Monday, August 14, 2017

Winning the Loser's Game

In the finance world, there are a whole list of books every professional seems to buy but few seem to actually read.  Books for the bookcase and for visitors to an office to see.  The best example is Graham & Dodd's Security Analysis, the massive tome which is far more influential than actual readership would suggest.

One of these such books for years has been the magnificent work Winning the Loser's Game by author Charles D. Ellis.  I have seen copies of this book everywhere from Wall Street to Main Street but ask the owner of the book if they have actually read it.

Blank stares.

This is a shame since Ellis is a brilliant writer who explains complicated concepts of investing and finance with a common sense ease which is disarming.

Investing really isn't all that complicated.  This explains the subtitle of the book, "Timeless Strategies for Successful Investing."  In other words, the keys to successful investing aren't new or unique to any given time.  The same rules which worked centuries ago still work today.  And these same rules apply to all categories of investing from stocks to real estate to collectibles.

One example is this simple problem which all active investors routinely encounter.  As an investor which scenario would you choose?

A.  Stocks go up---by quite a bit---and stay up for several years.

B.  Stocks go down---by quite a lot---and stay down for several years.

90% of investors say Choice A and, of course, they are wrong.  Choice A makes you feel wealthy but means you are constantly paying more and more money for the same shares.

Choice B is the correct answer.  Common sense says why.  A person could honestly hope for a forty year bear market and then for a bull run to begin two years before their retirement.

This book is now in its SEVENTH edition and keeps getting better.

Don't just buy it.  READ IT!

Sunday, June 11, 2017

Best Real Estate Book of All Time

One of the most common email questions I get is simple.

"What is the best real estate investing book of all time?"

For many years, there was a growing consensus in the real estate world the best book ever was the 1959 classic "How I Turned $1,000 into a Million in Real Estate in my Spare Time" by William Nickerson.

No doubt this was and still is an amazing book even if the contents are dated.  The properties he targeted in the book, fixer-uppers which need just a coat of paint and some minor repairs, are today mostly scooped up by professional property flippers who can often pay all cash.  In Nickerson's day, property flippers of single family homes were much rarer than they are now.

My current answer to the "Best Book" question above is one you may not have ever heard of before.

The 1979 classic "How We Made a Million Dollars Recycling Great Old Houses" by authors Sam and Mary Weir.

This book, much like Nickerson's, is a personal account of how this married couple got started in real estate and how they ultimately crossed their target of $1 million.

But what makes this book so special is its personal tone, almost like reading someone's diary.  There is LOTS of great advice in this book, albeit some of it dated now.  There are better vapor barriers today than nearly forty years ago, for example.  But their common sense advice on every subject a real estate investor needs to know makes this book a winner.

No get-rich-quick advice here.  Instead, a total commitment to professionalism and hard work.

For me, the best part of this book is a chart (today it would be called a spreadsheet) of every property the couple bought along their way to one million dollars, including the street address, purchase price, sale price, dates of ownership, and more.  I have never seen a real estate book before or since with such honesty, including them admitting mistakes and losses along the way.

More importantly, the Weirs ultimately settled on a strategy of targeting older and larger homes instead of normal single family properties since fewer buyers wanted these so-called "money pits."  It can be argued today's "Rehab Addict" Nicole Curtis adopted the strategy of the Weirs.  Nicole was three years old when the Weirs published their book.

Still, targeting larger and older homes which need LOTS of improvements is a strategy that still works in many cities.

The book is sold used on and I occasionally still see it in thrift stores.  It is well worth the read.

One final point.  I always wondered what happened to Sam and Mary Weir after they wrote this book.  It seems they never wrote another.  Did they set a new goal, say $10 million in real estate?  Did they retire from rehabbing after saving so many properties?  Did they stay together?  Why not another book?

We know what happened to William Nickerson.  He continued to invest in real estate and give lectures on investing until his death at the age of 91 in 1999.

But the fate of Sam and Mary Weir is unknown to me and I am hoping some reader of this post can extinguish my curiosity for me.  If you know about the Weirs, please reply to this post below.  The readers of this website have come through with some amazing information in the past so I have my fingers crossed once again this lingering mystery can be solved.

Saturday, March 25, 2017

Guru Admits to Fraud

A well known real estate guru from the early 2000s who once boasted he did "100 Deals a Month" and made "Millions of Dollars While He Sleeps" from his wholesaling and flipping property courses now admits it was all a lie.

