other does! I once hired a painter
to do only the second story of my house. I did the first floor. You do not need to be handy
to buy houses. You only need to buy the right houses. I made some bad mistakes in the
beginning, but I still came out all right. Because you almost cannot fail.
Buying a house is not like owning a business or opening a retail store. Owning a small
business means you must be there 12 hours a day, almost 365 days a year and hope
customers come in. What is true with real estate, so it is with business: "location, location,
location." If you're not in the right place you're in trouble. If you don't make enough money
to support yourself and pay the bills, well, let's hope you have enough money to back you
up. In owning a house, however, you only have one customer: your tenant. As long as the
tenant pays their rent, no problem. Even if they don't pay, and that's happened to me, you
may only lose one or two months rent. You can cover that with your pay or savings.
One big advantage of owning houses is the deductions you can take on your federal
and/or state income taxes. Each house is the equivalent of one, two or more dependents.
Owning five houses is like having 5 or 10 children to deduct on your income tax (it depends
on your overall tax bracket.) This is totally legal, you are not claiming “children,” you are
taking the legal tax deductions offered by the IRS and/or state income tax codes. On one
house I was loosing $10.00 per month because the mortgage was $10.00 more than the
rent. My accountant got all excited. "You're losing money" he said. I replied that I was
“losing” only $120 per year and that, besides, my income tax refund was $600. I got this
$600 because of the deductions on this house from my federal and state income tax return.
So I didn't lose $120, I earned $480.
All the advice given, all the self help books read, all the books on real estate, stocks,
bonds and business will do you no good if you don't heed the advice. As the bumper sticker
says: ''Just do it!" If you don't do it, who will? Will you make mistakes? Probably. Will you
lose money? Maybe in the beginning. But over time you will end up in a comfortable life.
Look at it this way: Would you lend me a thousand dollars if I paid you back $200 a year for
life? Well, a house basically pays you back forever. If something happens to you, your
spouse will make money from the rent. Your children can inherit it. Your wife and children
can sell it and invest the proceeds wisely to live comfortably ever after.
For example, working with me many years ago was a young man whose parents owned
a house. Unfortunately, both his parents had died while they were relatively young. He and
his brother inherited the house. Later, they sold the house and both went to college with
the proceeds of the sale. They studied to become doctors. The money ran out just as they
graduated, but they were now doctors. If the parents had been renting instead of owning
the sons would have inherited nothing. The sale of that one house earned enough money
to send two young men to college. Rent receipts never sent anyone to college.
I'm sure you went looking to make a big purchase sometime during your life. You spent
time at auto dealers, furniture stores and malls window shopping. When you want
something you spend time looking and then you buy. Same with a house. Like buying a car
or a truck, if you don't sign on the dotted line you won't own it. You're willing to go $10,000
or $20,000 in debt for a car or a truck. Most people own a car for only 3 or 4 years. Why
not spend $50,000 or $100,000 for a house? Besides a house can be owned forever and
the mortgage is not debt.
That's right, you should never look at a mortgage as a debt. You have to look at the
house as an asset; something that you own. Don't forget, you're not in debt $50,000 or
$100,000. You only owe one month's payment! When you pay that you are out of debt until
the first of next month. Look at it another way: if you buy a $100,000 home for $90,000 and
you put $10,000 down and maybe spend a few thousand for improvements, your mortgage
is only $80,000. But you can look at that house and say "That's my hundred thousand
dollar house.” The mortgage owed quickly falls below $80,000, however. Once you make
that first payment you no longer owe $80,000. You owe $80,000 less that one mortgage
payment made. Not only that, if you sell the house tomorrow you don't owe the remainder of
that $80,000 mortgage. Whoever buys the house pays the mortgage off. You'll get back at
least the one mortgage payment made, plus the difference between the $80,000 mortgage
and what you sell the house for.
Sometimes, when you don't quite have enough money, you can't buy in an upscale
neighborhood; you have to settle for what you can get. I've been doing that all my life.
