Andrew Newberry is a distant family friend that knew about my business acumen. He knew how I had been in his position only 24 months previously and had heard about the new life I was leading with the wealth I had generated. I could hear the earnest desperation in his voice, when he asked me “how’d you do it Jack”? His question was open and sincere. In my eye’s he was at a point where there was only one direction for his life to go…up.
Andrew needed to make money fast. His family were in danger of losing the roof over their heads and although Andrew worked a fulltime job, there were difficulties that created this current crisis.
He couldn’t understand how I had done so much considering my humble beginings, while he had worked at his current job for over 10 years and was saddled with the difficulties he was currently experiencing. He told me he had no money to invest or anything like that, but could I advise him on what if anything was possible.
This was my response to him.
You see, what he was asking me specifically was, “how do I make money with little or no investment” My mind ignored his emotional pain and focused on the reality. That is the reality of what he needed answering.
Talking about Real Estate investment or anything that needed a capital injection was futile for Andrew, he needed to hear something different. This is what I told him to do, step by step. I told him that if he followed these two steps, he would have $100,000 within 12 months. He did it in 6!
Step one, get a little money. Not much needed, a few hundred dollars would do, but he has to find something as a seed capital account. I gave him the URL of a broker that does paid surveys online. These brokers represent companies that pay ordinary people for their opinions. They typically pay between $50-$300 per hour. He got his wife busy doing these through the day and evenings, they had $1000 within 2 weeks.
Step two, Go Shopping I explained to Andrew the mechanism behind my success. Compounding, intrinsic value, leverage, rapid capital gains, pyramiding profits. I then asked him to compound that thousand dollars by 30% 19 times. In other words, I told him to find 19 investment-objects that were for sale that he could buy, that had at least 30% or more spare intrinsic value.
Intrinsic value is everywhere. Whether you are buying New York sky scrapers of marble pool tables or Bertram boats, every market has a percentage of sellers offering their goods at well below market value.
Andrew started with old cars because he was a mechanic and now he had a game plan he was going to compound his money with his existing skill set. He traded up and up until he had $12,000 in six weeks.
Get your calculator out and see how he did it, how he evolved his money without a hitch. Start with 1000 then multiply by “1.3” which is the same as 30% Don’t press equals, just hit “1.3” and multiply symbol again. Do that 19 times.
When Andrew sold his last auto deal, he was ready to get involved in Real Estate. With $12,000 it wasn’t much but it was enough to start applying the same principles with Real Estate. This is where his compounding really escalated.
It escalated, because now he was using leverage….borrowed money. He called me on the day he was ready to start compounding with Real Estate with another problem. As I advised him “get into Real Estate Andrew as quickly as you can, around the $10,000 mark its time to get into that game”
He had a problem. The houses in his area were dear, he couldn’t see how having $12,000 was enough to get involved.
I advised him that he should forget about houses until he had at least $40,000 He should focus on raw land. Raw blocks are cheap, and easily re-zoned into a higher purpose. With just a small investment at the local town planning department he could re-zone a residential into a commercial or the other way around where appropriate. Its called a “soft” or “paper” renovation. No painting, no work, just a few simple forms and a fee to pay.
Creating a new use is just one way to add value to raw land, there are many others. Andrew researched and discovered them all. He stuck with land after all was said and done. He discovered buying a large block and subdividing it was very profitable. The second deal he did, he bought a block of over an acre, surrounded by established homes for $300,000 (with a bank loan) It was a corner block and he split it into three handsome sized blocks, tailored to the upper market. The first two blocks paid out his loan and put profits in his pocket, the last block he used as collateral for another bank loan where he built his own beautiful mansion on.
He sold it for a final profit of $354,000
That was about 8 months after our little chat on that cold evening.
To your health and rapid success.