The circumstances could not be simpler.

For nearly a decade this well known real estate guru was a regular on the creative real estate circuit, selling a variety of get-rich-quick schemes including an "asset protection" course which could "hide property so even God could not find out what you own."

From at least 1999 to 2007, this guru was one of the most famous in the United States, literally everywhere including a hotel ballroom near you pitching home study courses, seminars, workshops, bootcamps, you name it.

Fast forward ten years.

This guru is now involved in a bitter divorce with his wife of nineteen years.

The judge ordered him to pay child and spousal support of $11,500 per month until a property settlement could be reached.

He then claimed in official court documents he is "without the resources to pay (name deleted) the amounts ordered by the court."

When deposed by the wife's legal counsel, he claimed to be broke, a product of the Great Recession and the real estate crash.

What happened next is stunning.

The wife's lawyers cross-examined him with excerpts of text from the guru's own asset protection course and advertising materials where this man claimed to be making millions of dollars a year.

Excerpt after excerpt taken directly from his advertisements, books, and courses of him boasting of great wealth and the supernatural ability to hide it.

After forty-four questions, the guru admitted, and this is an exact quote:

"Okay, I admit it.  I lied.  Who cares?  There was no property.  No houses, whatever, nothing.  We sold lots of courses and whatever and that's the money we lived on.  She (the wife) knew this and didn't mind spending this cash.  Everyone was doing it so I did it too.  Big deal."

For the record, I have seen the transcript of the deposition but do not have permission to post it here.  Also, out of respect for the guru's long suffering wife I am not naming him in this blog.  He no longer sells any products online or in stores and has exited from the business, making any exposure of his name gratuitously cruel and unnecessary.

If you ever bought or thought about buying a get-rich-quick real estate course in the early 2000s, you likely considered buying his stuff.

If you did, I'm sorry.  If you didn't, you dodged a bullet.

I always suspected his outlandish claims of incredible wealth were false.  At one point he was claiming "100 flips a month."  More than three properties a day?

Now we know for sure.  The sad fact this guru is not the only fraud out there.

Tuesday, February 14, 2017

Mr. Blandings Dream House Locations

One of my favorite posts ever in this blog is about the 1948 Cary Grant film Mr. Blandings Builds His Dream House.

As noted in the post, the producers of the film literally built 73 Blandings homes all across the United States to promote the film.  A great number of these houses still stand.

A reader of this website generously sent me a list of all the Blandings dream homes they have found.  It is very cool to look up the addresses on Google Maps and literally see these nearly forgotten historical relics from Hollywood's Golden Age.  Would movie producers today build more than six dozen homes to promote a film?

When I received this email from my reader, I watched Mr. Blandings again and still love the film.  It is wonderful to know so many others still do as well.

Here is the email received below.  Thanks to Eric for sending it.


I saw your post about "Mr Blanding's Builds His Dream House" and thought I'd send you the list of the houses I have found. Still looking for some. Google street view should find most of the houses but the Baltimore one is off a few blocks so here's that link-,-76.6302355,3a,75y,52.99h,92.13t/data=!3m6!1e1!3m4!1sCh7Oh3uTkWSHplox92Db_w!2e0!7i13312!8i6656!6m1!1e1
If you have any info on the missing houses I'd love to have it. Some of the small Midwestern town "Dream Houses" aren't very Dreamy.