Somehow, when I was newly married we never quite had enough money for the best, just
what we could afford. We never lived in the “best” neighborhoods, only nice ones. It wasn't
until after making money in real estate that I was able to afford what I wanted to buy and live
where I wanted to live. That is, of course, very subjective. I never wanted to live in a very
upscale neighborhood anyway, just a very nice one. To me, my money was better spent on
having a good time than on the best house in the best neighborhood.
By reading this book you will hopefully learn how to avoid the pitfalls that are
encountered. You will hopefully start you off on the road to comfortableness much earlier
than I did. The most important thing to remember is that you are buying time -- and time is
the essence of life. Just imagine if you bought a few houses 20 years ago. Let's say you
bought 3 houses. Suppose you paid $40,000 for each in 1979. They would now be worth at
least over $200,000 each (probably more in most parts of the country.) For each house,
the rent paid to you at the beginning was, say, $400 a month, now it would be over $1,000.
Of course, someone will probably say: "You were lucky, you could never do that today."
Well, yes, you can do this today. There are tens of thousands of people doing this today.
And in the year 2028 houses will be doubled again in price, if not more. (It sounds so far
away doesn't it? It's only 20 years.) So if you buy houses today at $100,000, in 20 years
they should be worth $200,000 or more because of inflation of about 2% or 3% per year.
Where are you today in your life? Until about the age of 35 I had no clear goals. Like so
many others in the 1950s, I came out of the army and got married. As a Korean War
Veteran I was eligible for a GI. Loan, so we took advantage of that. We bought our first
house with only $500 down. It was brand spanking new. We lived there 12 years. Our four
children began their lives in that house. Other than getting married, have children and live
nicely I had no plan. My wife and I were perhaps not that dissimilar in our unclear goals
(though it did turn out otherwise.) Basically, we were content to survive in a middle class
lifestyle, dreaming of a “better” life, one that we had no idea how to achieve. We just did
what everyone else around us was doing. We had decent jobs, but with no prospects of
real advancement. We were making a living, but not earning enough for the extras that
some other people seemed to have (I didn't realize that many were deeply in debt!) We
always bought used cars and didn't travel much. With four children to support you can say
that money was very tight. Like so many other Depression era babies I had learned to do
without. So we scrimped on coffee, bought no sodas and no beer; and we purchased very
few new clothes. Later I noticed that some people bought what they wanted, then worried
about the bills later. Before the 1950s there were no credit cards. You had to pay cash. So
getting into debt was a lot harder then. But with the advent of the cards, people all around
us went into debt, and I did not want to do that. My wife at the time seemed to have no
problem with this sort of debt-ridden life.
In creating our goals it dawned on me, we already owned a house and I started thinking
“suppose I owned 2 houses?” After all, when my father died in 1956, my mother used the
rent from her two-family house to travel. During my childhood they always had a rental unit
or two-family house. That's why they didn't suffer nearly as much during the Depression as
so many others did. So that looked like an attractive avenue to pursue a better life. Buying
a second house seemed like the best idea I could come up with, and it wasn't reinventing
the wheel. We'd have twice as much equity. Suppose we owned 5 houses? Then I started
thinking 10! How about the whole neighborhood? I started looking at buildings in New York
City. Wouldn't it be nice to have a twenty or thirty story tower? Wow! Boy, what a goal! Was
I dreaming! No, I was not dreaming, rather, I was beginning to plan. But that's when my wife
and I started to diverge, and thus began the long, slow slide to divorce.
It's also about the time when it dawned on me that money is one of the most important
things in the world. Without it you live in the street, with no clothes, no food, no fun, no
travel. Time is another extremely important element to a nice life. Health, of course, is still
another important aspect to a nice life, and while that is part genes and luck, it is also a
matter of habit, just like time and money. So I came to the conclusion that time, money and
health were the three keys to a really comfortable life. When I realized this I decided to do
something to achieve these.
One payday I opened up a saving account with $5.00; and received a little gift, too.
(Banks actually used to do that!) Every payday after that I always put in $1 or $2 more.
