You’ve been working hard at a blue-collar job for years and, suddenly, you’ve got a big problem: You just had a heart attack. What do you do now? For Peter P., the answer was real estate.
Peter closed his business in New York, sold his house, and headed south with his wife. Instead of getting another job, he decided to invest in some income-producing properties.
In his first year of investing, he bought nine properties — ranging from a townhouse to single-family homes and a triplex. He sold two of them in just a few months for a combined cash profit of about $105,000. He held the other seven as rental properties. During the year, they generated net cash flow, after expenses, of about $25,000. And, because he had bought the properties under value in a fast-rising market, his net worth increased by about $280,000.
What makes Peter such a successful real-estate investor? “I drive slow,” he told me.
Peter has identified two neighborhoods where he finds the best value and growth potential. Whenever he drives home from just about anywhere, he’ll cut through one of them. Other times, he’ll zigzag through the two neighborhoods specifically looking for new “for sale” signs.
And he’ll drive slow.
He knows not just most but every single property that’s for sale in these neighborhoods — whether they’re listed by a real-estate agency or by an owner — just about the moment they become available. This has allowed him to act on rare opportunities the moment an under-priced property appears on the market. And that’s key . . . because properties offering good value don’t tend to stay on the market long.
Peter may travel an extra 20 miles a week, combing these areas for good investments. That works out to an extra 1,000 miles a year or so. But when you consider that he racked up profits, net rents, and equity gains of about $400,000 in his first year alone — that works out to a gain of about $400 a mile. That’s about 100 times better than a New York cab driver might do by catering to foreign tourists . . . and a whole lot more enjoyable.