I had this posted at the IMDb but they are closing their message boards.
As a publicity gimmick a number of houses (73) were built using the design & plans from the movie, although designs varied greatly. Details about some problems with building the houses here:
The real Blandings house is located at 240 Indian Trail Road in New Milford, Connecticut. The one built for the movie is at 3800 Solstice Canyon Rd in Malibu Creek State Park.
List of houses built
Birmingham (?-built by Jackson Securities & Investment Co.-furnished by Pizitz)
Phoenix (4322 N 16th Av)
Camden (Clifton Heights), Little Rock (?-built by Little Rock Builders-furnished by Gus Blass)
Bakersfield (2500 Beech St), Bel Air (913 Chantilly Road) Cary Grant & Myrna Loy made an appearance at the opening of the Bel Air house, Fresno (244 E Terrace Av), Oakland (11000 Cameron Av) a teardown, Sacramento (2167 Irvin Way), San Diego, San Mateo/San Francisco area (3426 Alameda de las Pulgas "a green and white California version of a Cape Cod cottage," and "is built for 'indoor-outdoor' living")
Bow Mar/Denver area (5200 Lakeshore Dr)
Trumbull (30 Windy Ridge), Hartford (?-built by Joseph A. DePaolo-furnished by Brown Thomson & Co.)
Jacksonville (?-built by Stockton, Whatley & Davin-furnished by Cunningham Furniture)
Atlanta (?-built by B.A, Martin-furnished by Davison-Paxton Co.)
Skokie/Evanston-Chicago area (7 Williamsburg Rd) Evanston zip code & schools but Skokie police and street plowing - locals call it Skevanston
Indianapolis (6416 Dean Rd), Terre Haute (2400 Ohio Blvd) and South Bend (522 N Greenlawn Av)
Des Monies (4921 Woodland Av)
Baltimore (7111 Bellona Av)
Worcester (495 Chandler St), Natick/Boston area (4? MacArthur Rd) Myrna Loy attended the opening of the Natick house, Springfield
Detroit (20000 Whitcomb St), Grand Rapids (1401 Breton Rd SE)
Minneapolis (?-built by L.Z. Carlson Home Building Corp.), St. Paul (2303 Burma Ln)
Chillicothe (1706 Jennings Pl), Joplin (2921 E 14th St), Kansas City (1035 W 65th St), Clayton/St. Louis area (337 N Forsyth)
Omaha (502 N 72nd Av)
New Jersey
New Mexico
Albuquerque (4001 Mesa Verde Av)
New York
Albany (338 S Manning Blvd), Buffalo, Rochester (41 Orchard Park Blvd), Manhattan (5th Av & 48th St) a prefab house that was raffled off and moved, Syracuse, Tarrytown (142 Altamont Av), Utica
North Carolina
Greensboro (3924 Starmount Dr), Rocky Mount (1515 Lafayette Av)
Cleveland, Columbus, Ottawa Hills/Toldeo area (3766 Edgeville Rd)
Oklahoma City (2723 NW 32nd St) Melvyn Douglas visited the Oklahoma City house, Tulsa
Beaverton/Portland area (2715 SW Mayfield Av - NW corner of S.W. Walker Rd and Mayfield Av)
Huntingdon Valley/Philadelphia area (Huntingdon Pike & Dale Road), Philadelphia (This house may have been built in John Wanamaker's Store. Newspaper ads include "Mr. Blanding's Dream House is on the 7th Floor, Central" and "10 room settings"), Mt. Lebanon/Pittsburgh area (410 Salem Dr)
Rhode Island
Chattanooga, Knoxville, Memphis, Nashville (4435 E Brookfield Dr)
Amarillo (2813 Parker St), Austin (?), Corpus Christi (?-built by Jack Grant), Dallas (5423 Walnut Hill Lane) Melvyn Douglas made an appearance at the Dallas house - an empty lot in 2015, Fort Worth (3801 Arundel Av), Harlingen (905 E Pierce Av), Houston (3702 Glen Haven Blvd), San Antonio (2505 W Gramercy Pl)
Salt Lake City (2260 E Country Club Dr)
Richmond (?-built by Alfred L. Blake & Sons-furnished by Miller & Rhodes)
Seattle (? -built by First Mortgage Co.-furnished by Bon Marché), Spokane (15 E High Dr)
Washington, D.C. (?-built by W.C. & A.N. Miller Development Corp.-furnished by P.J. Nee)

Monday, February 6, 2017

The Real Book of Real Estate by Robert Kiyosaki

I have never been a fan of "Rich Dad" Robert Kiyosaki and his books.  His "Rich Dad" never existed despite his forceful claims to the contrary.  Plus much of his real estate and financial advice sounds like it came from a fortune cookie like "When People are Lame, They Love to Blame" and "Education is What You Learn After You Leave School."

But his new book, The Real Book of Real Estate, is actually quite good.

Filled with chapters written by "His Trusted Real Estate Experts" that range from Carleton Sheets to Eric Trump, the advice offered in this book is actually free of much of the get-rich-quick hype which predominates in this area.

Of great importance to me, Kiyosaki actually addresses many of the myths and mistakes taught by real estate gurus, for example, how stupid it truly is to hold real estate title in a C corporation.  (Use an LLC instead.)

This book is an excellent primer for anyone wanting to learn more about investing.  If you own a rental property or two, you probably don't need this book.  But until then it is a great guide for someone wanting to get into the business.