Also, the bank that held my mortgage said I would get free postage when I sent in the
mortgage payment if I opened a savings account with them. Every month when I mailed the
mortgage I added $5.00, which went into the savings account -- and I received the free
postage. (True, nowadays, you have to start a savings account with a bit more, but this is
well within anyone's means. Save up a hundred bucks and start a savings account!) Yet,
that's when I really put into practice the idea of doing without something today so that I
could have more tomorrow. I muddled along with slowly forming a plan, and then came my
divorce from a spouse who could not see this goal, who would not cooperate with me, who
seemed almost to fight me every step of the way. So, at the age of 46 I had to start all over
again. It took me another twelve years, but I came to have the time as well as the health
and the money to do what I wanted when I wanted. Combined, they enabled me to live a
wonderful life.
While I talk about houses on Long Island, where I had moved, as so many born-in-New
York City first generation Americans did, and then houses in Florida, a place where so
many retiring New Yorkers go, this process can be used in all 50 states. It is applicable
nationwide. There's no reason to move to either Long Island or to South Florida to do this.
It is just the circumstances of my life that brought me to these two places. The parts of this
book about real estate and investments -- the methods, the benefits, the numbers, the
system, the experiences, and more -- are from my life and my knowledge. It is what I did!
This is not some hifalutin theory and college learned stuff. However, if this worked for me it
can work for you. I'm no genius, just a very practical, thoughtful man who developed a plan,
then stuck to it through determination and discipline. I followed through on my plan and
reap the rewards today.
There are also parts of this book that delve into subjects that are, I confess, a bit out of
my league. They are by my son. I wrote my part of the book in long hand. Then my son
came to Florida several times for month-long book writing sessions. He typed it up on his
laptop and put his “two cents” in. Actually, he did a bit more than that. I wasn't sure at first
that his parts were necessary, but he convinced me about most of what he wrote. I'm still
not sure that what he wrote is completely germane to the subject, but I do think that he
makes some rather interesting observations, asks some very pertinent questions, and
presents some rather fascinating ideas. So I let him add his part.
He doesn't own any real estate now, though he does agree with what I wrote, because
he has observed with his own eyes. He did buy a house here in South Florida once. Using
my principles, he lived in it for two years and rented it out for two. But he essentially lived
rent free and earned money from the renters. He bought a house with a private mortgage
from a man who turned out to be a little loony. That man and his brothers were upset that
my son planted a lot of trees in the yard. The seller complained “But my mother loved the
lawn!” My son hates lawns. So he planted trees, shrubs, bushes and plants by the dozens.
He created a jungle! Even his neighbors complained about the growth. My son ignored
them all and enjoyed his garden and mini-forest. More amazingly, after he gave up the
house he dug up this garden and took it back to Louisiana where he sold the plants.
He has, however, what is commonly called “wanderlust.” I never saw a guy with no job
and seemingly no money travel so much and enjoy life so much. In fact, just before he
came to Florida to help me with this book he lived in Mazatlan, Mexico for three months
playing the piano! I've watched him “work” and do what seems to be sheer fun – play the
piano, paint mazes of all things (and sell them, too,) build websites, write his own book (on
Czech immigrants to Louisiana, strangely enough,) and do that loose thing called
“consulting” and other short term projects and business adventures. He's rather amazing in
the way he does it. One thing he does that I agree with, even marvel at his ability to do so:
he avoids spending money at every turn. Like I said at the beginning of this introduction, we
agree on very little about what it is to have a comfortable life. But that just proves my point: I
did it my way, he does it his way, and you can do it your way.
I started to write this book in 1995 and have only now finished it in 2008. Over the
intervening years I wrote little, even nothing, on the book, but I did keep traveling and
enjoying life. I also kept doing maintenance like repairing, calling in plumbers, replacing
carpets, fixing windows and painting, gardening and various other little things as tenants
came and went to keep the houses I still owned rented out. I had to attend to putting ads in
the paper, interviewing prospective tenants, evicting others and keeping track of all the
details. I slowly sold off all but two. One is the condo I live in, the other I still rent out.
While this book took a long time to come to fruition, when looking at what I wrote nearly
13 years ago, nothing much has changed. The means and methods are still available to
anyone today. This is something you can do! If you're an average person and you read this
book and buy only one house and save a few dollars this book will have accomplished its
mission. If you can combine what I recommend with your dreams and aspirations, so much
the better. So now let's turn to what we have to say about wealth and building a comfortable
life!
I wrote this book to explain how I retired at age 56, moved to Florida from New York and
spent the next 20 years enjoying life. While the basic ideas are mine I did have the help of
my son in putting it into a readable form. This is “no get rich quick” millionaire book. I think
there are far too many of those, all of which I believe are impractical to some degree,
especially for those who start with little or nothing. It is, though, about the creation of a
comfortable, easy going life. A life where you can have the time and money to enjoy
yourself and indulge in your favorite pursuits, just like me. Creating and living a comfortable
life is an ongoing process. My son and I have nearly completely different views on what is
“comfortable.” In fact, we agree perhaps on very little about what is a comfortable life. Yet,
we both are very comfortable in our own way. Only you can determine what is comfortable
for you. This book is, therefore, part memoir and part how-to book. It shows how anybody in
America can achieve similar results.
This book is about my experiences buying, renting out and selling houses. It is not about
flipping houses, or even making a million dollars. It is about becoming comfortable
financially and giving yourself time to pursue your hobbies and favorite activities while living
off that so-called “nest egg.” And doing so long before what is considered retirement age.
Throughout it ideas are presented that will work for you as well. I use the houses I bought,
rented out and sold only as examples of what anyone can do.
Over the years, when telling people what I did, some said “you should write a book.”
Those who most encouraged me were those who followed my advice and experienced
similar results. Others dismissed the whole idea as “pie in the sky” dreaming. They are the
ones, though, who never seem to have money or time to pursue their dreams. Many of
them still have to work to make ends meet. Indeed, I think many people in America do not
lead comfortable lives. Surely if you listen to many politicians, financial experts and to news
reports most Americans are very concerned about their lives and financial condition. They
are in debt, they are stressed, they spend (waste) too much money, and they are living
paycheck to paycheck. They seemingly have very little to show for their efforts. Many
people are apparently merely muddling through life. For others life is rough, even
unbearable. Perhaps you are one of these people. If so, then this book is for you, for it will
help you get out of the situation you are in.
Perhaps my views are iconoclastic, out of the ordinary, even strange. My title alone is
evidence of that: Houses are Free! Yes, that's right: House are free. I can't say it often
enough! I know more than a few “experts” who told me that I am wrong and what I did “can't
be done.” The newspapers, TV financial shows and magazines do not present what you will
read here. In fact, they all seem to say that the idea expressed in my title is not true and my
methods cannot work. So be it. I believe they are wrong, however, for I do live comfortably;
by my reckoning or anyone else's. For those with a plan and a dream, achieving
comfortableness is relatively easy following my methods. This book will explain more than
how to look at house ads and how to buy, rent and sell them. It will also show you how to
think about earning, saving and investing money. Perhaps just another "how to book" that
uses money instead of muscles, but not one that promises you millions of dollars, just a
comfortable life. You do not need millions of dollars to have a comfortable life. There are
plenty of books on how to become a millionaire; this is not one of them. This book tells how
you can become secure and comfortable, an often overlooked goal in our mega-millions-
earning celebrity and sports player driven society.
The reason I went into real estate was rather simple. I was employed for many years at
various companies as a lithographer, making negatives for offset printers. In 1971 I started
my own lithography business. This was what I knew. By the late 1970s, however, I began to
notice a declining volume of business. Computers were slowly taking away my livelihood. By
the late 1990s nearly the entire industry was gone. Lithographers simply could no longer
support ourselves with our skills. We were just like typewriters, record players and LPs, and
the companies that made them: dinosaurs headed for extinction. Just like candlestick
makers and blacksmiths disappeared as technology moved ahead in previous decades,
lithography was a dying, soon to be dead, industry. I was approaching 50, newly divorced,
and was no longer needed in almost any place where I could make money. It became
imperative to find another way to earn a living. So what was I going to do? Go back to
school to learn some new trade? Even if I had learned computers that would not have been
enough. This new industry wanted young people who were not burdened with preconceived
notions about how to do things. In the early 1970s I began reading books about how to get
rich with real estate. By the end of the 1970s I realized that about the only way left for me to
earn a living was to be in real estate.
I was a so-called “average American,” making an average salary. I worked 2 jobs for
about 20 years just to pay bills and have a few extras. I didn't start my real estate ventures
until I was 46 years old. When I tell people how and why and what to do they come up with
all kinds of excuses as to why they could never do what I did. Yes, I had plenty of anxiety at
first, and lots of misgivings, especially just after a house was bought. Frankly, until they
were rented out I was panic stricken. You will probably have similar misgivings and go
though similar experiences. Yet, what's really amazing is that there is always someone
willing to rent. But don't worry about that, for that person will come to you.
I am not a handy type of person. I don't do plumbing. I don't do electrical work. I don't do
roofing. There are many things I can't do, don't do and won't do. Many years ago I tried to
fix my own toilet tank to “save money.” It took me a whole weekend, several bruised fingers,
along with plenty of aggravation and frustration. It still leaked. On Monday I called a
plumber and he fixed it in 20 minutes for the price of a service call and a few parts. I never
attempted plumbing again. Once I tried to make a molding around a window. After buying
enough molding to do 2 windows I began by mitering the corners. Every corner came out
crooked. After cutting each corner 2 or 3 times I finally filled in the corners with wood filler,
but it never looked right. Another time, watching a relative trying to fix a ceiling fixture, there
was a loud pop and sparks. He was thrown off the chair. I never tried electric work after
that. As for fixing roofs, I keep remembering a story about a man who was helping his
neighbor repair a roof. He fell off and became a paraplegic. That scared me away forever
from getting on any roofs. There are plenty of licensed, insured and trained professionals
for every job. Find and use them.
The only thing I can do is paint and clean. Soap, water and paint is what you need after
buying the type of home I'm going to recommend that you buy. Painting a house is very
easy. I sort of hate it myself but it's not so bad. The house looks nice when you're finished.
It gives a lot of satisfaction. Home Depot and Lowes have classes on painting, tile repair
and other simple home repairs. If you have a cooperative significant other or teenagers to
help, it's much easier. I have a fear of heights. I cannot go above the 14th rung, or about
15 feet. Guess who does go up that high? My significant other does! I once hired a painter
to do only the second story of my house. I did the first floor. You do not need to be handy
to buy houses. You only need to buy the right houses. I made some bad mistakes in the
beginning, but I still came out all right. Because you almost cannot fail.
Buying a house is not like owning a business or opening a retail store. Owning a small
business means you must be there 12 hours a day, almost 365 days a year and hope
customers come in. What is true with real estate, so it is with business: "location, location,
location." If you're not in the right place you're in trouble. If you don't make enough money
to support yourself and pay the bills, well, let's hope you have enough money to back you
up. In owning a house, however, you only have one customer: your tenant. As long as the
tenant pays their rent, no problem. Even if they don't pay, and that's happened to me, you
may only lose one or two months rent. You can cover that with your pay or savings.
One big advantage of owning houses is the deductions you can take on your federal
and/or state income taxes. Each house is the equivalent of one, two or more dependents.
Owning five houses is like having 5 or 10 children to deduct on your income tax (it depends
on your overall tax bracket.) This is totally legal, you are not claiming “children,” you are
taking the legal tax deductions offered by the IRS and/or state income tax codes. On one
house I was loosing $10.00 per month because the mortgage was $10.00 more than the
rent. My accountant got all excited. "You're losing money" he said. I replied that I was
“losing” only $120 per year and that, besides, my income tax refund was $600. I got this
$600 because of the deductions on this house from my federal and state income tax return.
So I didn't lose $120, I earned $480.
All the advice given, all the self help books read, all the books on real estate, stocks,
bonds and business will do you no good if you don't heed the advice. As the bumper sticker
says: ''Just do it!" If you don't do it, who will? Will you make mistakes? Probably. Will you
lose money? Maybe in the beginning. But over time you will end up in a comfortable life.
Look at it this way: Would you lend me a thousand dollars if I paid you back $200 a year for
life? Well, a house basically pays you back forever. If something happens to you, your
spouse will make money from the rent. Your children can inherit it. Your wife and children
can sell it and invest the proceeds wisely to live comfortably ever after.
For example, working with me many years ago was a young man whose parents owned
a house. Unfortunately, both his parents had died while they were relatively young. He and
his brother inherited the house. Later, they sold the house and both went to college with
the proceeds of the sale. They studied to become doctors. The money ran out just as they
graduated, but they were now doctors. If the parents had been renting instead of owning
the sons would have inherited nothing. The sale of that one house earned enough money
to send two young men to college. Rent receipts never sent anyone to college.
I'm sure you went looking to make a big purchase sometime during your life. You spent
time at auto dealers, furniture stores and malls window shopping. When you want
something you spend time looking and then you buy. Same with a house. Like buying a car
or a truck, if you don't sign on the dotted line you won't own it. You're willing to go $10,000
or $20,000 in debt for a car or a truck. Most people own a car for only 3 or 4 years. Why
not spend $50,000 or $100,000 for a house? Besides a house can be owned forever and
the mortgage is not debt.
That's right, you should never look at a mortgage as a debt. You have to look at the
house as an asset; something that you own. Don't forget, you're not in debt $50,000 or
$100,000. You only owe one month's payment! When you pay that you are out of debt until
the first of next month. Look at it another way: if you buy a $100,000 home for $90,000 and
you put $10,000 down and maybe spend a few thousand for improvements, your mortgage
is only $80,000. But you can look at that house and say "That's my hundred thousand
dollar house.” The mortgage owed quickly falls below $80,000, however. Once you make
that first payment you no longer owe $80,000. You owe $80,000 less that one mortgage
payment made. Not only that, if you sell the house tomorrow you don't owe the remainder of
that $80,000 mortgage. Whoever buys the house pays the mortgage off. You'll get back at
least the one mortgage payment made, plus the difference between the $80,000 mortgage
and what you sell the house for.
Sometimes, when you don't quite have enough money, you can't buy in an upscale
neighborhood; you have to settle for what you can get. I've been doing that all my life.
Somehow, when I was newly married we never quite had enough money for the best, just
what we could afford. We never lived in the “best” neighborhoods, only nice ones. It wasn't
until after making money in real estate that I was able to afford what I wanted to buy and live
where I wanted to live. That is, of course, very subjective. I never wanted to live in a very
upscale neighborhood anyway, just a very nice one. To me, my money was better spent on
having a good time than on the best house in the best neighborhood.
By reading this book you will hopefully learn how to avoid the pitfalls that are
encountered. You will hopefully start you off on the road to comfortableness much earlier
than I did. The most important thing to remember is that you are buying time -- and time is
the essence of life. Just imagine if you bought a few houses 20 years ago. Let's say you
bought 3 houses. Suppose you paid $40,000 for each in 1979. They would now be worth at
least over $200,000 each (probably more in most parts of the country.) For each house,
the rent paid to you at the beginning was, say, $400 a month, now it would be over $1,000.
Of course, someone will probably say: "You were lucky, you could never do that today."
Well, yes, you can do this today. There are tens of thousands of people doing this today.
And in the year 2028 houses will be doubled again in price, if not more. (It sounds so far
away doesn't it? It's only 20 years.) So if you buy houses today at $100,000, in 20 years
they should be worth $200,000 or more because of inflation of about 2% or 3% per year.
Where are you today in your life? Until about the age of 35 I had no clear goals. Like so
many others in the 1950s, I came out of the army and got married. As a Korean War
Veteran I was eligible for a GI. Loan, so we took advantage of that. We bought our first
house with only $500 down. It was brand spanking new. We lived there 12 years. Our four
children began their lives in that house. Other than getting married, have children and live
nicely I had no plan. My wife and I were perhaps not that dissimilar in our unclear goals
(though it did turn out otherwise.) Basically, we were content to survive in a middle class
lifestyle, dreaming of a “better” life, one that we had no idea how to achieve. We just did
what everyone else around us was doing. We had decent jobs, but with no prospects of
real advancement. We were making a living, but not earning enough for the extras that
some other people seemed to have (I didn't realize that many were deeply in debt!) We
always bought used cars and didn't travel much. With four children to support you can say
that money was very tight. Like so many other Depression era babies I had learned to do
without. So we scrimped on coffee, bought no sodas and no beer; and we purchased very
few new clothes. Later I noticed that some people bought what they wanted, then worried
about the bills later. Before the 1950s there were no credit cards. You had to pay cash. So
getting into debt was a lot harder then. But with the advent of the cards, people all around
us went into debt, and I did not want to do that. My wife at the time seemed to have no
problem with this sort of debt-ridden life.
In creating our goals it dawned on me, we already owned a house and I started thinking
“suppose I owned 2 houses?” After all, when my father died in 1956, my mother used the
rent from her two-family house to travel. During my childhood they always had a rental unit
or two-family house. That's why they didn't suffer nearly as much during the Depression as
so many others did. So that looked like an attractive avenue to pursue a better life. Buying
a second house seemed like the best idea I could come up with, and it wasn't reinventing
the wheel. We'd have twice as much equity. Suppose we owned 5 houses? Then I started
thinking 10! How about the whole neighborhood? I started looking at buildings in New York
City. Wouldn't it be nice to have a twenty or thirty story tower? Wow! Boy, what a goal! Was
I dreaming! No, I was not dreaming, rather, I was beginning to plan. But that's when my wife
and I started to diverge, and thus began the long, slow slide to divorce.
It's also about the time when it dawned on me that money is one of the most important
things in the world. Without it you live in the street, with no clothes, no food, no fun, no
travel. Time is another extremely important element to a nice life. Health, of course, is still
another important aspect to a nice life, and while that is part genes and luck, it is also a
matter of habit, just like time and money. So I came to the conclusion that time, money and
health were the three keys to a really comfortable life. When I realized this I decided to do
something to achieve these.
One payday I opened up a saving account with $5.00; and received a little gift, too.
(Banks actually used to do that!) Every payday after that I always put in $1 or $2 more.
Also, the bank that held my mortgage said I would get free postage when I sent in the
mortgage payment if I opened a savings account with them. Every month when I mailed the
mortgage I added $5.00, which went into the savings account -- and I received the free
postage. (True, nowadays, you have to start a savings account with a bit more, but this is
well within anyone's means. Save up a hundred bucks and start a savings account!) Yet,
that's when I really put into practice the idea of doing without something today so that I
could have more tomorrow. I muddled along with slowly forming a plan, and then came my
divorce from a spouse who could not see this goal, who would not cooperate with me, who
seemed almost to fight me every step of the way. So, at the age of 46 I had to start all over
again. It took me another twelve years, but I came to have the time as well as the health
and the money to do what I wanted when I wanted. Combined, they enabled me to live a
wonderful life.
While I talk about houses on Long Island, where I had moved, as so many born-in-New
York City first generation Americans did, and then houses in Florida, a place where so
many retiring New Yorkers go, this process can be used in all 50 states. It is applicable
nationwide. There's no reason to move to either Long Island or to South Florida to do this.
It is just the circumstances of my life that brought me to these two places. The parts of this
book about real estate and investments -- the methods, the benefits, the numbers, the
system, the experiences, and more -- are from my life and my knowledge. It is what I did!
This is not some hifalutin theory and college learned stuff. However, if this worked for me it
can work for you. I'm no genius, just a very practical, thoughtful man who developed a plan,
then stuck to it through determination and discipline. I followed through on my plan and
reap the rewards today.
There are also parts of this book that delve into subjects that are, I confess, a bit out of
my league. They are by my son. I wrote my part of the book in long hand. Then my son
came to Florida several times for month-long book writing sessions. He typed it up on his
laptop and put his “two cents” in. Actually, he did a bit more than that. I wasn't sure at first
that his parts were necessary, but he convinced me about most of what he wrote. I'm still
not sure that what he wrote is completely germane to the subject, but I do think that he
makes some rather interesting observations, asks some very pertinent questions, and
presents some rather fascinating ideas. So I let him add his part.
He doesn't own any real estate now, though he does agree with what I wrote, because
he has observed with his own eyes. He did buy a house here in South Florida once. Using
my principles, he lived in it for two years and rented it out for two. But he essentially lived
rent free and earned money from the renters. He bought a house with a private mortgage
from a man who turned out to be a little loony. That man and his brothers were upset that
my son planted a lot of trees in the yard. The seller complained “But my mother loved the
lawn!” My son hates lawns. So he planted trees, shrubs, bushes and plants by the dozens.
He created a jungle! Even his neighbors complained about the growth. My son ignored
them all and enjoyed his garden and mini-forest. More amazingly, after he gave up the
house he dug up this garden and took it back to Louisiana where he sold the plants.
He has, however, what is commonly called “wanderlust.” I never saw a guy with no job
and seemingly no money travel so much and enjoy life so much. In fact, just before he
came to Florida to help me with this book he lived in Mazatlan, Mexico for three months
playing the piano! I've watched him “work” and do what seems to be sheer fun – play the
piano, paint mazes of all things (and sell them, too,) build websites, write his own book (on
Czech immigrants to Louisiana, strangely enough,) and do that loose thing called
“consulting” and other short term projects and business adventures. He's rather amazing in
the way he does it. One thing he does that I agree with, even marvel at his ability to do so:
he avoids spending money at every turn. Like I said at the beginning of this introduction, we
agree on very little about what it is to have a comfortable life. But that just proves my point: I
did it my way, he does it his way, and you can do it your way.
I started to write this book in 1995 and have only now finished it in 2008. Over the
intervening years I wrote little, even nothing, on the book, but I did keep traveling and
enjoying life. I also kept doing maintenance like repairing, calling in plumbers, replacing
carpets, fixing windows and painting, gardening and various other little things as tenants
came and went to keep the houses I still owned rented out. I had to attend to putting ads in
the paper, interviewing prospective tenants, evicting others and keeping track of all the
details. I slowly sold off all but two. One is the condo I live in, the other I still rent out.
While this book took a long time to come to fruition, when looking at what I wrote nearly
13 years ago, nothing much has changed. The means and methods are still available to
anyone today. This is something you can do! If you're an average person and you read this
book and buy only one house and save a few dollars this book will have accomplished its
mission. If you can combine what I recommend with your dreams and aspirations, so much
the better. So now let's turn to what we have to say about wealth and building a comfortable
life!
| Houses are Free achieving the American Dream |
| Table of Contents Acknowledgments Introduction 1. Keep This In Mind 2. Questions You Should Ask Yourself 3. My First House 4. What's a Closing? 5. Legal Terms 6. Types of Ownership 7. The Brooklyn Disaster 8. Fear of Failure 9. Common Misconceptions 10. Forest Avenue 11. Mortgages 12. Types of Mortgages 13. Elmwood Road 14. Poverty & Wealth 15. My Son's View of Savings 16. My Son's House Odyssey 17. Social Security and Pension Plans 18. Time Management 19. Udall Street 20. Plan Ahead 21. Taking Charge of Your Life 22. Bellmore Street 23. Money is the Game of Life 24. Quick Starting 25. Heisser Lane 26. What to Look For in an Ad 27. Buying that House 28. Rhode Island Ave 29. Time Line 30. Doing the Work 31. Manatuck Blvd 32. Renting out the House 33. Rental Terms 34. Boca Rio 35. Real Life Monopoly 36. Doom and Gloom 37. SW 18th Court 38. That Dream House 39. Going Green 40. SW 20th Street 41. Other People's Money 42. Types of Insurance 43. Boca Entrada 44. A Little House Math 45. How Much is Your House Worth? 46. Forest Hills Lane 47. Learning about Money 48. How Did I Keep Track of it All 49. Gettysburg Road 50. Types of Investments 51. Investment Strategies 52. My North Florida Houses 53. Tax Benefits of Owning Real Estate 54. Teaching My Daughter 55. Buying A Condo Conclusion: Woulda Coulda Shoulda |
| By Karl Hlavac with Jim Hlavac |
